COMMENTS RECEIVED ON CONCERNING NAIC

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					COMMENTS RECEIVED ON QUESTIONS CONCERNING REVISIONS TO

      VIATICAL SETTLEMENTS MODEL REGULATION (#698)
March 30, 2012

Rosanne Mead, Chair
NAIC Viatical Settlements Working Group
c/o Jolie Matthews, NAIC Senior Health and Life Policy Advisor and Counsel
jmatthews@naic.org

Re: Comments on Questions Relating to Possible Revisions to the NAIC Viatical Settlement
Model Regulation

Dear Chairwoman Mead and Members of the Working Group:

The National Association of Insurance and Financial Advisors (NAIFA) appreciates the
opportunity to comment on the issues raised by the Working Group Chair in connection with
possible revisions to the NAIC Viatical Settlements Model Regulation.

NAIFA comprises more than 700 state and local associations representing the interests of
approximately 200,000 agents and their associates nationwide. NAIFA members focus their
practices on one or more of the following: life insurance and annuities, health insurance and
employee benefits, multiline, and financial advising and investments. The Association’s mission
is to advocate for a positive legislative and regulatory environment, enhance its members’
business and professional skills, and promote the ethical conduct of its members.

NAIFA’s comments with respect to the future work of the Working Group are as follows:

   1. NAIFA’s primary recommendation and comment is to strongly urge the Working Group
      to limit its activity to the confines of the Life Insurance and Annuities Committee charge
      in connection with the appointment of the Viatical Settlements Working Group, which is
      “to review and consider revisions to the Viatical Settlements Model Regulation (#698)
      for consistency with the 2007 revisions made to the Viatical Settlements Model Act
      (#697), including reviewing and considering revisions to or replacement of, as
      appropriate, Appendix A—Informational Brochure.”

        The 2007 revisions to the Viatical settlements Model Act, which were developed in
       large part to address rising concerns about the increasing number of stranger-originated
       life insurance (STOLI) transactions that were appearing in the marketplace, were
       adopted after lengthy debate, discussion and the consideration of the views and
       opinions of a wide variety of interested parties. NAIFA believes this model act
       represents one of the most effective means available for deterring STOLI practices, as it
       focuses on the economic viability of these transactions. Equally important, the model
       act is not designed to impede non-STOLI life or viatical settlement transactions; in fact,
       the model does not actually prohibit specific transactions. Instead, it requires a waiting
       period of five years before policies that are part of a transaction that exhibit
       characteristics of STOLI may be settled.

       NAIFA believes the model act remains an effective means for deterring STOLI and that
       any revisions to the model regulation should be limited to those that serve to conform
       the model regulation to the current version of the model act.

    2. One thing that remains a relative mystery is information regarding the number and size
       of STOLI transactions that take place. In a broader sense, there are many gaps in the
       currently available information regarding the viatical and life settlement markets. The
       NAIC viatical settlements model act and regulation contain specific and detailed
       reporting requirements, and NAIFA believes that the effective enforcement of these
       requirements and analysis of the data reported will be a valuable aid in obtaining
       information regarding the number and dollar amount of STOLI transactions as well as
       the extent to which such transactions have infiltrated the secondary market.

Thank you for the opportunity to submit these comments. We look forward to working with the
Working Group as it moves forward with its efforts in this area.

Sincerely,




Gary Sanders
Vice president, Securities and State Government Relations


.
COMMENTS FROM NEBRASKA DOI

Ms. Matthews,

You have sent out for comment a list of questions developed by Rosanne Mead, the Working Group Chair,
related to the charge to revise the NAIC Model #698, Viatical Settlements Model Regulation.

It was noted in the questions that the current model had some things that might need attention, including the
following:
     1. Reports
        A. All necessary – useful? I’m not sure all the current reports are necessary, especially since the Viatical
            Settlements Act (“Act”) amended the viatical settlement provider reporting requirement to limit it to
            where a viator is a resident of our state. This would seem to eliminate the need for the “All States”
            report (VSP 001). I believe that the other annual provider reports are useful to monitor activity of our
            licensed providers in our state. Additionally, the same amendment to the Act eliminated the
            requirement for any type of viatical settlement broker reporting, which would eliminate the need for
            VSB 001, VSB 002,and VSB 003.
        B. All filed – consequences. We do request and follow up for such annual reports, but there are no real
            consequences for failure to file other than an unfair trade practice for failure to respond to a
            Department written inquiry.
        C. How utilized? Monitor activity of our licensed providers in our state.
        D. Sanctions for non-filing? An unfair trade practice for failure to respond to a Department written
            inquiry.
        E. Status of report content – Public/confidential/trade secrets. We treat these reports as “trade
            secret” and thus may be withheld from a public records request, although the assertion that these
            reports are “trade secrets” under our public records law is a bit of a stretch.
     2. Anti-fraud plans. Only have required such from viatical settlement providers; looks like the amended Act
        may require such from viatical settlement brokers as well.
     3. Brochures
        A. Appendix A and Insure U are same. That’s good.
        B. What is goal – “What is and how to” or “Caution” or “investment”. I believe that our goal should be
            focused on “What is and how to” and “Caution” and leave “investment” separate for those states
            where the Insurance Department also regulates investments in viatical settlements.
        C. Consider FINRA/NASAA partnerships/documents. We should consider it if compatible with Insurance
            Department regulation.
It was noted that other things the Working Group might consider:
         What to do with developments since Act amended?
                 a) Model regulation should address via this update. No, just focus on what is in current
                     amended Act.
                 b) Issue should be reserved and referred to A committee. Agree, we should limit our focus to
                     changing the Model Regulation to meet the changes in the amended Act. If there are new
                     issues, then consideration to amending the Act further should be given rather than making
                     such changes in the regulation without supporting changes in the Act.


        Mike Boyd
        Staff Attorney
        Nebraska Department of Insurance
Michael Lovendusky
Vice President & Associate General Counsel
(202) 624-2390
michaellovendusky@acli.com



2 April 2012

Rosanne Mead, Chairwoman
NAIC Viatical Settlement Working Group
c/o Jolie Matthews, Senior Health Policy & Legislative Analyst & Counsel
via jmatthew@naic.org

RE: Questions On Viatical Settlements Regulation 3/3/2012i

Dear Chairwoman Mead and Members of the Working Group:

The American Council of Life Insurers comments in this letter upon the aspects of the NAIC
Working Group Questions relating to the principal ACLI concern of deterring illicit viatical
settlements. ACLI anticipates participating in the discussion between regulators and viatical
settlement representatives to the extent the business of insurance and insurer operations might
be affected.


Viatical Settlement Model Act (VSMA) § 9, Disclosure to Insurers

Many elements of the Viatical Settlement Model Act (VSMA) are detailed sufficiently to be self-
executing without further regulatory exposition. Section 9 is such a provision. The Section
relates to the transactions of the greatest concern to insurers and regulators. To the extent it is
utilized it operates to insulate a settlement transaction occurring within five years from policy
issue from subsequent insurer criticism.


VSMA § 12, Prohibited Practices

The scope of this section extends to the “side agreements” used by investors and providers to
induce brokers and others to contribute to the scheme of an illicit viatical settlement. The
context for this provision was 2006 New York Attorney General allegations that viatical
settlement providers engaged in fraudulent and anticompetitive conduct involving bid-rigging
by payment of substantial, concealed commissions to viatical settlement brokers. The brokers
in return allegedly persuaded their clients to accept defendants' offers rather than higher bids
from rival viatical settlement providers. The New York Attorney General also claimed that
defendants concealed a scheme of "gross offers" whereby brokers were allowed to determine
how much of a purchase price paid by defendants they would keep and how much they would
pass on to the policy seller. Additionally, falsification of documents was alleged.ii

The NAIC Working Group might consider reviewing fact patterns of transactions judicially
determined to violate relevant laws. A good starting place for such a review might be the
judicial Order in Pruco Life Insurance Co. v Steven M. Brasner (appended). The fact pattern in
this Florida adjudication exemplifies the complicated web of agreements and payments
designed to evade detection by insurers and condemnation by law. With hundreds of viatical
settlement cases in litigation since the NAIC adopted the Model Act, there are numerous judicial


American Council of Life Insurers
101 Constitution Avenue, NW, Washington, DC 20001-2133
www.acli.com
findings and adjudications available to assist the Working Group evaluate whether the guidance
of the Model Act might be improved by model regulation in this area.


VSMA § 2, Definitions

The definitions of the Model Act were carefully developed by the regulators with substantial
contributions from all interested parties. It is unlikely that any Definition will require model
regulation detailing.


STOLI

It is popular shorthand to describe the problems of illicit viatical settlements as that of “STOLI”
or “stranger-originated life insurance.” The official definition of “STOLI” and its prohibition is
found in the NCOIL Life Settlement Model Act. Unfortunately, viatical settlement advocates
resist enactment of the NCOIL definition of “STOLI”. As a result no common definition of STOLI
has been enacted and no uniform law prohibiting it exists. Examples of the lack of definitional
uniformity appear in this endnoteiii.

In contrast, the NAIC Model addresses directly the specific characteristics of typical illicit viatical
settlement settlements. They are: non-recourse premium financing; guarantees of settlement
prior to or near the time of policy issue; and settlement life expectancy evaluations prior to or
near the time of policy application. See NAIC Model § 11A(3). The NAIC Model does not prohibit
these elements individually or in combination. Rather, the NAIC Model merely requires that
transactions exhibiting these characteristics mature five years before the underlying life
insurance policy is settled to investors. This has proven to be a successful regulatory approach
because investors will not wait five years to learn whether their investment is profitable.
Consequently, investors will not venture capital to initiate and fund for five years the life
insurance premium. The result is that the offensive wager on human life is deterred and the
effectiveness of the NAIC Model is validated. There is no need for the NAIC to consider moving
away from its successful Model approach.


“Life settlement” or “Viatical settlement”

“Viatical settlements” is a perfectly good name for the transfer for consideration of an insurance
policy or its values by its owner to investors. It was the name given by its inventors to the
transaction from its beginning. The name was recognized officially for the first time and forever
by the NAIC in 1993. It is the name enacted in the laws of about 20 states. It is the name of
the transaction referred to in hundreds of court cases and dozens of law review articles. Its
curious terminology encourages questions about it. This is a good thing.

Some authority has observed that “Life settlement providers distinguish life settlements from
viatical settlements, in which the policy seller suffers from a "catastrophic or life threatening
illness or condition". People v. Coventry First LLC, 2009 NY Slip Op 05368, footnote 1 (June 30,
2009). But the structure of the current NAIC Model makes clear in its expansion of justifications
for exchanging life insurance for investment contracts that all of them are “viatical
settlements”. That is, the justification of chronic and terminal illness, for example, is identical
functionally to the justifications of the death of a spouse or retirement. See NAIC Model §
11A(2) for the complete list of six justifications.

In comparison, the phrase “life insurance settlement” is misleading. A viatical settlement has
nothing to do with “life insurance.” Indeed, it is anti-life insurance. It destroys life insurance.
The Fourth Circuit explained why:


                                                  2
       While obvious, it must first be stated that the subject of every viatical settlement is an
       insurance policy. Moreover, the viatical settlement is not collateral to the policy. Rather,
       it modifies it, changing the parties' obligations and benefits, while yet leaving the
       insurance -- i.e., the transfer of the specified risk -- in place. At its essence, a viatical
       settlement is a transaction that fractures the two-part insurance contract between the
       insurer and the insured and creates a new tripartite arrangement (albeit not a three-
       party agreement) among the insurer, the insured, and the insured's assignee -- the
       viatical settlement provider. Because of this new tripartite arrangement, each party has,
       with respect to the preexisting insurance contract, new or different obligations and
       benefits.

       The insurer is faced with the newly divided obligations reflected in the interests of the
       insured and the viatical settlement provider. While the insured gives up her financial
       interest in the insurance contract, her life and the risk of her death remain the subject of
       the insurance contract. But now, the insurer, instead of carrying its obligation to pay on
       the insurance contract with an insured “who guards against possible loss and disaster to
       [her] as an individual,” see 1 Appleman on Insurance § 1 (2d ed. 2006) (defining life
       insurance), carries its obligation with a viatical settlement provider, who hopes, for
       financial reasons, for the early death of the insured. The insurer must also now keep
       track administratively of both the insured, whose life remains essential to the
       arrangement, and the viatical provider, who now must pay the insurer the premiums.
       Moreover, the fact that a new contract --the viatical settlement -- introduces a new
       interested party to the arrangement raises the possibility that the insurer can become
       involved in legal disputes between the insured and the viatical provider.

       The insurer is also faced with changed economic risks that were not factored into its
       calculation of premiums. Under the two-party arrangement that preexisted the viatical
       settlement, the insured was in a class of persons that statistically surrendered a portion
       of its policies or let a portion of them lapse. Insurance companies rely on these
       surrender and lapse rates to calculate premiums to charge for life insurance policies. The
       viatical provider distorts these rates, however, because it will always hold onto the
       policy until the insured dies in order to protect its investment. Thus, as the initial
       actuarial risk is distorted with each new viatical settlement, the risk-spreading profile of
       the insurer becomes less reflective of its initial calculations.

Life Partners v. Morrison, 484 F.3d 284, C.A.4 (Va.) (2007); cert. denied, 128 S.Ct. 708
(December 3, 2007).

Indeed, “life insurance settlement” is a marketing ploy by viatical settlement providers to (1)
align their transactions with the ideals, goals and benefits of life insurance while (2) distancing
their transactions from the many viatical settlements historically condemned by regulatory and
judicial authorities.1iv

Further, there exists an alternative to both “viatical settlement” and “life insurance settlement”
that is arguably superior to both. In the United Kingdom and much of Europe the transactions
are referred to as “traded life policies” or “traded life settlements.” ACLI recommends continued
respect and use of the terminology of “viatical settlements” but if a change in labeling is to be
considered, ACLI recommends consideration of “traded life policies” as the most accurate name
for the transactions.


…continued…



1


                                                 3
Things in the current model regulation that (might) need attention: Reports

For all the marketing of viatical settlements it is remarkable how little is known about the
viatical settlements market. How many policies are settled in any state in any given year? How
large is each policy? Are most policies that are settled owned by individuals or trusts? How
many of them are financed by non-recourse premium financing? How many settle within five
years of issuance? Exactly what “fair market value” does each owner receive in exchange for a
policy? Is the market for viatical settlements growing or diminishing? Who funds the premium
for sustaining the policies settled to investors? The answers to these and similar questions
would go far to establishing the consumer benefits of viatical settlements.

Regulators need comprehensive data to determine whether consumers are being adequately
protected from viatical settlement provider misconduct. The NAIC Viatical Settlement Model Act,
NAIC Model Regulation, NCOIL Life Settlements Model Act and laws based upon them contain
comprehensive data reporting requirements for viatical settlement providers. Enforcement of
these reporting requirements and the publication of viatical settlement data will assist
regulators and the public understand the value and the risks of viatical settlements. The data
will assist regulators determine if additional consumer safeguards are needed. Accordingly,
ACLI recommends that the states – or NAIC -- collect and analyze information obtained
pursuant to settlement provider reporting requirements to determine the prevalence of illicit
viatical settlements and the degree they contaminate the secondary and tertiary markets. The
ACLI here renews its appeal to the NAIC that the NAIC Market Conduct Annual Statement be
expanded to viatical settlement providers.


Recommended Changes in the Act

What if the results of improved state or NAIC data collection reveal that 50% of all viatical
settlements exhibit disturbing transactional characteristics? What if data reveals the percentage
of suspicious transactions to be 80%? In such circumstances do the benefits of viatical
settlements outweigh the social dangers they create or the cost of their regulation? ACLI has
recommended to federal authorities that the securitization of viatical settlements be prohibited.
Financial authorities in the United Kingdom are now moving to ban retail investment in “traded
life policies” due to their “toxicity” and problems. Certainly there is room to consider changes in
state laws relating to viatical settlements.

But it not clear whether ACLI would recommend changes to the NAIC Model Act. The NAIC
Model is the gold standard of viatical settlement regulation and deterrence to settlement fraud
and unfair and deceptive practices. Enactment of the NAIC Model in all states would go far
toward establishing a respectable viatical settlement market. ACLI will deliberate further on
recommendations to the NAIC Working Group pertaining to possible changes in the Model Act.

Thanks to the Chairwoman and members of the NAIC Viatical Settlement Working Group for
considering the comments of the ACLI.

Sincerely,

AMERICAN COUNCIL OF LIFE INSURERS




Michael Lovendusky, Associate General Counsel & Vice President


                                                 4
Appended Document: Pruco Life Insurance Co. v Steven M. Brasner


i For background and context, the entire work outline exposed by NAIC for interested party comment is as follows:
VIATICAL WORKING GROUP
MARCH 3, 2012
New in 2007 Viatical Model Act Update
Brand new Sections
Section 9 – Disclosure to Insurers
Section 12 – Prohibited Practices
Definitions
Disclosures to Viator
Life Insurance Producers
Continuing Education
STOLI
Drafting note in Act – “Life settlement” or “Viatical settlement”
Solvency requirement for providers.
Things in the current model regulation that (might) need attention:
I. Reports
A. All necessary – useful?
B. All filed – consequences
C. How utilized?
D. Sanctions for non-filing?
E. Status of report content – Public/confidential/trade secrets
II. Anti – fraud plans
III. Brochures
A. Appendix A and Insure U are same
B. What is goal - - ‘What is and how to’ or ‘Caution’ or ‘investment’
C. Consider FINRA/NASAA partnerships/documents
Other things the VWG might consider:
What to do with developments since Act amended
a) model regulation should address via this update
b) issue should be reserved and referred to A committee
States that have already updated their regulation
Reserved issues
Recommended Changes in the Act

iiSee People of the State of New York v. Coventry (New York Supreme Court No. 404620/06, filed October 2006;
Denial of motion to dismiss and reinstatement of action for common-law fraud Ordered by Supreme Court Appellate
Division at 2008 N.Y. Slip Op. 05548 (June 17, 2008); resolved by Assurance of Discontinuance No. 09-137, Office
of the Attorney General of the State of New York In the Matter of the Investigation by Andrew Cuomo, Attorney
General of the State of New York of Coventry First LLC et al) (the Assurance required Coventry to pay New York $12
million). The New York findings were corroborated by similar findings by insurance officials in Florida Office of
Insurance Regulation v. Coventry (Order Show Cause No. 88270-06, resolved October 2007) (Order requires
Coventry pay Florida $1.5m plus submit to special compliance audits until 2009 as well as specially report all
Florida resident transactions quarterly and more).

