State Treasurer, Fire Marshal,
Insurance Commissioner
State of Florida
Tallahassee, FL
1-800-378-0445
For Immediate Release
February 4, 2000
MORE FLORIDA VIATICAL DEALERS INDICTED
Grand Jury Indictments Are Latest In Continuing Probe
TALLAHASSEE -- As part of Florida Treasurer Bill
Nelson and Statewide Prosecutor Melanie Ann Hines' probe of the life insurance resale
industry, five individuals and one viatical business have been indicted for their alleged
participation in separate multi-million dollar fraud schemes.
The suspects today were charged collectively with 240
counts of grand theft, organized fraud and dealing in stolen property in the purchase and
resale of about $9 million worth of life insurance policies fraudulently obtained from 53
insurance companies.
Based near Jacksonville, Orlando and Fort Lauderdale,
the suspects helped market to investors life policies that had been obtained by hiding an
insured's terminal illness, according to statewide grand jury indictments and state
insurance fraud investigators.
Future First Financial Group Inc., a Ponte Vedra
Beach-based viatical settlement provider, and Future First's vice president, William F.
Sweeney, 51, each were charged in one indictment with 81 counts of grand theft and one
count of organized fraud in connection with the marketing of fraudulently obtained
policies valued at $6.9 million.
Wanda Tappan, 56, the president of Life Benefit
Services Inc., a Winter Park viatical settlement broker; Bruna Coveleski, 54, the
company's vice president; Stan Coveleski, 55, the company's chief financial officer; and,
Joel Seidman, 44, a client representative from Fort Lauderdale, each were charged in a
second indictment with one count of organized fraud, and a total of 72 counts of dealing
in stolen property in connection with the sale of about $2.5 million in fradulently
obtained policies.
The indictments by the 15th Statewide Grand Jury,
announced Friday, stem from a lengthy and ongoing investigation by the state Department of
Insurance, Division of Insurance Fraud, into the viatical business across Florida,
including "clean sheeting" - the practice involving the hiding of terminal
medical conditions from a life insurer.
"For more than a year now, we've been digging
into the viatical industry," Nelson said at a morning news conference in Orlando,
where he was joined by Hines. "Our investigation so far suggests widespread
fraud."
Said Hines: "Properly managed, the viatical
industry can provide valuable support to people in their most desperate hour of need. But
the kind of fraud engaged in by those charged today poses a serious threat to the
continued viability of the industry by undermining investor confidence."
Friday's indictments were the second and third by the
Statewide Grand Jury in the continuing probe. Last October, the officers of Justus
Viatical Group, of Pompano Beach, were indicted on numerous charges of organized fraud,
grand theft and insurance fraud. Some $3 million in fraudulently obtained policies were
bought by the company's two officers, and some $2 million were resold to investors,
according to the October indictment.
In essence, viatical providers and brokers are in the
business of buying life insurance policies, usually from the terminally ill, and reselling
them to investors who seek to make money upon the insured's death. By selling a policy for
a percentage of its face value, the insured can get cash now for medical, living or other
expenses. The tradeoff is giving up a bigger payoff at death for one's beneficiaries.
For viatical dealers, the business can be lucrative.
For example, Future First in some cases paid the insured only 12 percent of the face value
for policies it bought, investigators said. And for helping arrange the sale of just one
policy for $122,746, Life Benefits was paid a $48,510 commission, investigators said.
In Florida, as elsewhere, the viatical business once
thrived on those dying from a terminal illness. But because advanced medical procedures
are helping patients live longer, the business is targeting new clients - usually seniors
with high payoffs - who may be willing to sell their life insurance policy to investors at
a discount.
Nelson now is proposing to expand the state law
governing viatical sales by the terminally ill to also cover the sale of life insurance
policies of seniors and others. The proposal will be up for consideration by the
Legislature when it convenes in March for its annual two-month session. In an interim
report issued Friday, the Statewide Grand Jury also made a series of recommendations for
consideration by the Legislature, including increasing the penalties for viatical fraud
from a misdemeanor to a felony.
For further information, investors with Future First
or Life Benefit Services can call the insurance department's Division of Insurance Fraud
toll-free at 1-800-378-0445, or visit www.doi.state.fl.us.
