STATE MOVES TO PULL VIATICAL
COMPANY’S LICENSE
TALLAHASSEE - A Central Florida man is linked to a
Florida viatical company through a Nevada firm, even though state officials here
previously banned him from management, ownership or other involvement in the company.
As a result, state Treasurer and Insurance
Commissioner Bill Nelson, in an order issued Aug. 5, took steps to yank the company's
license to deal in viaticals here. The Orlando-based Accelerated Benefits Corp. now has 21
days to contest Nelson's Order to Show Cause or surrender its Certificate of Authority as
a viatical settlement provider.
Viatical settlement providers, like Accelerated
Benefits, are in the business of buying life insurance policies at a discount, usually
from the terminally ill, and then reselling them to investors. It's a legitimate business
that has its roots in the AIDS crisis.
But Accelerated Benefits is not the only viatical
company being probed by the Florida Department of Insurance. At least five of the state's
eight licensed viatical providers currently are under scrutiny for having dealt in
policies obtained from insurers through cleansheeting. This is a practice that involves
hiding terminal medical conditions from a life insurer in order to obtain a policy for
resale to investors.
"We're going to clean up this industry,"
Nelson said today.
The first results of the insurance department's
probe of viaticals came to light in January, when Nelson charged a South Florida viatical
firm with deception. That firm, Justus Viatical Group, is fighting the charge.
Another South Florida viatical company, American
Benefits Services, currently is being investigated by insurance officials, along with
other state and federal agencies, to determine whether it helped sell tens of millions of
dollars of viatical settlements backed by nonexistent life insurance policies. The
insurance department began looking into American Benefits and its activities with another
company, Financial Federated Title and Trust Inc., late last year.
Legitimate viatical deals first came into existence
in the 1980s, as the number of AIDS cases increased. By selling a policy for a percentage
of its face value, the insured can get cash for medical expenses, travel, investments or
gifts to the children now rather than later. The tradeoff is giving up a bigger payoff at
death for one's beneficiaries.
Investors make money unless the original insured's
death comes significantly later than anticipated. If, for example, an investor buys a
$100,000 policy for $60,000 and the insured dies in a year, that's a $40,000, or about 67
percent return. But if the patient lives two years, the return falls to about 33 percent.
In his order on Accelerated Benefits, Nelson said
the company originally was given a license on October 31, 1997. But that license was
issued on the condition that a man named C. Keith LaMonda would have no "direct or
indirect affiliation" with the company, other than to act as an investment broker for
prospective investors. LaMonda was involved in a Securities and Exchange Commission case
at the time, which later resulted in a $50,000 penalty.
Recently, Florida insurance officials discovered
that ownership of Accelerated Benefits apparently was transferred last year to the LaMonda
Management Family Limited Partnership, which included as a partner a Nevada company called
Diverse World Enterprises Inc.
Corporate records there reflect that C. Keith
LaMonda is president, secretary, treasurer and sole director of Diverse World Enterprises.