  Arizona: Intentionally practicing or planning to initiate a life insurance policy for the benefit of a person or entity
iii

that lacks an insurable interest and that, at the time of policy origination, has no insurable interest in the insured,
is a violation of section 20-1104. Stranger originated life insurance practices include situations in which life
insurance is purchased with resources or guarantees from or through a person or entity that, at the time of policy
inception, could not lawfully initiate the policy himself or itself, and if, at the time of policy inception, there is an
agreement to directly or indirectly transfer the ownership of the policy or the policy benefits to a person or entity
that lacks an insurable interest. Trusts that are created to give the appearance of insurable interest and that are
used to initiate policies for the benefit of investors with no insurable interest violate section 20-1104 and the
prohibition against wagering on life. Intentionally practicing or planning does not include a policy holder's lawful
assignment of the insured's life insurance policy. Arizona Revised Statutes (A.R.S.) § 20.443.02 (2008).



                                                            5
Connecticut: ["Stranger-originated life insurance" or "STOLl" is] An act, practice or arrangement to initiate a life
insurance policy for the benefit of a third party investor who, at the time of policy origination, has no insurable
interest in the insured. Such practices include, but are not limited to, cases in which life insurance is purchased
with resources or guarantees from or through a person or entity, who, at the time of policy inception, could not
lawfully initiate the policy himself or itself, and where, at the time of inception, there is an arrangement or
agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or the policy
benefits to a third-party. Trusts created to give the appearance of insurable interest and used to initiate policies for
investors violate insurable interest laws and the prohibition against wagering on life. (Gen. Stat. § 38a-465)
(2008).

Hawaii: "Stranger-originated life insurance" or "STOLl" means a practice or plan to initiate a policy for the benefit of
a third party investor who, at the time of policy origination, has no insurable interest in the insured, and includes:
 (1) Arrangements in which life insurance is purchased with resources or guarantees from or through a person or
entity who at the time of policy inception, could not lawfully initiate the policy by oneself or itself, and where, at the
time of inception, there is an
arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy,
the policy benefits, or both, to a third party; and
(2) Trusts created to give the appearance of insurable interest and used to initiate policies for investors. "STOLl"
does not include those practices set forth in subsection (b) of the definition of "life settlement contract". (Hawaii
Public Act 177(2008) (re-enactment legislation pending).

Indiana: ["Stranger-originated life insurance" or "STOLl" is] A practice or plan to initiate a life insurance policy for
the benefit of a third party investor who, at the time the life insurance policy is originated, has no insurable interest
in the insured. The term includes the following:
     (1) An arrangement under which, at the time of life insurance policy inception:
        (A) a life insurance policy is purchased with resources or guarantees from or through a person that is not
legally permitted to initiate the life insurance policy; and
        (B) a written or verbal arrangement or agreement is made to transfer the ownership of the life insurance
policy or policy benefits to a third party.
     (2) A trust that is:
        (A) created to give an appearance of the existence of an
insurable interest; and
        (B) used to initiate a life insurance policy for an investor. (IC § 27-8-19.8-7.8) (2008).

Iowa: ["Stranger-originated life insurance" or "STOLl" is] A practice or an act to initiate a life insurance policy for the
benefit of a third-party investor who, at the time of policy origination, has no insurable interest in the insured. (Ins.
Code § 508E.2) (2008).

Kansas: ["Stranger-originated life insurance" or "STOLl" is] An act, practice or arrangement to initiate a life
insurance policy for the benefit of a third party investor who, at the time of policy origination, has no insurable
interest in the insured under K.S.A. 40-450 and amendments thereto. Stranger-originated life insurance practices
include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or
through a person or entity who, at the time of policy inception, could not lawfully initiate the policy, and where, at
the time of policy inception, there is an arrangement or agreement to directly or indirectly transfer the ownership of
the policy or the policy benefits, or both, to a third party. Any trust that is created to give the appearance of
insurable interest, and is used to initiate one or more policies for investors, violates K.S.A. 40-450, and
amendments thereto, and the prohibition against wagering on human life. K.S.A. § 40-5002(l). (2008).

Kentucky: "Stranger-originated life insurance" or "STOLI" means the procurement of new life insurance by persons
or entities that lack insurable interest on the insured and, at policy inception, such person or entity owns or
controls, or has an arrangement or agreement to own or control, the policy or the majority of the death benefit in
the policy and the insured or insured's beneficiaries receive little or none of the proceeds of the death benefits of
the policy. Trusts that are created to give the appearance of insurable interest and are used to initiate policies for
investors violate insurable interest laws and the prohibition against wagering on life. STOLI arrangements do not
include those practices set forth in paragraph (b) of subsection (17) of this section. K.R.S. § 304.15-020.15
(2008).

Maine: ["Stranger-originated life insurance" or "STOLl" is] An act or practice to initiate a life insurance policy for the
benefit of a person who, at the time of the origination of the policy, has no insurable interest in the insured.

                                                             6
"Stranger-originated life insurance" includes, but is not limited to, cases in which life insurance is purchased with
resources or guarantees from or through a person who, at the time of the inception of the policy, could not lawfully
initiate the policy and when, at the time of policy inception, there is an arrangement or agreement to directly or
indirectly transfer the ownership of the policy or the policy benefits to another person. A trust that is created to give
the appearance of insurable interest and is used to initiate policies for investors violates insurable interest laws
and the prohibition against wagering on life. (MRSA Title 24A, Section 6802)

Ohio: "Stranger-originated life insurance," or "STOLI," means a practice, arrangement, or agreement initiated at or
prior to the issuance of a policy that includes both of the following:
(a) The purchase or acquisition of a policy primarily benefiting one or more persons who, at the time of issuance of
the policy, lack insurable interest in the person insured under the policy;
(b) The transfer at any time of the legal or beneficial ownership of the policy or benefits of the policy or both, in
whole or in part, including through an assumption or forgiveness of a loan to fund premiums.
(2) "Stranger-originated life insurance" also includes trusts or other persons that are created to give the
appearance of insurable interest and are used to initiate one or more policies for investors but violate insurable
interest laws and the prohibition against wagering on life. (OH Rev. Code Ann. § 3916.01)

Oklahoma: A practice or plan to initiate a life insurance policy for the benefit of a third-party investor who, at the
time of policy origination, has no insurable interest in the insured. Stranger-originated life insurance practices
include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or
through a person or entity who, at the time of policy inception, could not lawfully initiate the policy, and where, at
the time of policy inception, there is an arrangement or agreement, whether verbal or written, to directly or
indirectly transfer the ownership of the policy or the policy benefits to a third party. Trusts that are created to give
the appearance of insurable interest and are used to initiate policies for investors violate Section 3604 of Title 36
of the Oklahoma Statutes and the prohibition against wagering on human life. Stranger-originated life insurance
arrangements do not include the practices provided in subparagraph b of paragraph 15 of this section; (Stat. tit. 36
§ 625.1)

West Virginia: Stranger-originated life insurance" or "STOLI" means a plan or agreement that provides for both of
the following at the time of the origination of a life insurance policy.
(A) The purchase of a life insurance policy by an applicant primarily for the benefit of a third-party investor that
lacks insurable interest in the insured person; and
(B) The subsequent accrual, directly or indirectly, to that third-party investor of the legal or beneficial ownership of
the policy or the benefits of the policy. (Ins. Code § 33-13C2.18)

iv“There has been substantial criminal and civil litigation arising from the fraudulent activities known to occur in the
viatical settlement industry. See, e.g., Liberte Capital Group, LLC v. Capwill, 462 F.3rd 543 (6th Cir. 2006); Wuliger
v. Kelco, Inc., 2006 U.S. Dist. LEXIS 561, 2006 WL 51126 (S.D. Ohio, Jan. 10, 2006). It has been observed that the
‘risk of fraud’ is ‘somewhat common in the viaticals business.’ People ex rel. Wood v. Innovative Financial Services,
Inc., 2006 Cal. App. Unpub. LEXIS 1439, 2006 WL 392030, *3 (Cal.App. 4th Dist., Feb. 17, 2006) (unreported).




                                                            7
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 1 of 32



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                    A.S     O                 NAL JUDGM ENT
              BANK.N. ' M OTI N FOR SUM MARY FI                               i

           S       s feh          r on ait f u o f n anc mpan
                                            f        e
         THI CAUSE i be or t e Cou tup Pl n i Pr c Li I sur e Co /sj
   ' u o' ' t or
    '     ) on          yu
   (Pr c s' Mo i f Summar J dgmen I 1
                                 t DE 77)Cpr c s Mo i ' an t e Mot l
                                           u o' ton' d h
                                                      )          ion
                                                                     1
                                                                     l
   Qr nal    y             endantW elsFar Bank,N. ,as Securtes
   f Fi Summar JudgmentofDef         l go       A.         ii                 I
                                                                              l
   nt medi y DE 86) ' I g s tonn. e
                    ' s                     4s onsd ed u o'
   I er ar I 1 (W eI Far o' Mo i ) Th Coud h c ier Pr c s                     f
                                                                              l
     ton, l go' pon e DE 00) Pr o'
            s                          y DE 31 W l gos
                                                  s
   Mo i W el Far s Res s ( 2 , uc s Repl ( 21 , el Far '                      j
                                                                              l
     ton, uc s spon e DE 98)W l go'
                              s      y DE 4) t adi ' el ed
   Mo i Pr o' Re s I 1 , el Far s Repl I 21 , he p es r at
                                                           I
   u mi o s te ru n o c u s lth tb r 12 1 e r DE 4 Ja dj
       s                                          n
   s b s in ,h ag me t f o ne a teOco e 2 , 0 1h aigI 2 0, n i
                                                             l
                                                                              l
    he- se sed n he emi
   ot i advi i t pr ses.                                                      f
                                 .BACKOROUND
                                 I                                            q
                                                                              I
           s        i r he r      ent ocur            lon nsur
                                                       i
         Thi câse arsesfom t faudul pr ementofa $10 mil i ance                I
                                                                              !


     ic    h i f l
                f     en
   pol yon t e le o Ar e Ber (t e Ber Pol /) Pl n i Pr o Li I s an e
                           ger 'h
                               '         c        #
                                    ger i . ait uc f n ur ce
       any ' uc ' a bsdi y f ePrdeni Lf n r e
           '    )                     e         any Amer i,
   Comp (pr o'I su i ar o Th u tal i Isuanc Comp of    ic
                                                                              I
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                                                                              !
                                                                              I
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Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 2 of 32

                                                       l
                                                       l
                                                       I
   s u h i n 06. e ren wn d en ii y s endan W el Far k
             c
   is edtepol yi 20 Th cur to eran b efcar i Def   s
                                                 t l go
                                                       !
       , A.
   Bank N. (W S      )      t
            ' I gO' as ec ies n er di y
            ' eI Far ', s ur i it me ar .              i
                                                       j
                       A                       '
                                                          -.                  1
                        .               Fr n ance'
                                 ger ek '
                            MO.Ber Se s' eeIsur  '                            j
                                                                              !
        n 005, s. g an h hu ban Rihar Ber er a t ded a numb of I
        I2    Mr Ber er d er s d, c d g , ten              er
                                                     I         l
    emiar whc he e ne bou ' e ew onc 1 ha f ou e eal
                              wh
   s n sat iht y Iar d a ta ' ol n c ept(t tiy r h t yand   h  E
      r tn         tn     you
   you'e wihi a cerai age, coul getbasi l fee i ance f a num berofyear
                              d         y
                                      cal r nsur     or              :
                                                                              (
     '      ion f l
             i
     ' Depost o Ar Ber ( 1 -)( l eBererDepost 'a 46: 4 1
                  ene ger DE 81 1 ' en
                                  Ar   g     i )        .
                                            ion' t 24-7:1
                                                                              !
         ger    oac   hei
   The Ber s appr hed t raccount ,M ar Tar s, o i r aboutt s 'r
                               ant   k shi t nquie           f
                                                         hi ' ee              l
   i ance'concept I at12: 23* 15- 9. M r Tar s di notknow anyt ng
   nsur  '       . d.   19- ,46: 47:   . shi d               hi
                                                                              l
                                                                              '
                                                                              !
        he r nsur
   aboutt fee i ance,               ntoduced t Ber s t St
                                 he i r                        asner a
                                             he ger o even M .Br   ,          I
                            so                                                l
   i
   l       nsur e oduc
    censed i anc pr erwih Pr and ot cari s. I at42: 432 , 5- 9.
                       t uco      her rer d.      7- 5*          l
                                                         45: 47: j
                                                                              1
                                                                              1
     25- 0.
   58: 59:

           he i    s. ger                  or i nsur
                                              f          d.    6-
         Att tme,M r Ber had no need orwantf I e i ance. I at60: 11.

        d              at o ot t hat          ecl o he
   She di nothave an est et pr ec t was an- her ose t t amountof$10
    lon.
     l     d.
   mii See i at103: 109: Hernetwodhwas al
                  14- 25.                    ower han lon. n
                                                      l
                                        ways I t $1 mii I
             or nst e, he ger combi netwodh wasar
   June 2006,f i anc t Ber s'     ned                    000
                                                ound $600, or
    70 000,     t ar es h    0 lon.
                                l     sion f c d ger DE
                                        i
   $ 0, an amoun f I st an $1 mii Depo t o Rihar Ber I
    J ' c ar  g        ion' t 5: 9- 6:
                        i )
   1 (Rih d Ber erDepost 'a 5 1 5 1,
               ger        d      em um or he ger i
                                                 cy. l   ger
         The Ber s neverpai any pr i f t Ber Pol Arene Ber
         19-           s. gerdeci t I M r Br
   at 159: 23. W hen M r Ber                      sue nsur or ,
                                ded o et . asnerpur i ance f her

        d                   nsur          d ai                he em um
   she di notknow how m uch i ance he w oul obt n orhow m uch t pr i

      d     d.    25- 9. t      s.     . ger            nt i o
   woul be. I at58: 59: NeiherM r norMr Ber everhad any i enton t
                                           2
                                                                              I
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 3 of 32
                                                                              I
                                                                              I
                                                                              I
                                                                              l
                                                               l
        y emim or h ol d. t 9:025; c d ger
                      c                         a : 716. n a t
      an pr u f te p iy.l a 5 1 - Rihar Ber Dep. t7022- : I f cj
                                                         .
                                                                              d
      her         r
      t e wasno cicumst
                      ance underwhi t woul have pai a pr um f anypol yj
                                  ch hey   d       d emi or         c
                                                                    i
                                                                      !
       h t . as er t n     or oul h av     d emi           0 lon ol
                                                               l   c
      t a Mr Br n ob aied,n c d t ey h e pai a pr um on a$1 m ii p iy.;
        l     ger       22- , char  ger       23- 18.     y eason
      Arene Ber Dep.at59: 25.Ri d Ber Dep.at83: 85: The onl r
       hat s. ger     lng o
                       l       ong t hi nsur     an             t
      t M r Ber was w ii t go al wih t s i ance pl w as because iwas

       r or . l         ger       1 15.
      fee f her Arene Ber Dep.at60: 2-

             t      .     s.Ber everhad any i enton ofcontolng ork
           NeiherM r norM r   ger           nt i         r li        ng
                                                                  eepi any

      nsur     i ssued t ough M r Br
                cy
      i ance pol i     hr       . asneron M r Bei ' Ie. Arene Ber Dep.
                                            s. gers if    l     ger
          15- 1    char  ger       17- 3, 15- 20,84: 8- 18. M r
      at97: 98: 1;Ri d Ber Dep.at69: 70: 70: 70:   1 85:      s.

        ger ways knew t t pol woul uli at y be ow ned by a t r pady who
      Ber al                 cy
                      hat he i   d tm el                   hid
         d l he
             ect    h      i           ed f     ed t he r nsur
      woul col t deat beneftw hen she di i she di afert fee i ance
  '      i     l     ger       20- 16. ,Br
                               .                   ol s. ger
      perod. Arene Ber Dep.at65. 66: M r asnernevert d M r Ber who
                                                                              r
                                                                              I
      he tmat        he i cy  d     d.    1 20. s, ger
      t uli e owneroft pol woul be. I at66:7- Mr Ber neverasked j
                                                                I
       i o h wn r ud e nr i h ae d a6 :06 :.
      hmwh teo e wo lb ,o ddsecr.l.t 62-72                                    j
                                                                              '
                                                                              k
                                  . r- pi t
                                         c o
                                 B PeAp l ain                                 j
                                    l de nspecton Ser ces,a t r pary vendort
           O n Novem ber29,2005,W ordwi I      i    vi      hid- t         ha

       er is o eci n r d' ianc s d e
         f          v
      v ie a pr sp t e isu e sfn e an n twodh,a      t n or t  on,
                                               mong o herif ma i              I
                                                                              I
       o ltd n n p ci ep d n s Beg r n p ci p d DE 7 -)
                     o                     o
      c mpee a ls e t nR o o Mr. re .ls e t nRe o ( 1 86;                     j
       '
                                                                  j
                                                                  ,
                                                                              1
          sion f heen
            i            t f d DE 78 71 t eror     oston t 6: -
      Depo t o Kat l A.Ru heror I 1 - CRu h f d Dep ii )a 1 22 l

      75TeneiRpdte h Ms eewse ii rcf ea
       2 st  o ad a . g en sa rst
      1:.hIpcneost ttrBrras kgnuneo'tj
       I n g'hth a o te l n rneadhth a 2000 nul
       an               fs
                         e
      P ni ,tasehdn ohri i uac,n tasehda$5,0 ana l
                                                                              l
      ncome,$2. mii i r est e,$6 mil i st
      i           l
              5 lon n eal at        i             000 n sonalasset 1
                                   lon n ocks,$250, i per        s,
                                                                              i
                                                                              I
          000 n        s,
      $700, i cash asset $1 mil i Cedii esofDeposi,and $10. m ii i t al
                              lon n
                               i     fcat        t             l
                                                          45 lon n ot I

                                         3                                    1
                                                                              à
                                                                              I
                                                                              !
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 4 of 32
                                                                              I
                                                                              I




    s es n e wot. n p ci p I fhs nomai s as , u wh n s j
                         o                 o
   a s t a dn t rh Is e t nRe .AIo ti ifr t nwa fle b t e Mr.
                                                                              1
                                                                              .



    e ewsn ree o Nvm e2,05nonco wt h r aao fh
     g ti                     i h e e tn t
   Br raievwd n oe br820 icnetn it p pri ot
   n et eot h rv e h nw rtaMrBanrn i siatPtcI
    s o      ,   d                  s s    ip
   I pcinR prsepoi dteasesht .rseadh astn,ari
         ,    ol      ovi     i he l l         ger        7- 22,
                                                              q
   W agner hadt d herpr de durng t cal.Arene Ber Dep.at122: 124:
                                                              1
    2 1 1 925; t edor p. t 38: 0 1 :  e np t  on    t s ubmied
   1 7:8- 2 1 Ru h d De a 1 1 - 417.Th I s ec i Reporwa s t t
                                                              i
   o u o n u p d fh pi t o te eg Poi , n s o sd rd n
                        c o           c
   t Prc i s p o o teAp lainfrh B rer ly a dwa c n iee i                      1
   d                                                                          l
     t mi n et er o s u h ol . f t
                               c    da
    e er nig wh h t is e t e p iy Afi viofTh       r lDE 78 2
                                            omasFarel( 1 - 6)                 j
                                                                              I
   ' relAfi i' 1 1
    d        da
   (Fa r l f vf)! 7.                                                          I
        O                                                                     1
               emb 2, 05, i ok a
                           e
          n Dec er1 20 Lf Br er ge Equi Gr (LBEG', ihwas
                                      t oup '
                                       y    $   )
                                                ' whc                         j
     en u l i ed s h r er ener ag y h
          ys                                   g     i FarelAE 1
                                                      c
   ev t al I t a t e b ok g al enc on t e Ber erPol y, r l :4,
    der    if      ancy r
   or ed a Ie expect    epod on Mr Ber . See 1 / 3 20 Li Exp t nc
                                 s ger
                                     .        2 1 / 05 fe ec a y  I
                                                                  !
                                                                              I
      od DE 78 8 . Li pe t c epodsar u e t gau t e Ie ex c an yofa!
                     e
   Rep ( 1 - 1 ' f ex c an y r                     f
                                   e s d o ge h i pe t c
                                                                              i
    osp tve nsur     e     o cul e he i nsur e i n he
                                      f           c             yi
   pr ec i i ed and ar usedt cal at t Ie i anc pol y i t secondar
                                                                              j
                                                                              !
     r et or i n r e, e ong h n ur d' oeced i pe t c t e e s
             f                                    f
   ma k f Ie isu anc Th I ert e is e spr j t Ie ex c an y, h Is j
                                                                I
    alabl ol s i y o e n h ec
               c   k                   y k ec s f he on iuig
   v u e a p iy i l el t b i t e s ondar maretb au e o t c tn n l
                                                                1
                                                                              .



     i on o
      gat       em um            s or he nsur    es    he   h
   obl i t pay pr i overm any year bef e t i ed di and t deat


         1       l g j t oh
                  s                     r l davt au e Thoma Farel Vie
              W el Far o obec st t e FarelA#i ibec s '     s rl c,
    esi      fe
   Pr dentofLi Under ii atPr
                   wrtng        i,        scl           ental t s,
                           udentalwas notdi osed as a pot i wines
        t i td s        l b ( or r e epr enat t no edge hi
                                                v h
   wasno desgna e a a Rue 30( )6)c po at r es t ie wi k wl on t sr
   opi an s o ac t s t eron k wldge.
                      n     h                ' l go'
                                                 s
   t c, d i n taf twi es wi p s al no e 'W el Far sCouner t- j   '
    at          eral t n          ton o    o     ementPr s St em entof
   St em entofMat i Fac s i O pposii t and t Suppl     uco' at
     ti al t DE ) u o epi h ' es   Mr r l f i
                                           ' da        ub t d
                                                          t
   Ma er Facs ( 202 . Pr c r l t at' .Farelsafi vtwas s mi e on
   U hl rtng desi aed Miheb (F rn , rct s maPewas tf oabl t gn '
    e af f uo e ts a 30(Mcal d Pu ' c tr i no C l oao
          P gna                a           e :d       r re
   bnde-oiirc bcueasca l)6)deponentiosVi ters e unavaip e t si û
                                     n hi
   h fdv r t h i f rc' u rjdmetr . rc' epneô
      i to      l
                n                e'
   teafaipirotefigoPuossmmayug nblf PuosR sos t
       l go' di al t i cs DE 2
       s           i       al               1 . Far  and so i ed
   W el Far sAd ton Maer Fa t I 21 )at2n..Mr Mc l al sgn I
       fi t op ig . r l fd i
         da                '      .     f t
                                         da     ch Mc l d DE 2-
   an a f viad tn Mr Farelsafiavt SeeAfi viofMi ael Faran ( 21 1
    ) er f e, h      t onsder h    rl f t
                                       da        s be vi ce.
   1 .Th e or t e Cour c i st e FarelAfi viasadmisil e den       4
                                                                              I
                                         4                                    I
                                                                              I
                                                                              I
                                                                              /
                                                                              I
                                                                              I
                                                                              !
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 5 of 32




    en ft omes p abl ' FarelAf.11
   b e ibec          '
                ay e, r l f 1 4.
                 y             le     he edecessori i er tt Bank of
         On Januar 25,2006,Lasal Bank,t pr        n nt es o

        i   e- oved t Ber Pol f a non-ecour pr i fnanci I
   Am erca,pr appr  he  ger i or
                             cy       r   se em um i  ng oan

   '      oan' whc
             )      l e dmi ser y v ty         oane y
   (NRPF L ', ih woud b a nit ed b Co en r and l d b Bankof
      ic          en r ter           an or DE 75-    o eran oo8
   Amer a. See Cov tyLe t and NRPF Lo F ms I 1 25 atPr v i - s-
    095, 0 . n onn t t h
                    on h         oan, e l
                                        en  ger 6 f
   0 01 9) I c ec i wi t e NRPF L Th Ar e Ber 200 Lie
   ns anc u t ' us' '   d e r t d o a e wn s p t e ger i an  c
   I ur e Tr s (Tr t)woul b c ea e t t k o er hi of h Ber Pol y, d ;
                                                                              E
      emi i n ub tu t . - u t) l s
            nan          '        '              r at d. d. t ov i
   a pr um f cig s -r s (Sub Tr s ' woud alo be c e e l a Pr er  an           l
     3101 01 - 23.    0 lon ol
                         l    c    s. ger i
                                         sf      d e tn
   01 - 38, 11 01 A $1 mii p iyonM r Ber ' le woul b ob yied
    r   uco,t Tr woul ow n t pol and t Sub- ustw oul appl f t
   fom Pr   he ust  d      he i cy,  he   Tr       d    y or he

   NRPF L    i    ov i 95, ov i
                      an       an- 3l ol Pr er 01 01
                                              an
         oan.l atPr er 00 Pr er ol - 38, ov i - 22- 23. For
   he ist wo s, he i em um
                    c
   t fr t year t pol y pr i woul be fnanced w ih Bank ofAm erca as t ë
                               d     i        t              i     he
                                                                              !
   e d rte rs a h or ra d o e t s h rga d ns ao, t
                   o           y                t
   Ine,h Tut steb r we, n C v nr a tepo rm a miirtrK a 1
    rv r -0 80 9 e
        a                 o n ud e eae nee t t ih ae. e
   Po ein0 8 -0 5.Th NRPFL a wo l g n rt itrs a ahg rt Se K l
    t ov i o
          an
   a pr er - ogs,                                                             I
                                                                              I
              t he             ogr    s. ger     ed     horzaton o
         As par oft NRPF Loan pr am ,Mr Ber execut an Aut i i t

      ea e  c Rec ds nd    i Ir oc l wer f t ney DE 75- 1
   Rel s Medial or a Specal rev abe Po o Ator I 1 6
                                                               l
   ' wer Ator e ' t - 281 0 2. . g ex u e
    '           )                                  r wers   i
   (Po of t n y' a W F 0 - 28 Mr Ber er ec t d a Boro ' Specal l
                                                               i
   r v c be we o At n y DE 7 -5 t o er - 0 -1 6 (Borwe' wei
    r              o                  a          '    s
   Ie o a l Po r f tre I 1 52 a Prv in01 50 0 )' ro r Po r
                                                                              I

    f t ne ) s t y,he wer Atore d r '
                  al                                f tr e
   o Ator yn.Es eni l t Po of t n yan BorowersPowero Ato n y                  j
                                                                              i
    aced Coventy i posii t hol contolovert Ber Pol y,t NRPF Loan,andl
   pl          r n    ton o d      r     he       c
                                             ger i he

   he us   or he
   t Tr tbef e t Appl i was eversubm i ed ort Tr w as evercr ed. Se
                    i on
                     cat             tt      he ust        eat

      t o i 008 01 8.
             an
   K a Pr ver - 5- 3                                                          I
                                                                              !
                                         5                                    i
                                                                              l
                                                                              I
                                                                              I

                                                                              !
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 6 of 32




                   oan s v u l s ue
                               y        e e dSecu i Agr emen I
         The NRPF L wa e ent al is d. Se Not an   t
                                                 ry e       t DE
    78- t    e ger v n w he       n s r e f he        oan ha
   1 4)a 2.Th Ber sne erk e t amou tor ou c o t NRPF L t t
    tm el d he em um or he   ger i
                                 cy. l     ger        3-
   uli at y pai t pr i f t Ber Pol Arene Ber Dep.at113: 24.
                                                                              7
    s g s a ed t er ost h he d o no edg f r t eig ea ej
                           i
   Mr .Ber er t t a h dep iont ats ha n k wl e o atus b n cr t
       i                   nt n i      l     ger        21 23. NeiherM r
   bearng hernam e atany poi i tm e. Arene Ber Dep.at135: -      t     .

    asner Ms.W agner norM r Tar s everdi
   Br   ,          ,       . shi       scussed anyt ng havi t do wih a I e
                                                  hi      ng o    t i   f

   nsur    r    t s. ger d.         24- 2.
   i ance tustw ih M r Ber . I at135: 136:

                                        i i
                                  C.Applcaton

                uar           s. ger      . asnersubm it t Appl i
         O n Febr y 21,2006,M r Ber and M r Br         ted he  cat
                                                              i on

    u o. i t or f ns an e
            c on     e           ic     ge DE 78 5 ' c ton )
                                                   Appl
   Pr c Appl a i f Li I ur c orPol yChan I 1 - )( ia i n.
    ong t h pl ton, . a er ubmi
                c               t      i n or i or DE 78 5
                                        en       on
   Al wiht e Ap ia i Mr Br sn s ted a Cl tl f mat F m I 1 -
    t u- 9- ) e es tn h t h 0mii ac l          n h       ger ic
   a Pr 5 60 ,r pr en ig t a t e $1 lonf e amou toft e Ber Pol ywas
               ' e
               est     ysi ' hat he pose oft i ance was ' at
   based on an ' at anal s, t t pur         he nsur     est e
        vaton, hat s. ger
              '           d     he em um hr      ' ent ncome or
                                                 cur
   conser i 't M r Ber woul pay t pr i t ough her' r i
    a n c t' d h h ad 74, n nu ic
                '                                  0, n as
   s vigsac oun ,an tats e h $2 000i an aln ome,$70 000i c h                  I
    s et $700,00 i s vi s, $2. mii h
   a s s,                        l   7 lon n n t t an
                                       l
             0 n a ng a 5 lon ome,$ m ii i ivesmen s, d                       l
                                                                              1
       000 n sonalpr t On Mar 8,2006,Ms.W agnersubmied t Pr
   $250, i per     opery,   ch                      t
                                                   t o uco,
                                                                              I
   ho g BEG, f ni Fia ca Sae n ( 7 - 1, e lo 30 /6
              d a
   tru hL aConie t l n n il ttme tDE 1 81 1s eas 0 /80                        l
                                                                              i
      l DE 78- 0 , ch, es t , shi s gnat e,    t ed     . asner j
   Emai( 1 1 1 whi d pie M r Tar s' si ur was aler by M r Br    I
                                                                              I
     d W ero ow h t s. g ad e t f 5.5 lon, ost    l      i
   an Ms. agn t sh ta Mr Bererh a n tworho $1 9 mii Dep ioq
    f r a gnerI 1 - )(W a
        c
   o Patii W a         d        ost ' 6:- 7. h
                                  i )
               DE 79 1 ' gnerDep ion' at9 1 97: Suc                           I
   r esent i gr y over at M r Ber ' ac ualnetwodh, See Contnued
   epr   atons ossl  st ed s. gers t                       i
                                                                              I
                                                                              :

      ost
        i Ar ene g DE 8 1 ' ene ger ost Con i '
                              Ar          i    nu )
   Dep ionof l Ber er( 1 2- 1( l Ber Dep ion, t ed' at
                                         6
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 7 of 32



     2- 6. char    ger       19- 1.           es ii hat he pos
   41: 43: ,Ri d Ber Dep.at55: 56: M s.W agnert tfed t t pur e

   or n ltn s, g ' et          o u tyf     i t gher ac
                                            c h
   f ifa ig Mr Ber ersn wodhwast j s i a pol ywi a hi f e amount
   han hat or ch s. ger dact l
                             y  i
   t t f whi Mr Ber coul ual qualybecause t pol wasevent l
                                 f        he i cy      ualy
   o                       her han he ger              15- 25,
   t be owned by som eone ot t t Ber s.W agnerDep.at125: 126:
    29:0
   1 1                                                                         1
           6.   or he emi      ,             ai              ton
       130: Asf t pr um payment Ms.W agnerexpl ned atherdeposii j
         -


                                                                 I
   hat . asnerdesi
   t Mr Br            he em um
                 gnedt pr i aswhathe cal '
                                       l smoke and m ir s,
                                        ed             ror '
                                                           '     !
                                                                 l
                                                                 !
             9
             $
       ig ha e h len y tt t    t ear o 1 ome r h i h eor
                                                  en
   meann Ilv te ci tpa i,ha wayiapp st (c fom tecl tterf :
                                                                               !
   t      t           ed l       n
   i doesn' cause any r fags. So i essence,. iwas t m i ead. I at129:
                                             t    o sl ' d. '       23-        i

      6
   130: .

                                 ger i ssuance
                             D.Ber Polcy I

           yi      he nspec i Repor,t Appl i t Cl I or aton For ,
         Rel ng on t I     ton     t he   cat     ent
                                         i on, he i nf m i    m

       he nanci St em ent Pr i
   and t Fi   al at                  he  ger icy,
                         , uco ssued t Ber Pol num berV1208044,on

     lne g ' i n he
             sf          n f 0 lon,
                                  l      i27, 06. arelAE 1 '
   Are Ber er Ie i t amou to $1 mii onAprl 20 F r l 1 11 j ,
                                                                               l
     ger i DE 78- 3 .
         c              lci he g     i Mr as er n
                                     c
   Ber Pol yI 1 1 1 Forpa ngt BererPol y, .Br n eared a                        I
     9 ,3 7 o s in a d BE te rk r e ea a en y e re 3 8 8.51
   $1 53 7.6c mmiso , n L G,h bo e g n rl g c , an da$ 4,5 2
                                                             I
    omm s on. r l      e ger i s i ed
                               c      v         i28, 6, d
   C isi FarelAE $ 4.Th Ber Pol ywa del er onAprl 200 an !                 '
                                                                               !
     nt pr um y t
       i                  8 . s de       y 2006.Se I tal
   aniial emi pa men of$81,7175wa ma onMa 2,      e nii                        j
                                                                               i
    emim   ei d k o ed
   Pr u Rec ptan Ac n wl gmen ofLi I s an e Pol y Del er I 1 8- 41 i
                             t f n ur c
                                  e           ic     v
                                                    i y DE 7 1 .I
         Th                                                                    1
                  he nii em um    pt efect hat he nii em um
             ough t I talPr i Recei r l ed t t i talpr i payment '
                                                                               1

     s ec v d r  s. ger e      Cov ty t l y    he ymen .
   wa r eie fom Mr Ber ,s e K , en r acual madet pa   t                        j
   S                                                                           !
       fcaly,     r r      871. o nfniy'           ,        ness Cash I
    pecii l Coventywied $81, 75 t I i t sbankaccount see Busi
                                                                               I
       ger ec ig a emen ( 1 - 61 aqer ch Mr Br ner t ou Ifnt , !
   Mana Ch kn St t     t DE 78 1 ,   whi  . as , hr gh n iiy
     r     or      ers      o              e o uco n he         ,
   aranged f a cashi ' checkt be made payabl t Pr i t same amount see I
                                         7
                                                                              I
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 8 of 32
                                                                              I
                                                                              I
                                                                              l
                                                                              l
                                                                              l
    //6 nit ek 0 8 n //6 coi ahe' ek D 7-7. h uj
         ny                        s
   510 If i Chc 14 a d520 WahvaC sir Chc (E181)T og
      l g ar t i
      s            z
   W el Faroch acer esCo enr' pa
                        v tys ymen a an' dv c '' behalo L l i
                                  t s ' an e''
                                       a       on           e
                                                     f f asal
   f                                                                          I
    rh nt l rmim a men . .whc l s o ma e o o c a pe u
         i
   o teiia pe u p y t . I ih wa n t d t c n e l rmim                          j
    i   ngr' l
   fnanci 'W el Far s Count - at entofM at i Fac s i O pposii t and t
               s go'      erst em        eral t n          ton o    o
                                                          I
     ppl t uc ' aemen f t i    al t DE 2)' I go'
                                          ' s          t-
   Su emen Pr osStt to Maer FacsI 20 (W eI Far sCouner I
                                                          I
    ae n O a tD, . g e tsie h th nt l rmim a me t s
                              f        i
   Sttme t fF cs) Ms Wa n re tidta teiia pe u p y n wa    1
                                                                              l
   d                                                                          i
      i ed o sl d d o ev t au ng ed lgs    ig t eem i he
    esgn t mi ea an t pr en c si r fa bymakn is Iet k                         i
                                                                              I
                r   s. ger                 10- 2,
   paymentcame fom Mr Ber ,W agnerDep.at129: 130:                             I
                                                                              i
                                                                              !
                                       -ssuance
                                 E.Postl

              han     h t he    ger i
                                    cy    ssued,on June 5,2006, he
         Lesst one mont afert Ber Pol was i                    t

    ut      ial s
               z       u t eemen ( 1 1 1 and onJun 3 20 t
   Tr s wasfn ied, ee Tr s Agr  t DE 78- 8 ,      e 0, 06, he
     ger icy'               i ar             o he ust        im i
   Ber Pol s ow nerand benefci y was changed t t Tr ,see Confr aton of

     an       er hi DE 78 1 . er fer on l 7, 6, h t
   Ch ge ofOwn s p I 1 - 5) Th ea t , Juy1 200 t e No e and
     eemen ( 1 - or ii t NRPF Lo was e ec t Banko Amer a
   Agr                   z
          t DE 78 4)f mal ng he an    x u ed.    f   ic
   hen ssuedt payment pur
   t i      wo             o he                   077.        o
                    s suantt t NRPF Loan- one $331, 29 paymentt
    uc s emi or he ger i s / 7/ 6 r anser DE 78 1 , d
                           c               e
   Pr o a pr um f t Ber Pol y, ee 7 1 0 W i Tr f ( 1 - 91 an
    ec d   8 75 he ay e o s.Bér , ee 7 1 / 6 L l Ban Ch k
   s on $81,70. c ckp abl t Mr ger s / 7 0 asale    k ec
    6270 DE 78 2 . on ec p t     8 75 he , s. g , t .
   0 77 I 1 - 0) Up r eitof he$81,70. c ck Mr Ber er a Mr
    asners diecton, entt M r Br
   Br    ' r i w                ' fce         sed he        o
                       o . asners ofi and endor t check overt

         l     ger        20- 20. . asnert
   See Arene Ber Dep.at153: 154: M r Br          t he        nt
                                         hendeposied t check i o

   n i y' c oun , ee n i t
     ni                  y k or ul 6 DE 7 21 , d o e h k
   If t s a c t s Ifni Ban Rec ds J y200 ( 1 8- ) an wr t a c ec
   pr 870, o           r fl e o ei se
                           i                 r or he is emi
   f $81, 75 t a Coventyafiat t r mbur Coventyf t frtpr um
    ay t s e n i t yn onBeac Ch k 1
                 y
   p men , e Ifni Bo t               da e / / 6 DE 78 22)
                            h ec 058, t d 7 20 0 ( 1 - .
                                         8
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 9 of 32




         n    i           r
         I Aprl2008,Coventy subm i ed t Ber Pol y t a pot i secondar
                                 t he
                                  t            c
                                          ger i o       ental      y

    u er or eve     2 08 ' ofer viw'Emai( 1 - 9 .Th i May
                          Pr
   b y f r iw. See 4/ 2/ ' e- f Re e ' lDE 75 1 1 en,n
                                                                              !
        t è ame mon h t a t e pol ysc esabit per e r Mr Br ner r dl
   2008, h s       t h th       c          i    od
                                i ' ont t ly i xpi ed, , as wie
                                                                              !
                                                                              i
        828.        o he ger or            i     ' nsur
                                                 an
   a$172, 86 paymentt t Ber sf whathe descrbed as' i ance                     !
    sburement' See Ber s'Fi i AccountSt ementandFi iyW ie Recor Ma#
   di s      ,       ger dely
                            t         at         delt r       d,
                                                                              i

      8 DE' 78 23,1 87 41 c ar g    at 22- 1     c dig o
   200 ( s 1 - 7 2 ;Rih d Ber erDep. 95: 97: 1.Ac or n t Ms.
         , i ent n . asners schem es wer t d t t coul possi y getm or
   W agner cl s i M r Br  '            e ol hat hey d     bl        e

          f hey t or he wo-      es abit
                                       i   i o     r      hen d hei
   m oney i t waied f t t yearcont t ly perod t expie and t sol t r
     ic     he ondar m ar et W agnerDep.at273: 274:
   pol y on t sec  y    k .                  19- 22.

               t      5, 8,he y ef e oan t i , s. g gn
                                             t
         On Sep ember1 200 t da b or I m a ury Mr Ber ersi ed an
   rev a e l ns r c i eter DE 75- 4) r i s ng I i s n er t
               er     on               nqu      gh
   Ir oc bl Sel I tu t L t I 1 2 , el ihi aIr t ,it ess,
       s,      il
   power and prvi     n he us        Tr tt       r      t he ac hat
                 eges i t Tr tand Sub- us o Coventy,despie t f tt sh:
                                                            I
    a r ady gn h wer t n ear ef e. e a            ay, s ger 1
   h d ale si edt e Po ofAtor eyy sb or Th s m e d Mr .Ber
                                                                              I
        ed             ementt Tr Agr
   execut a Second Suppl    o ust eement per tig Mr Ber t sep
                                       ,      t
                                           mi n . gero t                      I
                                                                              j
    o s rse       pt h a th . g a r y i h rwe' I
   d wna tu te des i tefc tatMrBererh dal ad sgnedteBoro r, I
                 ,  e                    e                f
                                                                              I
     wer f t ne ear ef e. z        s a er on t     7, 8, y
   Po o Ator yy s b or Seei Two day It , Sep ember1 200 Ban
                                                           i
   f mei et oi o h rstate rs' bi t o ea h F o n
       c     c              s go
   oA rasnntet teTuthth Tut o laint rpyteNRP La 1
                                                                 !
       at i y h u t el s men f h
         s ed         s n
   wass if b t e Tr s ' r iquih to t e Ber Pol y t Banko Amer a. I
                                         ger i o
                                              c         f   ic
                                                                 i
     e t aci
        s       i DE 75 2 .
                 c
   Se Saif tonNot e( 1 - 0)                                                   I
                                                                              I
           ee f , n c mb r 2 0 , n f r n v nr t e no l
               e                         c          y
         Th ratrO De e e 9, 0 8 Ba ko Ameiaa dCo e t enerdit a
      ef ar S eas d s to
        c                         ge ef ar f i ns anc i DEI
                                       c      e           c
   Ben ii y' Rel ean Con en t Chan Ben ii yo Lf I ur e Pol yI
    75 6 t 0 ) e ol ng , n emb 0, 008, v ty
                         o
   1 - a W F- 283 . Th f lwi day o Dec er1 2 Co en r                          I
                                                                              !
   epr   atve    ca
   r esent i Jessi Bunsi cal Pr r di t Ber Pol and Pr s
                       ck l ed uco egar ng he     cy,
                                              ger i   uco'
                                         9
                                                                               I
                                                                               l
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 10 of 32
                                                                               I
                                                                               !
                                                                               I
                                                                               I
      l er      oyee Tawanna Holi ans ed t cal. See Afi tofTawanna
    calcent em pl               ls wer he l          fdavi
         l DE 78 1 ' I f f) 1
          i
       HolsI 1 27 (HoIsAfi i'12,Ms, sc di n i tyh s fasc l t
                 -
                   ' i dav                       f        i
                                   Bun ik d otdeni erel alngj
    f                                                                          !
       om      r ns ead,she sai she was ' l fom W i i on Tr Company. I ,
       r Coventy;i t          d         ' i r
                                         calng     m
                                                  l ngt   ust       ' .
                                                                   ' dI
                                                                               i
    1 . , l eie ,ho g d nic t u si s ta s e s p a ig t h
            i f
            s                f o      o                     h
    13 Ms Hol v rid tru hie tiainq e t n ,h t h wa s e kn wi ti
                                                                               l
     utwhc s a te i h oi
                   me,  c
    Trs, ihwa ,th t tep ly            ' ow ner
                                      s       .   I.1 .Ha Ms Hol k o s e i
                                                  d 14 d , ls n wn h
                                                               i
   '

        al ng o        r     oyee,and notsom eone fom t Tr ,she woul not 1
    was t ki t a Coventy em pl                     r he ust        d
                                                                         !
    h                                                                          I
        v rvd d n nomai b u te eg r oi n h n e ta s e i.J !
                      o                 c
       aepo ie a yifr t na o th B re P lyitema n rh t h dd l=
    5. Butbecause she bel
                        i    hat            ng o he icy    ,       wer q
                         evedt she was speaki t t pol owner she ans edj
                                                                       i
        tons       he ger i ncl ng he
                              c                  r      ue
    quesi aboutt Ber Pol y i udi t cash surenderval and account ;
     ue, nf maton  he em um     s, he   hl        nsur
   val i or i aboutt pr i payment t m ont y costofi ance and

    nt est at whet t e wer I orassi ent agai t pol and she
    i er r e,    her her ei ens   gnm s           cy,
                                           nst he i

     on i
        r   h t h us
    c f med t a t e Tr twast p iyben ii y. l ! 6.W hen Ms Bun c
                           he olc     c
                                    ef ar d. 1           . sik
    s éyou pl
    g
    S ouj            im hat nce he i s
                                   cy   he wo      k, hat t s
            ease confr t si t pol i pastt t yearm ar t i i past

     ont t ly n ci '
            i                  li     im
    c es abit i sui de?, M s.Hols confr ed t ' es,i i pastt M o yearm ar '
                                           hat '
                                               Y  ts      he           k.'

    d. 1     , l d o n wl ge
                 i                p t t h t n or t
                                        on               on   d
    I 1 7, Ms Holsha n k o ed orex ec a i t at he if m a i woul be
    n       ton t        e he    ger ic    he     i al nt est her n n he
    i connec i wih any sal oft Ber Pol y ort benefci i er t ei i t

          y    ket    d
   secondar m ar ,nordi she i end t i
                            nt                   t o chase t Ber
                                  o nduce any pary t pur   he  ger

    n h ec dar     k t Z I 3, 4.
                            I
    i t e s on y mar e . l I! 1 1 She h nok wl e orex ec a i ofan
                                       ad  no edg    p tt  on    y
      em at         ng       y    ket r   ton nvol ng he ger i
                                                             c
   cont pl ed orpendi secondar m ar tansac i i vi t Ber Pol y.

   1 5. e de epr en a i ega dig et er h
                         on                  ger ic
   1 1 Sh m a no r es t t s r r n wh h t e Ber Pol ywas
                  nsur e nt est ncepton,nordi M s.Bunsi ask anyt ng
   suppoded by an i abl i er ati     i      d         ck        hi

    n abl n er t d.1 6.
    isur e it es . I 1 1
                         2,                i W l     go,     G f
           O n Decem ber1 2008,Bank ofAm erca, els Far and A I Lie
                                         10
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 11 of 32




      tl t (he pr es ori it e tofW el Fa go' ci t L asone , t e
    Se temens t edec s n n er s      s        en
                                    l r s l , av t ) en er d
    no iari t l t der DE 79- t - 41 - 7) ' i i d '.
              t    t                             d part     '
    it a Trp te En iemen Or ( 1 9 a W F 0 1 041 (Tr te Or er)
         i tt der l or
             e      ed      one o    048 l6n n
                                         l          i t
   The Trpari Or cal f Lavast t pay$1. mii i connecton wih
        rng he ger i d.Thi fgur i uded,am ong ot f t sal prce
                    cy.
    acquii t Ber Pol I   s i e ncl             her ees, he e i
   or he icy,   i nat ee d o      r         em um ei  sem  o
   f t pol an orgi orf pai t Coventy,and a pr i r m bur entt

      v ty.        t 0 5 0 6.
    Co en r See K a W F- 41 - 41
            enty ci l
                    y chased t Ber Pol fom Bank ofAm erca on
         Cov r o#i al pur    he       cy
                                 ger i r               i

       emb 8, 8.     i n r c
                      e          ic ch e eement( 1 - 4J
    Dec er1 200 See Lf Isu an ePol y Pur as Agr DE 75 1 .
     nal
       y,                     uco ec v   equestt change t ownerand
    Fi l on Decem ber24,2008,Pr r eied a r     o        he

        i ar   he  ger i
   benefci y oft Ber Pol y once agai t stm e t W el Far as securtes
                        c          n, hi i o      ls go,        ii

    nt medi f Lavast
    i er  al or                    or              shi          i ar
                   one. See Requestf Change ofOw ner p and Benefci y

   DE 78 25 t 00351 0 21 Pr o pr es ed t r es an c fr t e
   ( 1 - a PRU-    - 035 . uc oc s he equ t d on i  med h
                  y                t                  shi          i ar
   change on Januar 9,2009. See LeterRe:Change ofOw ner p and Benefci y

     75 25 t 0 )
    1 - a PRU- 0350 .
                                ai
                         F.Com pl ntand Pr      al st
                                          ocedur Hi ol

              y         uco ied t i countCom pl ntagai Def
                                s
         On Jul 9,2010,Pr fl i fve-           ai              s    l
                                                     nst endant W els

     ar nfnt nan al ou C n i t ' n i t s icial . a er Ifni
             y                   y)     y                       y'
    F go,I ii Fi ci Gr p LL Clfni ',Ifni ' prn p ,Mr Br sn ,n i t s
      o e, k Tar hi an ohn es - 0.See Compl n ( 1. Th Cour
   emplye Mar A. s s, d J Do 1 1          ait DE ) e     t
     t ed   f t nal dgmen I 61 agai tMr Br n and Ifni onJan y
   ener a De aulFi Ju    t DE ) ns . as er       ni ty     uar
     2011 d t e       d s s n f dan        k Tar s DE 3
   4, ,an en er d an Or erDimisig De en tMar A. shi I 1 6)on
               di y, l  s go s he y em ni       endant Pr brngs onl
   6,2011. Accor ngl W el Far i t onl r ai ng Def    . uco i      y

    ne oun ais   l go:
                  s        t f ecart y ud     t ha h    ger
   o c tag n tW el Far Coun Iord l a or j gmen t tt e Ber
   acked an i abl i er ati
   l                           i      s her or d      nii      l
                                                               s go
            nsur e nt est ncepton and i t ef e voi ab i to. W el Far
                                         11
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 12 of 32
                                                                               i

     ing       t cl m DE f e i    gen s epr en a i n t uc
    br s a Coun er ai ( 73) orn gl tmir es t tonagais Pr o.                    '
                                                                               l
         n h n t t ton ea a* eek mmar j dgmen on t e decar or '
         I t e is an Mo i s, ch p s ssu yu   t h        l at y
   ud    t ai     ecf al u o gu h t e g
                    i y                          i s oi nio or
                                                  c             i
   j gmen cl m. Sp ic l,Pr c ar est at h Ber erPol y i v d ab i t f
                                                                               !
    a k f n n ua l ners th oi ' n e t e a s h oi s g r
                             c       o           c         n
    Ic o a is rbeit e ta teP lysic pinb c u etep lywa awa eij
                                                                               E
       r t wher W elsFar cont
   contac ,   eas   l go         hat he i s i
                                        cy    d. uco so ai hat
                            ends t t pol i val Pr al cl mst l
             '
                                                                               !
    t s ie o et n he em um
           t                        s,      l go equest a r ur oft i
                                             s
    i i ent l d t r ai t pr i payment butW el Far r   s et n he

     r u t s ai n l uc sMo i e s mmar j dg
                         y,
    p emims iha p d. Fial Pr o' ton s ek su          nh
                                            y u mento t e
       i
    negl      sr esent i Count cl m ,butW el Far cont
        gentm i epr  aton    er ai          s
                                           l go          hat sput
                                                    ends t di ed

   su       t i a t e ud ummar j
               al
   is esofma er f c pr cl es         t h        t cai z
                             y udgmen ont e Coun er l m.
                               I
                               I. LEGAL STANDARD

           der eder Rul viPr c e 6( , he   t      an m y
         Un F al e ofCi l o edur 5 a) t Cour may gr tsu mar
   u      t' h v t o h t h e sn en ne sp t
           if                                          o y erala t
   j dgmen ' t e mo an sh wst a t er i o g ui di u e ast an mat i f c
     d h v s ied o udt           tas  ter f a '
                                              '     Ci P. 6( .
   an t e mo anti ent l t aj gmen a mat o lw. Fed.R. v. 5 a)
              '
              bear he nii esponsi ly ofi or i t di rctcoud oft basi
   The m ovant' s t i talr        i
                                bit    nf m ng he sti        he   s

   ts i on, den i igt os
                f          on t e ec d) chi el ev       srt
   i mot and i t yn h e podi sofIh r or whi tb i esdemon ta e
   he                ne ssue ofm at i f .
   t absence ofa genui i          eral act'
                                          'Cel ex Cor v.Catet,477 U.
                                             ot     p.     rt      S.

     7, 23 1 6)   s ar hi ur en,hemo antmu ts w t a 'h e i an
   31 3 ( 98 .To dich ge t s b d t  v                t
                                          s ho h t' er s
     s e f ienc osu or h       - ig adys as ''
   ab enc o evd e t pp tt e non movn p ' c e. % at325.


         2          l
                    s go y nt        o sue t      er ai f uco evais
                 W el Far onl i ends t pur is count cl m i Pr pr l on
   h car t y u men l m.          l g s p e o u o' ton o
                                 s
   t e de l a or j dg tcai SeeW el Far o' Res ons t Pr c sMo i t
     s s DE 0) 6 1 ' s s n t or opost
                        '       her         i     l go eek h
                                                   s
   DimisI 9 at1 - 7 (Thi i a ei / pr ion.W el Far s st e
              f ed n el
   damages sufer i r i          uco' sr esent i and om i ons onl t t
                       ance on Pr s m i epr     aton       ssi   y o he
     ent hat hi     t   ar he i
   ext t t s Cour decl es t Pol y voi ab i to. Ther or t Cour need not
                                   c   d    nii      ef e, he  t
       es    l go'
              s        n er ai )f t ul    n t u o t ecar or
                                                      s
   addr sW el Far s Cou t cl ml i ir esagais Pr c on i d l at y
   u      t l m .)
   j dgmen cai .. '
                                         12
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 13 of 32



           t he               t   den,t bur ofpr
         Afert m ovanthas m etisbur   he den       ton f o he
                                                         t
                                               oduc i shi s t t non-

       ng
    movi pady,who ' tdo mor t si yshow t t e i some Met
                  '
                  mus     e han mpl    hat her s            cal
                                                       aphysi
       b soh     eralacs. s hi ec.n s. v. t di n.4
                         'Ma    a               h
    dou ta t temat i f t ' tus t El Idu Co. Zeni Ra oCor , 75)
      S. 7 86 1 86) 'I     ai o oper ppodana s onof a torf l t l
                             s      y
    U. 5 4,5 ( 9 .'fapadyf l t pr l su      s edi f c ai oIs
     op l ddr s ot er
         y               ' s eri f t t e d y an mmar
                                on
    pr er a e s an h padys a s t of ac Ih Cou ma )gr tsu y                     !
                                                                               !
   u       fh     i d u
                   on        n t i s n ldi h ac s onsder d
   j dgmentit e mot an s ppodig ma eral- icu ngt e f t c i e                   E
      dipu ed o ha h va t s t l o t' ed. Ci P. e)3)
                                   t
    un s t - sh w t tt e mo n i en iedt i. F R. v. 56( ( .
           h mmar j dgmen s a t e Coursf ndi i n tt ' gh t e
         Att e su yu     t t ge, h   f u on s o o ' wei h
      dence and det m i t tut oft m aterbutt det m i whet t e i a
    evi           er ne he r h he     t    o er ne      her her s

     enun s e or r ' eron . bery ob . n ,
                  al                          S. 249 1 86) n i
    g ie isu f ti . And s v Li t L by Ic.477 U. 242, ( 9 . I .
        ng hi er naton
    m aki t s det m i i                                                        !
                          ,   h                               al
                                        s ci ih s es e er an ' l y  I
                              te Coud mu tde dewhc isu ar mat i , d'onl
                                                                               I
    s t v a t h gh f the to           h ui nd he v nig a ù
   dipueso erfcstatmi tafec t ouc meoftes tu ert go er n Iw wi l
                                                               I
    op l ecl e he ty f mmar j dgmen Factualdi es t ar ir evant i
        y
   pr er pr ud t en r o su   yu     t       sput hat e rel
                                                .

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    r neesr I o b o ne . da 28
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   o uncsaywintec utd'I.t4 .                                                   1
                                     1.
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                                          ANALYSI                              r
                                                                               I
           e adi Mot or
                    ons     r dgmen r s t r isu ( )wh h t e
         Th p es' i f Summ a yJu   t aie h ee s es: 1 et er h
    B                                                                          I
      g    i s oi nio orac
           c           i          n urbl ner t ( fhe i s oi I
                                                      c
     ererPol yi v dabi t f I kofanis a eit es;2)it poly i v dabj
   nt wh h
     i        u o s e ur l     s go' r u ay t an 3             t er j
   iio, et erPr c m u tr t nW el Far s p emim p men s; d ( )whe h
                                                                               I
    uc s tl o mmar jdgmen onte n i tmir es t i c t caij
           t
   Pr oi eniedt su yu    t h egl              on
                                 gen sepr enat ounerl n .
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   Th Co da de s se c is ei tr.                                                I
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                                           13
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 14 of 32
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                           A                                                   I
                             .
                                  a k a n u a l nee t
                                 L c of nIs r beltrs                           1
                                                                               I
                  i y sput s     her he ger iy s d     nii or ack
                                                          o
            The prm ar di e i whet t Ber Polc i voi ab i t f I ofan l
                                                                    i
    n rb n rs.F ra od hv o edhtn rb n rsi eesr$
     s et      od        n     s et
    iualieet'li cus ael ghltaiualieetsncsay                                    I

    he i y
         di      nsur
    t val t ofan i ance contactand, i ii I ng,he pol i consi ed a
                            r       f ts acki t    i s
                                                    cy     der                 !
                                                                               j
                                                                               $
         i      r        d nii
    wagerng contactand voi ab i to as agai publ pol ' At nson v.W alM ad
                                         nst   c cy. ki
                                              i i                  -           !
     or nc.
    st es I ,No.8: c 691- 30TBM ,2009 W L 1
            .    08- v- T-                           3 M D. a. y
                                           458020,at* ( . Fl M a 26, i
                                                                     j
                                                                               I

      09 ct g t v, a e x elGu , n ome Lf Is Co.1 So. 8, - ( a.
           i
    20 )( in Kno t St t e r . ar Ic     e
                                       i n                    I
                                              , 86 78 78990 FlI
                                                    .


     939 ) t, 86 a
          .                                       on r t ns anc i
    1 ), Knot 1 So. t790 (iha b u f ml hel t ata c tac ofi ur e I
                          dt       or
                         ' s een ni y d h
                                                                               l
           i n ch he nsur
            f                     nt est s   e
    upon a Ie i w hi t i erhas no i er i a pur wager t gi t i era !
                                                   , hat ves he nsur
                                                                               i
                                                                               i
    nit ou erit es n a n h i ome t anend, ; ee alo Fl St t
                                f
   si serc nt -ner ti h vig t e Ie c o  's
                                         '
                                         )      s a. a .                       '
        404( ) r uan o orda a u e      40 an i a e n er t ncud
                                             ns
   j 627. 1 . Pu s tt Fl i St t t 5 627. 4, ' ur bl it es 'i l es
                                                                               I
    e eal n meae nee t,n ldn 1 a n iiu l nee tn er wn i , o yl
                                       s              f
   s v r e u rtditrss icu ig() nidvd a' itrs i h o Ie b d ,
                                                                               i
       eal d 2) ndii al ner tn h i bo an eal f an h
          h            s            f          h
   andh t an ( ani vdu ' it es i teIe, dy, d h t o ' oter                      ;
                                                                               I
     s o om h ndii i l el elt y oo         ya     n      h
   peront Wh te i vdualscos yr aedb bl dorb Iw andi whom te                    l
                                                                               l
   n vi al as ub t ta it e t gen ed y ov d  t ' a. a.
                                             on.
   idi du h as sanilners en der b I ean aleci ' Fl Stt                         l
                                                                               i
       7
   j 62 4044 ( 2.Ast e Cou tn t d i i Or Denyh W el Far sMo i t
        .
           2)b)    h                 s
                          r o e n t der            s
                                             ig l go' ton o                    i
                                                                               j
    s s DE ,$ Ber ) i i ed s ger h
             t            c s                er d . g r
   DimisI 6414he I ger Pol yIt Mr.Ber asteown an Mr Bereraj
   he ene ii y. s. ger    ns abe ner t n er wn i s e a. a .
                                               f
   t b fcar Mr Ber had an i ur l it es i h o Ie, e Fl St t l
                                                                               I
      27 4( ( 1,                                            n ur bli
   j 6 40 2)b) and a t isu ed idi dual hu ban Mr Ber h d an is a e
        .                            s
                    s he n r n vi ' s d, . ger a
   ner t     l s a. a . 27. 2)b) ' u o i ns'      e       v. as ,
   it es aswel, ,, ee Fl St t j 6 404( ( 2. Pr c Lf I ,Co. Br ner
                                                                               I

     s    1 -0 0 - V, 01  3 0 6, t4 S. Fl. a . , 01 ) ' u o '
                                                      d     '
                                                            )
   Ca eNo. 08 8 4CI 2 1WL1 4 5 a * ( D. a J n 7 2 1 (prc 1. l
                                                                               I
        er he i
   Howev , t polcy was uli at y assi t W els Far an entt w ih no i abl I
                        tm el      gned o  l   go,      y
                                                       i t       nsur e!

   nt es n s. gers i  f
   i er ti M r Ber ' Ie,
                                         14
                                                                               r
                                                                               i
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 15 of 32
                                                                               I
                                                                     I
                                                                     i
             ord a       al er t i ns an e i o e si ed o
                           y     s f            c                 ty
                                                                   t
            Fl ia lw gener l p mi aIe i ur c pol yt b as gn t aneni 1
                                                                     !
                                                                     :
        t     nsur e nt est n he i
                                 f he nsur    a. at
       wih no i abl i er i t Ie oft i ed,see Fl St j 627. 44 ) bu ony:
                                                        40 1 , t l i
                                                          .



       f c sgnmen sar ma 'n goo f t an ot( l am as gn t mad
       isu h as i t e de '        h,
                          i d ai dn as sh         si mens e
       i loiuvnt a s r bi o 'aei cnat' X gib i
        my r     e w hi  o     n r s'     t ef
       s p tccmeth I 'poitn nwgrgotcrA AEualLe1
                                                                       i
       Is.Co. Ifniy Fi Gr LLC,608 F.Supp.2d 1349,1356 ( D.Fl 2009) see !
       n     v. n i t n. oup.                         S. a.      ,
                                                                 *
                                                                               !
        s i et . nc n tl i ns Co.Cas
                            e            9: -v 8             - S. 1
       aIoScartav Li ol Na'Lf I . , e No. 11c - 0427,DE 32at7 8( Dj
                                                                               !
        a. t 9, ) n h           ds, i n r c ol sgn t y t ere
                                     f            c
       Fl Sep , 2011 . I ot erwor a Ie isu an e p iyas i men ma no s v aj
          l o      ern   e     t      igsb Ru s l 2 S. 49, 56 1 )
                                                ,
       a coakt awag ig agr emen .See Gr yv. s el 22 U. 1 1 ( 911
       ' as s n c eron vng n er s end i el o ne t
        '                                            hou y,
       (c e i whih a p s ha i anit e tl s hms ft o wi tan asa
                                                                            I
        oak o   s, n t ncepton,a wager have no si i i t t
       cI t whati i is i    i        ,             ar y         e
                                                m l t o hose wher an honest !
                                                                               1
   .    on r t s ol n       h'
                          ai . e d t h e or t mi                t er he get
       c tac i s d i good f t ) Th Cou mus t er f e de er ne whe h t Ber
       P                                                                       @
         i s
          cy    id
        ol i aval contact whi was pr ed i good f t orwhet ii a mer
                      r , ch       ocur n      aih,     hert s   e             j
                                                                               i
         gern on r t whc s oi   nio or ol i or
                                  i
       wa ig c tac, ih i v d ab i t f vi at Fl i s p i p iyagais
                                           ng         c c
                                               da' ubl ol     nt               1
                                                                               !
         gern on r t
       wa ig c tacsa    .
                                                                               I
                                 '                           I
                             . e ere Poi s o ue n d ai
                                        c                h
                            1 Th B g r lyWa Prc rdi Ba F t   j
                                                             I
               oi s rc rd n a at fts rc rd t h ne t h tt l e
                c               h            h     o      l
            A p lyipo ue i b dfi iii po ue wi teitninta iwib I
                                                                       I
          gned orot i tansf r t a per orentt wih no i abl i er i t i
       assi       he- se r ered o   son     y
                                           i t      nsur e nt est n he
                                                                               1
                                                                  i
            a       l go ges h
                     s                o o ea    beci nen emen no 1
                                                    v
                 W el Far ur te Coud n tt r dasu j t e it tel tit l
         orda' nsur e nt est t ut      ls go'           21,      hi
       Fl i s i abl i er s at e,see W el Far s Resp.at18- butas t s Coud k
         r      d he      i o sm ss age,Fl i I r r good f t See Pr
       aleady hel att m oton t di i st   orda aw equies     aih.      uco
        ,         3 6, 4 cingi
       1 2011W L 1 405 at* ( t AXA Egui bl Li 60 F.Su 2 at1 6) I
                                      t e f 8
                                       a     e.      pp. d 35 . n    !
            ng   l go'
                  s        i o smi hi         t ed hat f uco d ove t
       denyi W el Far s Motont Di ss,t s Cour not t iPr coul pr is 1
        l ton ha s. ger vernend o nai he i erel d . l
         e                                       c
       al gai st tMr Ber ne it edt mait nt poly h s fan Mr
          ger v nend o eai i ner tten ' h acs d
                                        s                tat h
       Ber ne erit edt rt n hsit es,h 'uc f t woul demonsr etat I
        h g      i
                 c     o oc ed n od ai d ha t er s h ef e o al
                                      h,                        d
       teBererPol ywasn tpr ur i go f t an t t h ewa ter or n v i I
       n r l n er t' d ct  n
       isu abe it es ' I (iig AXA Egui e Li 60 F.Su 2d a 1 56- 7;
                    ,        .       t     e,
                                      abl f 8      pp. t 3 5                   1
         ben t n,    9- 741 CI UNGARO, 28 a 5..
       Ru s ei No.0 21 - V-             DE    t )
                                         15
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 16 of 32



    if   he nsur      n.        t e f
    Ie oft i ed. See.e. ,AXA Eguiabl Lie,608 F. Supp. a 1     hol n
                                                     2d t 357 ( dig
    f he nsur     nt      o
    i t i ed neveri ended t m ai ai pol es, hen pol es wer voi f l of
                               nt n i  ci t       ici    e d or ack

    n ur bl ner t; i eta, e     9: - v 8Q       2 t fndi n r c
    is a e it es) Scar t Cas No. 11 c - 427,DE 3 a 8 (i ng isu an e
     om       fci l ed      er ai            l i t i vi s pr ed
    c pany sufi enty pl count cl m based on alegatons hat ndi dual ocur

      i ' h he nt
       cy wi         r eri he
    pol ' t t i entoftansf rng t Coton Pol t a STO LIi
                                    t     cy
                                         i o             or t
                                                     nvest w ih no

    ns a e ner t n , t s i 'emph i ad l4 Su it ton maybe
                              f
    i ur bl it es i Mr Coton' Ie'( ass dedl. ch nen i s
     i c     a t s uc s 1) e- itn eemen orun san n tat h
   evden edbyfcor s ha ( apr exsigagr  t    dert dig h t e
      i so
       cy         gned t one havi no i abl i er t see AXA Eguiabl Lie,
    pol i t be assi    o        ng   nsur e nt es ,          t e f

                              ei            21M I- W UNGARO,DE 28 at5;
   608 F.Supp.2d at1357;Rubenst n,Case No.09-    CI

    ee s uc ,            34   at 4; 2) h ymen o s
   s alo Pr o 1 2011W L 1 056, * ( t e pa               I f he
                                             t f ome oraIo t


               ous       r    si he     t n stit      orda
        4 Num er cases fom out de t Sou her Di rc ofFl i have also
   o nt o er ne         her    i
                               c
   t i entt det m i w het a pol y was pr ed i good f t See.e. ,
                                       ocur n      aih.     g.
     r Li n . ,
         e            3 7,      6 h r 2 ) ' e i or p c s
                                             '
   Mfs. f I s Co.567 F.d 78 790 ( t Ci. 009 (Th vat s' ur ha es
   nsur     ici
   i ance pol es w ih t i entt r s l hem t Li
                   t he nt o e- elt             m    at y      iut
                                         o bede i medi el constt ed
   n ur c r d, ec e he i or ev nt ndedt isu e t ei o I es'
   is an e fau b aus t vat s n eri e                   v )
                                        o n r h r wn i '
    emp si dde ; ici Lf n Co. La en e k 007 n r c u t
                          e
   ( ha s a dl Prn pal i Is. v. wr c Ruc er2 Isu an e Tr s ,
   735 F.     2d 3 48 D. . 0 ' c er) ' l l nt ndedt s lhe
                                '     ''       y
         Supp. 1 0,1 ( Del201 )(Ru k ' (he cear i e     o elt
    en fcaln er t n he i t he i t s oc ed.) empha sadd ;
                        c
   b e ii it es i t Pol ya t tme iwa pr ur ' (      si ed)
     t f n Co.
      l e             h  59 Sup d 82,      D. J 2009)(l s ed
   Na 'Li ls. v.Caloun, 6 F. p.2 8 889 ( N..          d
                                                      'n ur s
   o un oul he nsur e nt es equiem ,             ,     hey nt
   t r af oft i abl i er tr r ent however when t i end at
      he icy' ssuance,t pr i by tans eri t pol t a s r
   oft pol s i                                cy
                      o oft r f rpg he i o tangerwih no      t
    nsur e nt es   he    r i      he
   i abl i er tatt expiaton oft cont abit perod. and 'ssues ofi ent
                                        est ly i '
                                            i      '    'i     nt
    r ci t hi t miat ) emp si
                       on'          dl s e s e. . igs . s l
   c u alo t sde er n i ' ( ha sadde ; e alo. g.Gr byv Rus el,
     S. 49, 56 1 ) ' a es n ch er on avn
                     d                       n er t en ms f o e
   U. 1 1 ( 911 (c s i whi a p s h ig an it es I ds hi elt on
                              s n t ncepton,a wager have no si i iy t t
   w ihoutany,as a cl t whati !i Is i
     t              oak o                 i       ,             ar
                                                             m l t o hose
        e             r s d n
   w her an honestcontacti sol I good f t '; i v. s al f & Cas I . ,
                                        h'
                                      ai l Lakn Po t Li   e      . ns Co.
     6 W 2 42,    Mo. 958 l ng o h r s or o i he i
                          ook                    ng    c
   31 S. .d 5 552 ( 1 )( i t t e pu po e f pr cur t pol y
    i ng, Thi       i     y    tt ed
   fndi ' s unquestonabl cons iut one tansac i wher appel caused t
                                          r  ton   eby     ant
                                                           l      o
      ssued f hi own benefta pol y ofi ance,f whi he pai t pr i ,on
   be i     or s          i    ic    nsur   or ch      d he em um
   i )i ih eh dn ibeenl ners by,and t epre n uapai by,a per e,
    f es
       n         a o n ua e en e t' e g I i r cd o t tu
                                             f s
   le i whce h polcy hass rqt it out.Th waheri iums n ec nrc rl w ho
   appl w er a i            ak               em
                                                          a son
          nsur e nt est n he i
                             f he nsur        t             gned f
   has no i abl i er i t l e oft i ed,orw hen i has been assi    or
    p ultv     ps )
   s ec a ie pur o esn.
                                         16
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 17 of 32



     em um              her han he nsur n tcul ,
    pr i s by som eone ot t t i ed,and i pari ar by t assi
                                                    he   gnee,see
           t e f                        .      ei            21741 CI
    AXA Eguiabl Lie,6Q8 F.Supp.2d at1357,Rubenst n,Case No.09-    - V-

               8    or 3) h ac f i f t al uur o s, h
                                  s                          96
    UNGARO,DE 2 at5; ( t e I ko ar k o ac u f t e ls Caloun,5 F.
       p. d t   ci g
                   i    s , 08          05 at 2 4 $t e n ur e ner t
                                                  ')
    Sup 2 a 889 ( tn Paulon 1 20 W L 451 4, * n. (( h is abl it es
    equiem     oped t cudait use ofi ance contac s as wagerng contact I
    r r entdevel    o     l he     nsur       r t          i      r s
                                                                  i
     y s i s ng et
         ngu          on r cs h t ou t o     h i f t al u ur os I
                                                  sk
    b dit ihi b ween c ta t t a s gh t dampent e r o ac u f t e I s
                                                                  i
        hose t i ead soughtt àpecul e on whet some f ur contngenc woul i
    and t    hat nst       o      at        her    ut e     i    y   d

     c r) ct i nd ot t
         ' a              ons t ) k ,
                               t                Sup 2d t 38 s
    o cu ' ( i ton a qu a i omiedl;Ruc er 735 F. p. a 1 ( ame).
            h s.        . ger es ii    hei     tons hat t   hem ever :
          Bot M r and M r Ber t tfed att rdeposii t neiheroft

    nt      o    nt n he
    i ended t m ai ai t Ber Pol See Arene Ber Dep.at97: 98: ,
                          ger icy.    l     ger       15- 11*
                                                                               l
     c ar   g       at 1 70: 70: 5 70: 84: 8- 5: 8. s. ger t t d ha
    Rih d Ber erDep. 69:7- 3, 1 - 20, 1 8 1 Mr Ber s a e t ti
                                                                    I
   she al                                                                   I
                  hat he i
                         c      d tm el                  hid t            d
        ways knew t t pel y w oul uli at y be owned by a t r pary w ho woul
                                                                            !
     l he
      ect       h     i
   col t deat beneftwhen she di i she di aqert fee i anc perod.
                                ed f     ed      he r nsur e         i      I
                                                                               j
   A                                                              i
        l     ger       20- 16.     ger esi    her        hat hey 1
       rene Ber Dep.at65: 66: The Ber s't tmonyt ebyshows t t
                                                                               1
    ne d d o te oi o e s in d r te s r serd o es n r ni t
                 c                   a                  t i
    itn e frh p lyt b asg e o oh -iet nfre t ap ro o e tywi
                                                                               1
     o n ua l nee tn s B re' i n h th r s r-xsi
                           sf                    n
    n is rbeitrs i Mr. eg r Iea dta teewa apee it g                            I
                                                                               !
     nd sandi ha h olc    d     s gn o ome     t o n ur e n er t
                                                h               l
    u ert ngt tt e p iywoul be a si ed t s onewi n is abl it es .
                                                                I
     s one s       o      hat he i
                                 cy       ocur n      aih.
   Thi al i enough t show t t pol was notpr ed i good f t See,AXA
                                                                               !
                                                                               i
       t
       abl f 8 Su 2d 357. eta, se 9:1-v 8 7,
            e,               Sci                          t
    Egui e Li 60 F. pp. at1 , ar t Ca No. 1 c - 042 DE 32a $.
                                                            I
              r y o l go'
                       s          ton, he t        dentf he senc
          Contar t W el Far sasseri t Cour need noti iyt exit e ofI
      e itn eemen f med b t en Mr Ber and a s ecict r p t hol I
   a pr exs ig agr t or  e we   s. ger           i d
                                             p f hi ady o d i
   h t h ger i s l wag i onr t
               c        l                    l g s p. t 1
                                             s
   ta te Ber Pol ywa aniegal erngc tac.SeeW el Faro' Res a 21I
      ls go t        ndi aw n          hi oposii ,r her i r i on t
   W el Far cies no bi ng I i suppod oft s pr ton' at , t eles   wo
                                         17
                                                                                 1
                                                                               :
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 18 of 32
                                                                                 1

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                                                                                 !
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    unpubl        si    r
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                               sti           a           f ns
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                                        nnesot case:Sun Li I . Co.ofCan.v.
    P                                                                            I
       s      e 07 3 DSD/ J , 8          05 D. nn. eb. 5, 8)
     aulon,Cas No. - 877( J G) 200 W L451 4 ( Mi F 1 200                         I
                                                  .                              i
     puo 'dmi n lm ee o ln al od t hd ayo o I
       s ) s sg a       at e e f ry
    Caln1(i si c iwhrcmp ifidti niati pd twhm l
    h ns ed n en    at n ep i o eli l ) d n f n Co.
                            on,    s c        e           v 1
    t e i ur it ded, ic t t s lt poiy an Su Li I s. ofCan. . I
                                                                                 -


       lon, s     7- 77( J ,             05 D. nn.       3, 08
    Paus Ca e No.0 38 DSD/JG) 2008W L451 4 ( Mi Dec. 20 ) !
        l' 1) c fr n ha nn o a aw eq r
         on '
    Opaus 1' (on imig t tMi es t I r uies an i ii t r pady t have j
                                             dentfed hid    o

      t e no      eemen wi t e i ur ,Thi Coud d l t a tsuc a
    ener d it anagr       h
                       t t h ns ed) s            nes
                                               eci o dop  h
    esti i est       ees t he     n i Dal f ns.          ence Ruck
    r rctve t ,and agr wih t coud i Prnci Lie I Co.v.Law r        er

        n anc u t 735 Sup 2 30, 48 D. . 01 ' ck ', h '
                                            '    '     a
   2007 Isur e Tr s , F. p. d 1 1 ( Del2 0)(Ru er) t at'
     e o c ie ge me t ewe n h n ue n lmae uc a e s o e ur ù
                                      i                    e
     rc n ev da re n b t e teis rda dut t p rh s ri n trq i dt
    nval
       dat    i or ack nsur e nt es .
               cy                   '  he             ed, he
    i i e a pol f I ofi abl i er t' As t RuckerCoud not t

       son est esent t f l i danger
    Paul t pr             ow
                   s he ol ng     s:
                                                                                 i
         n    ton o r tng he ong esul n   i hi he
                                           ke        son ,.
         I addii t diec i t wr r ti cases I t s,t Paul                           l
          l al nen
           at          y i rvi s     uepit or    i t e- s
         bi er it t analss po de a bl rn f makng o h ie                          i
         mper s il r s t on a ai e f hi oud ap i te r e
                                  ab
         i m isbe tan aci s un ss l l I t s c .
                                                   ed
                                                 pl h ul                         i
                                                                                 j
           vo at y t e r t, ns eds d hid- y o- on r or oud
                                                   a
         ad c ed b Ih tus) i ur an t r pad c c spi t s c l                       j
          c ur oie n i l iu t h y r s u d eoe h o ig rm
              e c                l
         a q i p l isa dsmpywat nite aeis e b fr c o sn fo                       I
          mo g o t f ln u es n e d ti tae ya p as on itn wi
                       l
         a n ah s o wiigb y r.Id e ,hssrtg p e r c sse t t h                     1
         he tve k o h e i es, er deni ig yer qerhe a t
                             c         f
         t aci maretfrtes pol i wh ei tyn abu a t f c                            1
               el he ghestprce.
         m ay yi d t hi     i                                                    '
                                                                                 I
         n      tsr      ton
         I shod,hi tansaci wasno l agambl because Ruckerdi notm eet
                                 ess    e                d                       j
                                                                                 !
          i oi ' uc a e eoe p lig ort ol te s s n hs
              c                       .
         hsp lysp rh s rb fr a pyn f i To h doh - ie i,i ti                      I
            ts ew t evat he or     he eementov t subst
         cour' vi , o el e t f m oft agr      er he         he
                                                     ance oft                    I
          c eme an t e pol y o Delwar ' is abe it es sa ue.
         sh               c
                  d h i f a es n ur l n er t t t t                               l

   i t 49. s t ac t a h e s e exs ig dert n h t he g
   l a 1 Thu , he f t h tt er wa a pr - itn un sandig t a t Ber er !
     ic     d
   Pol y woul be assi
                    gned t som eone wih no i abl i er ,r dl ofw het
                         o           t     nsur e nt est egar ess her
                                                                                 I
     s. ger          se      ec ed he
   M r Ber oranyone el had sel t t évent t r pary pur
                                       ual hid t         ,      o
                                                    chaser goes t                l
                                                                                 !
        hat her      nt o      gn
   show t t e was an i entt assi orothe- i tansf he pol t a per or
                                         se r ert     i o
                                                       cy     son

                                         18
                                                                               !
                                                                               i
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 19 of 32
                                                                                i
                                                                                i
                                                                                I
                                                                                t
    entt wih no i abl i er i t I e oft i ed, and t t pol was
        y
       i t                         f
                nsur e nt est n he i he nsur     hat he i
                                                        cy                      l
                                                                                I
    h
    t                                                                           I
       ef e ocur n       aih.
      er or pr ed i bad f t s
                                                                                i
                                                                                .


         The ot f or evi    ng                          fcal h
                                  aih e so esenther Specii l , te
              her act s denci bad f t ar al pr    e.        y                   l
                                                                                j
      ger        d      em um or he i
                                    cy. l   ger
    Ber s neverpai any pr i f t pol Arene Ber Dep, at159: 23.
                                                        19-                     i
                                                                            '
                                                                                I
      t     s
    NeiherM r . norM r Ber everhad any i enton t pay any pr i f t pol
                      . ger            nt i o                         cy, j
                                                          em um or he i j
                                                                                i
      dh e s o r   cu t e der ih h      d av       l av    d
    an t er wa n ci msanc un whc t eywoul h e orcoud h e pai a                  1
                                                                                i
     em u or h  i
                c l   en g Dep.a 59:025.Rih d Ber Dep. t70:21
    pr im f tepol y.Ar e Berer  t 1 - , c ar ger      a 2,
     6, 23- 18. her n     dance wih t el at schem e descrbed mor
   71: 83: 85: Rat ,i accor      t he abor e             i     e

   uly         . asneraranged f Coventyt pay t pr i s,butt m ake i
   f l above,M r Br    r      or     r o     he em um    o       t

           hat s, ger     d he em um         a.  eover Mr Ber
    appeart M r Ber had pai t pr i s. See supr Mor   , s. ger

     a o d         t or i n ur c 1 t 6-
                        f                      e d ot v n t t o
    h d n nee orwan f Ie is an e.1 a 60: 11. Sh di n ha e a es ae t
                                                                                i
         5        l go s st
                   s              nt
               W el Far i mi aken i i suggeston t t s Cour has aleady
                                     s       i hat hi    t      r               i
        t h    s es. e l g s t a 8 . n yn
                            s                           l go'
                                                        s
   adopedte Paulont t Se Wel Faro' Mo . t1 n6.I den igWel Far si
      ton o s s ,he d el ' n i l i er f o en, d h
                            Pl f e on
   Mo i t Dimis t Cou h d,' ait sal gat sh e,iprv woul s ow l
    h t h e s qr       t i o h s anc h g
                         or                       i o s gn h I
                                                  c
   ta ter wa ana eemen pr t te isu eofte BererPol yt a si te j
     i o
      c        t y t t ns a e net tn s. ger i
                t h                                sf      ch acs  d
   pol yt an en i wl ou an i ur bl it es i M r Ber ' Ie. Su f t woul I
    emo srt h th eg r ol s o rc rd n o d at a d h th r s
                       c                    h
   d n taeta teB re P iywa n tpo ue i g o fi , n ta teewa I
   her or      i nsur e nt es . uco ,
                d             '                       4. n ulng
   t ef e no val i abl i er t' Pr 1 2011 W L 134056,at* I r i on                1
     l ag ' t o mp I 6,h gsr e u g oe,' re t rv t
     s       o                    a           I
   WelF rosMoint Co elDE9 1tema it t jd ewrt 'nod rope al
      t ai hat nsur e nt est sed uco
       s                                          r e hat
   on i cl m t no i abl i er exit !Pr m ustdemonstat t an                       I
                                                                                ,I
    gr    to sgn h ol oc       ty t
                                t hou n r e ners n s, g !
   a eemen t as i te p iyt aneni wl tanisuabl it e ti Mr Berer
   i xse t r r t h n e t fh re Poi . u o i n . . .
    f          o        o           c       e
   Iee itda o piroteic pino teBeg r ly'Prc Lf Is Co v                           1
    a n rCa e 1-0 0 - V, 41 t S. Fa J l , 0 1. oh e iin j
   Brs e, s No. 08 4 4Cl DE1 a 6( D. l,uy5 2 1 ) B t d cso s
   equie       sr i h
                  on      s ger d o n en o e ai er ner t n er i
                                                              f
   r r a demon tat t atMr .Ber di n tit d t r t n h it es i h Ie I
   n ua c oi , u et r e ii e ur h t u o d ni h hr at o I
             c       h            e             f     d y
   is rn ep ly b tn i e d csonrq i stà Prc ie tyteti p r t
     o Ad i i s o e od.
        hd o c
   wh m tep lywa t b s l                                     j
           i l he
               y,     t      edgest Pr bel
          tonal t Cour acknowl            eves hat  f he
                                  hat uco i t even it Coud g
     r o d p te us n e tte eg r l es h e t e a s Co e ty a
                                   c
   weet a o th Pa lo ts,h B re Poiyme t tets b c u e' v nr h j
        eem   t        ger
   an agr entwih M s.Ber som e t ee m ont bef e t Ber Pol was i
                                hr      hs or he    ger icy   ssuedl
   h t h ud at iae n h
                 i           P rgrm. u os s . t 6 we e,
                                   '
   ta s ewo l p rcp t i teNRF po a 'Prc ' Re p a 2 .Ho v r                      j
           he   t i o nes      he  son est he             ess
   because t Cour decl t adoptt Paul t ,t Coud need notaddr                     1
       her he eem     o     ci e n he         ogr     tt ed eem
   w het t agr entt padi pat i t NRFP Pr am cons iut an agr entaf
   ncepton t selt pol y t a t r pady wihoutan i abl i er ,
   i                 c
        i o l he i o hid              t       nsur e nt est
                                         19
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 20 of 32
                                                                               i
                                                                               1
                                                                               ,

                                                                               I
     ot t hat
    pr ec t was an    e ose o he
                  ywher cl t t amountof$10 mil see $.t 0 : -0 :5
                                             lon,
                                              i           4
                                                   =a 1 31 1 92 )
                                                             .
                                                                               I



     nhrewrwslyI ra$ml ,eRhr eeDpa5:-
          t w wh l    io cd g        1
    adentoh aaasoetn1 inSe ia Brre.t51                                         I
      1
    56: . Ther or t evi      so      hat he ger d        he em um t
             ef e, he dence al shows t t Ber s di notpay t pr i s r
                                                                               i
        hat her       i      ual ut e oss, h  ch    im hat he
    and t t e was no rsk ofact f ur I bot ofwhi confr t t Ber ger
                                                                               I

      ic       ocur n     aih.           tabl f
    Pol y was pr ed i bad f t See AXA Egui e Lie,608 F.Supp.2d at1357;
                                                                   1
      ben t n s
    Ru sei , Ca e No. - 7 - V-
                     09 21 41 CI UNGARO,DE 28 a 5; l    59      p. I
                                               t Cahoun, 6 F.Sup 2dt
                                                                               l
     t    Ruc er 73 Su 2d 38 s   .
    a 889; k , 5 F. pp. at1 ( ame)                                             !
         A                                                                     E
              di y, he ecor denc      hat he ger i
                                                 cy     t
           ccor ngl t r d evi e shows t t Ber Pol was neiher                   l
                                                                               i
     ocur    r ered n       aih
    pr ed nortansf r i good f t
                                        nsead ocur   t he nt i hat:
                                 butwas i t pr ed wih t i entont l
                                       ,                          t
                                                                  l
      d       gned orot
   woul be assi           se r ered o
                      he- i tansf r t a per orentt w ih no i abl
                                           son     y
                                                  i t      nsur e i
                                                                               I
    nt est n s
    i er i M r                                                                 l
                .          f
                      gers i        ger i her or
                                         cy
                    Ber ' le. The Ber Pol t ef e am ount t an il
                                                       so     legal
                                                                               I
        i      r t            l he   ti
   wagerng contac . Consequenty,t Cour fnds t pol t be voi ab i to f
                                            he i o
                                                 cy      d    nii or           I
                                                                               I
    ol i      orda'    i i
                       c cy     nst     i      r s.
   vi aton ofFl i s publ pol agai w agerng contact
                        2.
                                l gos fr i         en
                             W el Far ' Afimatve Def sesDo Not
                                s                                              l
                                                                               j
                                  ecl          y
                                 Pr ude Sum m ar Judgm ent
         ' n a y as s fi t ee s s
         Wh             r v
         ' e ap d rie afmaied fn e , asummar jdgmentshoul notbe i
                                           yu           d
    ant     e her e ssues off r sed by t afim atve def
   gr ed wher t e ar i      act ai     he fr i               ch
                                                     enses whi have
                                                                               I
     o e fec iel acual hal d d e ued. ej dr Deus e k
                        y   en           '
    n tb en e f tv yf t l c l ge an rf t ' Al an e v. tch Ban
                                                                               I
    u t Ams, 4 . d 2 8 1 8 Fa. s. . p 2 1 )ct i s n
                                              ao
   Trs Co. .4 So 3 1 8 , 2 9(I DitCtAp . 0 0 (i t n a d                        1
                                                                               I
      tions t . l go onend h t u o as ai o spr e h
            t      s                        ed
   quoat omied) W el Far c t s t a Pr c h f l t di ov t e                      I
                                                                               I

   ol n fr v f e 1 u o' l m s r d y v as
     o       mat                                                u o'
   f lwig afi ie de ens s: ( )Pr c s cai i bare b waierb ed on Pr c s
    gn ig In ca f r d     h    t g t ul 0 o hal
                                i   l           eng h i s
                                                        c
    i orn alidii o fau andtenwain uniJ y201 t c l ete Poly' I
                                                                               !
                                                                               I
                        e em um . 2 u o s ared y h     tie
     i y, l l l ng zeabl pr i s;4 )Pr c i b r b t e docrn of I
      di      e ect
   val t alwhi col i si
                                                                               !
                                                                               1
                                            20                                 i
                                                                               :
                                                                               l
                                                                               i
                                                                               l
                                                                               ;
                                                                               I
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 21 of 32



       ean             t            d                orr essl ur       i
    uncl hands because i knew orshoul have know n and/ eckl y t ned a blnd

        o      oussuspi ous cicumst
    eye t num er      ci     r    ances i t appl i and i
                                        n he   i on
                                                cat    ssuance oft
                                                                 he

     ol ; 3) u o s t
       c               abl t pe r
    p iy ( Pr c i equi yes op d fom ch l gig t e v i t o t e Pol y ba ed
                                       al n h al y f h
                                         en         di          c
                                                               i s
         uc s    ac     e l c
                           i
    on Pr o' own I kofdu digen e andf lr t i esi e and or
                                    ai e o nv t
                                      u        gat    /                 i
                                                           t     mer s
                                                         ac on nu ou j
                                                                        I
    nt nal ed l hat ose i he   i on
                                cat     ocur    oc ,
    i er r fagst ar durng t appl i and pr ementpr ess'                          I
                                                                                l
                                                                                I

    4 L v so e s o a i uc a ero v le t u k o e g f r at p t
                       d                h                  c o
    () a a tn wa ab n f ep rh s fr au wi o t n wld eo o p riiaii
    nh l    ege r d t n ep i an 5 u o at i h t t gen , . as I
                                         f             s            ,
    i t e al d fau a ic ton; d ( )Pr c r ied t e acsofi a t Mr Br ner
                                                                                1
       e cs e mpue o t l ar ' p. 27-
                      . s                   u e ond h tt ai
   whos a t ar i tdt i W el F gosRes at 28.Prcorsp sta ih
                                                                                !
                                                                                :
    ef ed I hese afimatve def
    r ut aIoft    fr i              uco'  y     10.         ees haj
                            enses, Pr sRepl at9- The Coud agr t
                                                                  I
                                                                  I

     on f h f ma i
                r v     e es ecud        y udg t
    n e o t e afi t e def ns pr l e summar j men .
           r , he enses ofwai ,uncl hands,and equiabl est
         Fist t def         ver   ean                     ar
                                                 t e oppel e based

        uco' l
    on Pr s al     ack  l
              eged l ofdigence and pur
                         i                 aiur o nvestgat r fags
                                     poded f l e t i   i e ed l

    dentfed n he    ii    he ger i cy.    , he dence showst
    i ii i t unde- rtng oft Ber Pol However t evi         hat j
                                                              1
   h u h ed i e l s y a e r ui h n e in rc s , u os
                a          s    n          t
   to g c anrdf g ma h v aiend r gteu d - rigpo e s Prc '                       j
                                                                                I
        w ier om i ed t uco'       ii     delnes
   under rt s c pl wih Pr s unde- rtng gui i and pur        I ed l
                                                      sued aI r fags 1
                                                                     I
    h
   t atwer i ii See Pr s Repl at10. M i
          e dentfed.   uco'   y         chaelMcFarand,Pr s Vi
                                                  l     uco' ce
                                                                     I
                                                                    i
     esi       por e       ii
    Pr dentofCor at Unde- rtng,                                     I
                                    esied h t u o' de- i s e pe f al
                                       f               t        i y
                                    t ti ta Prc sun rer wer s cic l
                                                                                I
   r ned      nf m i        d
   tai on whati or aton shoul be i uded i t unde- rtng not and what
                                 ncl    n he       ii    es                     i
                                                                                I
                                                                                i
    n or t houl t e.
          on
    if ma i s d no b Depost ofMi ael
                          ion
                           i          l DE - )
                                       and          aran
                               ch McFar ( 201 5 CMcF l d i
       ost ' 60:
         i )
    Dep ion'at1 4 161: W hen r fags ar Pruco gat ed and i i ed 1
                     4.
                      -
                             ed l    ose,      her      nvestgat
                                                                                I

   he essar i or i prort i ng t pol See.e. ,Deposii ofRebeccaI
   t nec  y nf maton i o ssui he i cy.   g.      ton
                                                                                i
      l DE 1 8 ' e ost ' 7: 79: 0 dic sn
                  '        i )                      l s ig
    Pye I 2- 01 1(PyI Dep ion'at7 6- 1 ( s us ig emaian wern                    :
                                                       nst e
                                                    Fori anc                     l
    u der i s qu t s r gar n t e f s appiat )
     n wr er ' es i e dig h i t l i .
          t       oh              r     c on                   ,    uco nvestgat
                                                                   Pr i      i ed
                                                                                 I
                                        21                                      1
                                                                                I
                                                                                I
                                                                                I
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 22 of 32



      . shi t       pored  ce he i    al t em   n he   i on
                                                        cat
    M r Tar s, he pur t sour oft fnanci s at enti t Appl i , and

    olo     p     y s i nor ton.See 03 1 0 Pyl Emai( 1 1 ;
    f lwed u on an misng if ma i      / 4/ 6 e    l DE 78- 2)
       ear h gar ng r hi DE 95 3 - 02 ; f i Fi cal a emen
                                          den
    Res c Re di Ta s s I 1 - at99 1 ) Con i tal nan i St t t
    DE 78- 1 , / / 6   l DE 78- 01 u o lo n esiat  h     ger
    ( 1 1 1 03 08 0 Emai( 1 1 .Pr c as iv tg ed whyt e Ber s
      e     eeki   nsur e i cy    . gers i f        er ned hat
    wer nots ng an i anc pol on M r Ber ' I e,and det m i t he was
       ongerappl ng f cover becaus hi medi hit y qual i hi f onl t
    no I       yi or      age     e s    cal s or    f
                                                    ied m or y he

    o s e el f o er e.Se Un r ig No es( 1 3 a 1 11 a PRU-
    lwe tIv o c v ag          t
                        e de- in t DE 95- t Q3- 3) t                           :
                                                                               (
    01        011        nvestgatons,al wih ot s dem onstat Pr s
      227,PRU- 61. These i    i i     ong t her          r e uco'              j
                                                                               l
     i n e n o sd r n ee t a h fh e l s t t y Prc s u d i
     ig            n      n            a     i
    dle c i c n ieiga drjcige c o terdf g .Ulmael, u ois e I
    he ol el n ha h e
        c ev                al ns a e ner t as
                             d                    nor t p
                                                       on
    t p iyb i igt tter wasav i i urbl it es b edonii mai u on1
                                                                               I
      ch t     m ted o el     di o orda' nsur e nt est at e.
   w hi iwas per it t r y accor ng t Fl i s i abl i er st ut See
                                                                               I
     ar AE 1 1 l Sttj 2 . 43 (nii n n ue t ey p n p l n' I
       el
    F r l 11 Fa. a. 6 740 ()e tl ga is rrorl u o a pia t, I
                  .
                  ,            tn                    c t
    at    s
   st ement ,                                                      I
                   l a i s, d epr s t i
                                      on de egar n ns abe ner t. sj
                decar ton an r e en at ma r dig i ur l it es ) Thu
     e a s u o ig nl n e t td Ird l s he enses ofwai ,uncl
                i y       g
    b c u ePrc dle t iv siae aIe f g , t def
                                  a                ver   ean                   i
                                                                               1

     an an    tabl sop do ot r lde ummar jdgmen.
    h ds, dequi e e t pel n pecu s     yu      t                               j
                t         i    chaserf val def
         Second, he bona fde pur     or ue ense f l because t pol i
                                                 ai
                                                  s              cy
                                                            he i s             l

    oi b nti    ontac t ts oi b nt ev goesit e t See. g.
                                  o
   v d a iio.A c r tha i v d a iii n er   no #ec .   e. ,                      1
    R                                                                          I
       en t n, 09 21 41 CI UNGARO,DE 28 a 5 Cit Pol y i v d ab iio
     ub s ei No. - 7 - V-                          c
                                         t f he i s oi nt        i
   because an i abl i er i I ng,t i est ly cl woul be ofno
              nsur e nt est s acki he ncont abit ause
                                               i      d
                                                                               I
                                                                               1
                                                                               I
    fe t' eeoe b c u e a a tn e e to al ie o h ere Poi ,
        '
        )                               dt             c
   efc..Th rfr, e a s L v so en v ro kv i tl t teB g r ly !
     a asone s ot aide c as .     sr s St er786       d 68l
    L v t i n abon f purh er SeeZurtas env. oni , So.2 65,
                                                                               I
   FI Dit . 2001 n i ha oi eed ann as ie, en o
                     n                   t
   ( a. s.CtApp. )(ot g t tav dd c otp stl ev t a                              I
    ub equ t nn en r he er.
   s s en i oc tpu c s )                                                       I
                                        22                                     I
                                                                               I
                                                                               l
                                                                               !
                                                                               !
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 23 of 32
                                                                               (
                                                                               1
                                                                               !
                                                                               I
                                                                               I
              nal he at caton ensef l because Mr Br
                 y,    f
             Fi l t r ii i def    ais                        nsur
                                               . asnerwas an i ance            I
                                                                               !
     oker     nsur       . n he atfcaton fr i    ense ar ent W el I
    br ,notan i ance agent l t r ii i afimatve def     gum ,    ls
                                                                               i
      g eles h ' er r e h whenani ur eag ti edsit tonal
                g
    Faror i onte' en alul tat   ns anc en ns neni l   y                        i
                                                                   I
     r   e
    faudul                                                         i
                  t ttmens n n p l t ,h n ua c o a y y o v i h oi
                                 c o                              W
                 n sae t o a a piain teis rn ec mp n ma n t odtep l
                                                           l
       ed h e sr r enai ' l ar '
                        ons ' s         p. - ct g
                                                i     ch n .
    bas ontes mi epes tt . W el F gosRes at89 (in 6Cou on Is
                                                                               !
      53 ote rpsi ta'hnh n rne gnkosh r at 'e I
       6        t
                o         s            u st
    â8: frh pooinhtw e teiuac aetnw tetefc ,h l
     no edg f h ns er en s mpu ed o he n ur '
                      s                     ). l g urh
                                                s
    k wl e o t e i ur ' ag ti i t t t is er W el Far o f t er                  1
                                                                               i
     gues
    ar                                                                         I
             ,   an
                 ' nsur      el     he al t
                                          y
                 ' i ercannotr yupont f si ofans s i an applcaton wher sucp
                                                wer n       i i      e
                                                                          I
         s           nsered           he nsur       n eparng he
    answer have been i t by an agentoft i erengaged i pr i t                   I
                                                                               t
                                                                               I
       i on, iel
        cat           s             i
    appl i entr y on hi orherown moton andwihoutt knowl
                                            t   he             he
                                                      edge ofort               j
     r in
      ec       nqur o h n r d, v h       he n ur woul ot v s ed h
    di to ofan i iyt t e isu e e ent ought is er d n ha e isu t #
                                   ,
                                   ,
                                                                 i
                                                                 i
     ol
      c     rtf l tt t een de. d. t quoig 4A J . ns r q
    p iyhadtuh u saemensb ma I a 9 ( tn 4 Am. ur2d I uanc
                                                                               I
       586 . wev , h e ul e r ev t er ec e . a ner s t
                              r
    j 1 ) Ho er t es r es ar i el an h e b aus Mr Br s wa no an                I
                                                                               l
    i                                                                          I
        s rn e g n, u wa n ta n n ua c rk . h oi ped          dI
       n ua c a e tb t sise da is rn ebo er AsteFlr aSu rmeCou j
    oe n mer c       n Co. 6 2d 4, 6 Fl 998) ns an e r er
   wr t i Al io v.RLIIs. ,71 So. 77 77 ( a.1 ,an i ur c b ok
                                                                               1
   s esponsi e f ' i tng i ance fom t publ underno em pl entfom any
   ir            sol
           bl or ' cii nsur      r he    ic            oym   r
                                                                               I
       al                       i      der aci t t                 ect
   speci com pany,and,upon securng an or ,pl ng iw ih a com pany sel ed by I
                                                                           I
   he nsur       t             ect      m el     sel
   t i ed orw ih a com pany sel ed by hi s forher f                        l
                                                    .
                                                              ay
                                                          se t l a nua c
                                                        'E s nil,nisrny
   b                                                                           I
    r    s     ddl
     okeri a m i em an bet
                         ween t i ed and t i er Zaw i v.Gol Rul
                              he nsur    he nsur .  lski  den e                I
                                                                               I
    ns
    I                                                                          l
        .     , s       0 1 2, 011
            Co.Ca e No.1 - 22 2 W L 335      * M. Fl Au 0 2011 . Unl e
                                       9658at4 ( D. a. g, 4,  ) i   k
                                                                               I
       gen , an ns anc o er s ot x usv y    o ed   y ecf ompan . I
   an a t ' i ur e br k i n e cl iel emply byan sp icc  i        y''
                                                                     I
   .s ct
   $-( ingAl io, 6 So. at7 -7
        i mer 71 c      2d 76       .    c an ns an e ok s
                                  7) Assu h,' i ur c br eri an a tI
                                                                gen i
                                                                               I
     he nsur '
             '    he nsur . d.   so eel
   Oft i ed, notoft i er I ;see al St e v.Jack       ' f ns. ,
                                              son NatlLie I Co.
                                         23
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 24 of 32




          2d    52 Fl Ct App.1 97)(an idepe
    691 So. 525, 7 ( a. .     9 ' n'           t en    ok    t
                                           nden ag torbr eracs on
       al h n r a her han h n ur ) . as ' n edge i t s no
                                                s
    beh foft e isu ed r t t t e is ecn.Mr Br ner k owl s hu t
    m abl o uco        e .Br             uco'
    i put e t Pr becaus M r asnerwas notPr s agent,

             di y, he r i        ens         ecl   he   tr      erng
         Accor ngl t a#im atve def es do notpr ude t Cour fom ent i

     u   y ud    tn uc s a or h ns a e ner ts ue d carn he
    s mmar j gmen i Pr o' fv onte i urbl it es is an de l igt
      ger i o
           cy      d    nii
    Ber Pol t be voi ab i to.

                           B.Ret n ofPr i Paym en/
                               ur     em um                                    i
                                                                               !
                                                                               I
           vig oun he i o oi nio,he
                      c           i         o     t et mi ih
         Ha n f dt polyt bev dabi t t Coud n w mus d er newhc
                                                                               I
     a y s nie o h rmim a me t. mal Foi a rvd s h t e h
             t                          y d
    p d ie tldt tepe u p y ns Nor l , lr aIw po ie ta wh na !
                          s he n ua c o t t od te n ue lI l ni t
                                         a               s t  e
    i ance I vi aton 'ender t is rn ec nrc v i,h is rd)i e tldt
    nsur    aw ol i ' r
                                                                I
    e tui fh rmims ad n h n ua c o t t e n ue mu t lc h
       to                                  a
    rsi t no tepe u p i o teis rn ec nrc.Th is rr s pa eteI
                                                                               I
    n ed k n h ame ost he n urd
                       i           n f e h fci e f h
                                                 v
    isur bac i te s p iont is e wasi beor teefe t edat o te I
                                                                               I
                                                                               1
                                       1
                                       ,
      i hr
       cy      he et n he em um       es     e ns. ,
    pol t ough t r ur oft pr i . Gonzal v.Eagl l Co. 948 So.2d 1,3 1
                                                                               I
    FI s . . p. 6) ct g a. ur 2d, c l i
                         i                a on    200 ; e s
    ( a.Dit Ct Ap 200 ( in 9 Fl J . Can el t j 35 ( 4) s e alo                 I
                                                                               i
    L                                                                          I
     oad . tt am i sC .6 5 o2 7 ,7 Fa Di C. p 19)
                  e                        t
    e nrovSaeF r Fr&Ca . o,7 S .d16 19(I. s. tAp.96(
                 .

    equ tn oi ng n ur c i t es ison h i an t tn ha
                              c h                  c
    ( a ig v di an is an e pol ywi r cs i oft e pol y, d s a ig t t            1
                                                                               !
   ' h e n ur e s o e id oi e ol ,t t ot v t f
    I                                 c                c
   'wler anis ers ek t rscn av dabl p iy imus b h gienoie o                    l
                                                                               I
    esci on   et n enderaIpr ums pai wihi a r
    r ssi and r ur ort   I emi                  ei     t
                                   d t n easonabl tme afer                     I
                                                                               I
    ic v r fh ru d o a odn h oi . we e, er oi s e lrl
                               c')              c
   dso eyo tego n sfr v iigtep ly'.Ho v rwh eap lyid cae
   od bnt u o h oi ' r d lnpoue n,o o r ae lwe
         i       cs a                   s
   via iiodet teply f u uet rcrmetsmec uthv ao d 1
    n r s o eek o et n emims. See.e. ,PHLVarabe I Co. Lu ie E. I
    isu er t s t r ai pr u         g.       i l ns. v. cl l
    M                                                            I
       elo 7 rev abe us , 08- 72 MJ SRN) 201 W L25397 a *4- ( .
     or l 200 lr oc l Tr t No. 5 ( D/      , 0        55, t * 5 DI
                                                                               I
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                                                                               1
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 25 of 32
                                                                               I
                                                                               1
                                                                               I
                                                                               I
     nn. . 201 sai ha bl i equi l n
                  ng     c c      e o        n ur t eek o
    Mi Mar2, 0)(tt t tpu i pol yr rsal wig anis eros t I
                                                                               I
    et n emi
    r ai pr ums,                                                     I
                       I) on r y ul   d       n i i o ommifau l J s v
                                                 a
                   as 'a c tar r e woul be an ivt tont c t r dn; ame .
                                                                               I
    n Co. f Am. 8 W 26 2 Ten 8 ) r ii e ur f emi
                                         ng               y
    ls. o N. ,1 S. . 0, 60 ( n.1 91 (equr r t n o pr umsonl I
                                                                               I
     pon o ng ha h e s nen i al r             he ad f he n edl ry .
    u a sh wi t tt er wa no it ton faud ont p o t isur ;Cu r v i
    W                                                              I
        h. tln Co. 9 E. 25,        Ga. .      937 h dig h n r
      as Na 'Is, ,1 4 S, 8 826 ( Ct App.1 )( ol n t atisu edwas !
                                                                   i
      t l o e ur f emi
       t                     d, es e s l f t al r d) s
                                             t                  s
    en ied t r t n o pr umspai unl s h wa guiy o ac u fau ; ee alo l
       iger
    W ul v.                                                                    i
              r Li n Co.567 3
                  e                   799 800 6 h r 2009 h di h t n u t
            Mfs. f Is. , F.d 787, - ( t Ci. )( ol ngt a u j q
      ic    t lm
    enr hmen cai as b i f rr ur ig pr umswoul b wi ou mer wh
                     ass o et nn emi                h
                                              d e t t i en t          1
                                                                               4
                                                                               I
     rmims e ad us a to n x rs n ua c o ta t.
    pe u wer p i p ru n t a e pe sis rn ec nrc)                                I
                                                                               I
               l ag o tn s h t u o h ud o e emie o ean h rmimk
               s                                  t
            W el F roc ne d ta Prc s o l n tb p r t dt rti tepe u
                                                                               1
    because i dur a bl eye t num er f s,whi underPr s s andar coul
        '
            t ' ned
               t     ind   o      ous act ch,     uco' t    ds, d
                                                                               j
      v i ed STOL tan aci i ed umer s r l s'
                          on,             e      sbl
    ha eevdenc a ' Ir s t 'gnor n ou ' dfag ofpos i e                          1
                                                                               l
     ec dar k t y denie y t wn n
                  vi    f     s        is
                                        t
    s on ymaretaci t i tid b i o u de- rer,                                    I
                                                         n tl h s o s u h I
                                                            l
                                                        a dsic o et is eteI

     oi, n hn olt rmi n i of u niorn a yas fI
      c'       ee    ms d l t l
                             e           f
    Ply adte clc dpe u add nti siutfuadahl erajr
    he i s ncepton. W el Far s M ot at27. However Fl i s i abl i er t I
         c
    t pol y' i  i      ls go'     .             , orda' nsur e nt es
     t ue tld u o el h e es tt
           t                       on o d o uc i h   ng
    satt enie Prcot r yonte rpr enai sprviedt Pr odur te                       I
                                                                               !
                                                                               1
      de- ii r e s. e a. a.
           n                   40 3) ' n r halb t l o el
                                     '               t
    un rt g poc s Se Fl Sttj627. 44 (An isuers l een iedt r y I
                                                                               I
                                                                               !
          I at    s,   ar i
    upon aIst ement decl atons,and r esent i m ade by an appl
                                   epr   atons               cant or
                                                            i f                !
                                                                               I
    nsur   el i o he nsur e nt est ch        i has i t i ed;and
    i ance r atve t t i abl i er whi such applcant n he nsur
                                                                               I
       nsur   l ncurany l
    no i ershal i       egalI ly exc as setf i t pol , byvi ofanyj
                            i i
                             abit   ept             cy
                                           odh n he i     due    I
                                                                               I
       r   at     s, ar i        epr
    untue st em ent decl atons,orr esent i so r i upon i good f t by t l
                                       atons  eled     n      aih    he i
    i                                                                          I
     s rr) dt n l P u o e ov d n r l s ta ao e ui h
         D     i y                e a              n
    n ue. .Ad io al, rc rs le a y' df g 'h t rs d r gte                        j
                                                                               I
     nd ing oc s e or s n h
          t                           ger i .
                                           c       u a dicu son
    u e- r i pr e s b f e isuig t e Ber Pol y See s pr ( s s i on              I
                                                                               !
                                         25                                    i
                                                                               I
                                                                               i
                                                                               I
                                                                               I
                                                                               !
                                                                               1
                                                                                   !
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    Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 26 of 32
                                                                                   1
                                                                                   I

         fr t f s ) nal uco
             v
        afimaiedeen es Fi l Pr had no r
                          y,
                          .                 o      he ger i cy      i
                                      easoi t know t Ber Pol was an I
        ll w      i      r t it        l r
        iegal agerng contac untl he W alSteetJour publ
                                                nal  i        t y
                                                      shed a s or aboutM r,        !

         rs e' ru s n 0 0
              s
        Ba n r fa d i 2 1 .                                 '                      l
                                                                                   1
              n ec t orda as er ol    c s cl e oi nt orac f
                                                        i
              I ar en Fl i c ewh ea p iywa de ardv dabiiof I ko anI
                                                                                   I
                                                                                   I
        nsur e nt est ncepton,TTSIIr
        i abl i er ati     i             e us      iast f ns. ,
                                  revocabl Tr tv.Rel arLie I Co. 60 So.
                                                   $
                                                   4
                                                                                   !
         d 1 8 FI. s. . p 2 1,h o d ed ee a y o gul rc rs l
                                                         y
        3 1 4 ( a DitCtAp . 01 )tec u h l,Wh r ap d wrn fl po ue #
                                                                         I
        i nsur
         f          icy
        Ie i ance pol on an i vi
                            ndi duali whom i has no i abl i er ,t pady i i
                                    n      t        nsur e nt est he   s
                                                                                   i
         o t l o e ur f emi
              t                       ai or h oi i K c        1      e
        n ten ied t a r t n o pr ums p d f t e v d pol y ' at1 49. Th TTSI         l
                                                        ,                          j
          cii sigui ed t          cl a i h       i s oi es s i f h
                                                  c
        de sonditn sh be ween a de ar tont ata pol y i v d orr cison o t e I
                                                                           I
          i whih s
           c           iabl emed er h i
                                      mar i i s o do h i na
                                          g on             g
        Poly, c i anequt er ywh et epr yobl at i t un te or i l
                                                              l
         r     i      est e he or   at     he   es
        tansacton and r or t f m erst us oft padi
                                                       ,     d ecl a i ha ol i c
                                                           an a d ar tont ta p iy ;
                                                                                   i
        s oi nt d. t 50
                 i            e ol s oi b nio,' h ady c ) e tj
                                    c          i nei
        i v dabiio.I a 11 .Wher a p iyi v da i t ' terp Ian elc t
                                                                                   I
         ie f to h ol ts u e a s t s od th us t utemoe a
             e       c
        gv efc t tep iya is eb c u eiwa v i a teo te.F rh r r, sa 1
                                                                    I
           er rl c ta t ha e d onr y o i , l t e f c d y
                                               c lc l
        gen alue, onrcst tar voi asc tar t publ poiywi no b enore b I
                                                                                   1
        h ours d he es l et s he our o d hem ' d.ct g r
                         l                         i    s
        tec t an t padi wi beIf a t c tfun t ' I (in Hari v.    .
                                                                                   I
                                                                                   !
            alz,      2d   Fl Dit .      2001    s r San es,     2d
        Gonz e 789 So. 405 ( a. s .CtApp. )and Ca tov. gl 637 So. I
            Fl s . .        9 )
        989 ( a Dit Ct App.1 94).                                                  I
               e,i n TSIte oi s od b nt o Ic f n n ua l nee t !
                 k          c           i
             Her lei T ,h p lyi v i a iiofra ko a is rbeitrs. I
          l aro o eh ls t t o it us hs a e rm
          s               e       n                  b c u e h r,h
        Wel F g n n tee satmpst dsig ihti c s fo U SI e a s tee t4
                                                                                   I
                 ng et n he em ums   he          ongf l ocur he i
                                                      y          c
        pady seeki r ur oft pr i was t one w ho wr ul pr ed t pol y I
                                                                    I
          d ai he em ums wher h e, el Far wa n t e pa* r ponsbl f I
        an p d t pr i ,              s
                            eas er W l go s ot h       es    i e or
        h
        te Ber Polc swr ulpr ement W el Far s Repl at12. The padi
             ger iy' ongf ocur         s
                                  . l go'        y              es
                                                                                   I
                                                                                   j
                                                                                   l
          ee hat . asnercom m i ed faud i pr i t Ber Pol see W el
        agr t M r Br           t
                              t r       n ocurng he ger i
                                                        cy,     s
                                                                l                  !
                                                                                   I
                                             26                                    i
                                                                                   I


'
                                                                                   1
'
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                                                                                   l      .,
                                                                                            .
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 27 of 32




      go'          W ls go'     y         hey sagr   o he f       .
    Far s Resp.at6; el Far s Repl at12,butt di ee as t t efectofM r
     asners faud. W el Far concedes,however t i M r Br
    Br    ' r        ls go                , hat f . asnerhad nam ed
                                                                               l
      msel   he           i ar
    hi fas t ownerorbenefci y, pai t e p emims, d t en s gh t ha e Pr c 1
                                 d h r u an h ou t o v u q
                                                                        l
     et n he em um o m hen
    r ur t pr i s t hi , t TTSIwoul appl and Pr woul be entted t
                                     d     y    uco     d     il o      I
                                                                               I
    et n he em ums
    r ai t pr i .                     y    2.   ac hat . asnerconcoc ed l
                                 ' Repl at1 The f tt M r Br         t
                         l go
                          s
                      W el Far s                                               j
                                                                      1
        abor e       o         he act hat hi        i    icy   he act '
    an el at schem e t coverup t f t t s was a wagerng pol and t f
                                                                               :
    hat l go tmat y chased t pol assecurtes i er ar f
          s
    t W el Far uli el pur  he i cy      ii nt medi y or                        I
                                                                               I
         t                   he ac hat orda aw     et n he em um
    Lavas one does notchange t f tt Fl i I does notr ur oft pr i s.

      e   ,      3 t 5       he x en h W l g el
                                           s        ev t h d ot
    Se TTSI60 So. d a 11 0.Tot e t tt at el Far o b i es is oul n be j

     ed e p n il o te rmim a me t, ohn n hs u ' d r rv ns
    h l rs o sbefrh pe u p y ns n tigi tiCo dsOre pe e t                       I
      l go r eekn ei remen r
      s                              opr eron
                                        at         tt
    Wel Far fom s igr mbus tfom anappr i e p s oreniy.                         j
      e e or i
    Th r f e,l e TTSIt sCoud wi lave t e paris asif ndt em and decl t 1
              k     , hi       l
                              le     h      te   t ou h           i o
                                                                   ne
                                                                      I
                                                                               I
       d    ls go he et n t em um
                            s           s.
    awar W el Far t r ur ofi pr i payment 6                                    1
                                                                               I
                                                                               I
                                                                               I
                                                                               I



                                                                               I
                                                                               I

         6      l
             W el Far al ar
                 s go so gues t because Pr o' 'nsur e i er '
                               hat        uc s 'i abl nt est'     I
                                                                  1

     gum   s ed      sr esent i and faud,t r
    ar enti bas on m i epr  aton     r            o et n em um s
                                         he equestt r ai pr i s i
       r y h i s n onesabit l s
                c           i        l ar s . t 4-
                                      s                   e
    baredb tepoly' ic t t lycau e.W el F go' Mot a 2 26.Th Coud I
     rea   alat      eeced hs gu t t     ton o smis t e
    al dyev u edandrj t ti ar men athemoi t di s sag            I
                                                           e
                                                          Se j        .

      uc ,        3 6, t * 6 a tn h j i iw l ng ack f
                                         t      o
    Pr o12011W L 1 405 a *4- (dopigtemaoryve al wi aI o         I
    n r l n er t l m o o eed s t h pi i f n t s abit l s l i
                                  e       a                  i
    isu abe it es cai t pr c de pi t e ex rton o an icon e t lycau e ;
       t * 8 p mi ng u o o o eed t t eq t o e ai he emi
                  t                 h s
    K a *7- ( er ti Pr c t pr c wi i r ues t r t nt pr um             j
            s,       i I he        hat nsur        o    ar      i
                                                                cy d
    paym ent and notng,'n t eventt an i erseeks t decl e a pol voi ab 1
    ni i     o
    i to due t a pol y' faudul pr em ent however som e couds have al
                   i sr
                    c        ent ocur   ,      ,                   lowed
    n r s o eek o eai emims.
                           )     t l o e alat hi gu t
                                     n
    isuer t s t rt npr u '.TheCourdeciest rev u et sar men l
    n hi der
    i t s Or .                                                                 I
                                                                               I
                                         27                                    I
                                                                               p
                                                                               !

                                                                               I
                                                                               !
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 28 of 32




                               l     sr esent i Count cl m
                         C.NeplgentM i epr  aton    er ai

                  he
          Because t Coud has f
                             ound t Ber Pol t be voi ab i i and decl
                                  he ger i o
                                           cy      d    nto        ined
   o der he em um     s et ned o  l
   t or t pr i paym ent r ur t W el Far t Cour now t ns t W el
                                   s go, he  t     ur o      ls

      go'     er ai n t   s
    Far s Count cl m . I i Count cl m ,W el Far '
                               er ai      l     seek            ns
                                           s go ' s dam ages agai t

    pr c f t egl
              s
    E u o) ori n i tmir r en a i r ar n t e v i t oft e Ber erPol y
                 gen s ep es t t eg dig h al y h
                                pns           di          g     ic
    s ue n hi c i n ldig pr os v ic ton ov ag whi
                on,              f                    l g s
                                                       s
    is i t s a t icu n I uc ') er ia i ofc er e, chW el Far o'
     l L va t e) el pon n qui g h
      en           ed
    ci tI a s on r i u i ac rn t e Ber Pol y' Count cai I 73 a
                             i            c '
                                     ger i .      er l m DE   t
     0- ) 1 , u o gu ha      l go ann ov t
                              s              s    t cai          t
    2 35 1 1 Pr c ar est tW el Far c otpr e i Coun er l m as a mater
    aw
    I .

              evai t s   i
          To pr lon i neglgentm i epr
                                sr esent i Count cl m ,W el Far m ust
                                       aton    er ai      ls go

     ov ach t e ol n emen s:' ) sepr senat f
                  o         4             on     eralac ; 2
    pr e e of h f lwig el t $1 a mir e t i o a mat i f t ( )
    epr   or     he epr  aton t
    r esent made t r esent i wihoutknowl
                                       edge as t i t ut orf si or
                                               o t r h al t
                                                  s           y,               :
                                                                               I
      der icu t e n ih e gh o av n         f t ali 3 he epr en orI
                                             s    y'
    un cr msanc s i whc h ou tt h e k own o i f st ,( )t r es t !
                                                                               I
    n end h t sr pr enat n e ot er o t t ( nur r l o
                            on                              ed
    it ed t at he mi e es t i iduc an h t ac on i;4)ij y(esut )t I
   h ady c i n u t i e el e he sep e t i 1
            ng     f      an                 on.   an Tr v er
   t e p a t i j s iabl r i c ont mir r senat , Sour v. a el s i
                                                                               l
    n Co. 2 2 497,1 4 ( 1 h Ci.1 )( i t an qu t i omied)
    ls. ,98 F.d 1  50 1 t r 993 ct i a ons d o at    t
                                                 ons t ,                       I
     uco  ends t W el Far cannotpr t fr and t r el ent ?
    Pr cont    hat  ls go        ove he ist hid em s,
                                                                               I
                    1 Ther W er No Mi epr
                     .   e    e     sr esent i ofMat i Fact
                                           atons   bral          i
                                                                 j
                                                                 I
              is em   equies sr es aton      eralact    an,    2#
          Thefrtel entr r a mi epr ent i ofmat i f . Sour 982 F,
                                                                 i
     t s 4 e u t cam l e h t u o d e rs nai o fmig h
                        e                      on   r
    a 1 o .Th co nerli alg sta prc ma erpe e tt sc ni n te I
                                                           I
          1    P                                                               I
                   uco'    i   at hat t 'f            ls go' nabit
                                                                 i
                   r s M oton st es t i 'ocuses on W el Far s i ly,as a
      ter faw,o e t h r , id d dh emens f gl
                          s                         gen
    mat o l t mak ou t eFi tThr an Fou el t o ane i t         I
     seprs t i l m, u o' t a
              on   '               u u o s ot c ae       gumep
    mir e enat cai 'Prc sMo . t2Q,b tPrc doe n adiult anar    t
    e atng o he      em .
    r I i t t Foudh el ent                                                     i
                                         28                                    I
                                                                               I
                                                                               1
                                                                               I
                                                                               I
                                                                               :
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 29 of 32




      i y
       di
    val t and i
              ncont abit oft Ber Pol i t cour ofis busi
                  est ly he ger i n he
                       i            cy      se t      ness.

     $ 7-    u o on en ha t ev    e h sr e enat  ons l
                                                     ege
    $ 3 38. Pr c c t dst tin ermad t emi epr s t i al d,
     ghl ng hat
        ght             rs     oyee,Jessi Bunsi spoke t Pr s cal
    hi i i t when Coventy' em pl        ca    ck,     o uco' l

       er    oyee,Tawanna Holi M s.Bunsi '
    cent em pl               ls,          neverasked - and M s.Holi m ade
                                       ck '                       ls

               epr   aton       he i t y    or    ly he ger iy,
                                                   i
    com m entorr esent i - aboutt valdi orenf ceabit oft Ber Polc

         l ng nsur e nt est   sr esent i tansm it t Pr i
    underyi i abl i er ,any m i epr  atons r   ted o uco n

    he i cy, uco' i
    t Pol Pr s deal wih M r Br
                   ngs t        ,     her he wo-   est e i
                          . asner w het t t yearcont abl perod

    s      o    nsur e nt es
    i a bart an i abl i er tchal
                               l         ch,        t   aw t s
                                enge - whi as a m aterofI ,i i not- orany

     her nf m i hat ght guabl be used i suppor ofa negl
    ot i or aton t m i ar   y         n      t        igent
      sr esent i cl m . Pr s M ot at21. Pr cl m st aIofM s.Hols'
    m i epr            '
             aton ai ' uco'      .       uco ai hat I         i
                                                             l s

     at     s   er     d.
    st em ent wer tue. I at21- M s.Holi s deposii t i ony confr s Pr s
                             22.      ls'      ton estm       im   uco'

     gument
    ar     .
               l estfed hat
                i                 ed    tons     he ger icy'
          Ms.Hols t ii t she answer ques i aboutt Ber Pol s cash

      r       ue,        ue,    em um      s, nf m i        he
    surenderval accountval and pr i paym ent i or aton aboutt

     ost nsur      nt es at w her her   eiens    gnment agai
    c ofi ance and i er tr e, het t e wer I orassi    s    nst

     ol an e on ime ha h u t s he l
       c                                 c     e ii y. li   1
    p iy, d sh c fr d t tt e Tr s wa t poiy ben fcar HolsAE 1 6.
             epr   atons egar ng her he ger i
                                            cy
    m ade no r esent i r di whet t Ber Pol was suppoded by an

    nsur e nt es  ncepton,nordi Ms.Bunsi ask heranyt ng abouti abl
    i abl i er tati    i      d        ck          hi        nsur e

    n er s . d.1 6.      . sck k           l ' d ou ea é on i ha
                                            i c              r
    it e t I 1 1 W hen Ms Bun i as ed Ms.Hols,'oul y pl s c f m t t
     nce he i s
            c        he wo      k, hat t s     est l y n ci '
                                                    i
    si t pol y i pastt t yearm ar t i i pastcont abit i sui de?, M s.

      l on ime h ' ts s h wo ear k' d.1
       i           Yes                    '          i ig h t
    Holsc fr d t at' ,ii pa tt e t y mar . I 1 7.Consdern t at he
      icy   ssued on Aprl 2006 and M s.Hols confr
    pol was i           i27,             li          hat he i
                                                            cy
                                                imed t t pol was past

    he wo-     k                         at             al
    t t yearm ar on Decem ber10,2008,herst em entwas notf se.

                                         29
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 30 of 32




                 er ai so l
         The Count cl m al al     hat uco scover ' er ' er r
                             eges t Pr di         num ous i nal ed
                                               ed '       nt

    l ' durn h nd ing o es da t war sIi 1
     ag                 t                 '        as    oi c
    f s .. ig t e u e- r i pr c san fer d 'i ! 37,b ed up whih,
    t' w
     k        oul a no h t t ep es t t
                               s         ons e o r e . o r t de
    i' ne orsh d h ve k wnt a i r r en a i wer n ttu . .(l i ma
    he e epr enatons t t n ed
                     h            h r r t ali ' d. 1
                                                y'               er
    t s r es t i wi ou k owl ge oft eitu h orf st r i : 38. Howev ,
     scussed above,Pr r ved any 'ed fags't ar durng t under ii
    di               uco esol    r
                                ' l ' hat ose i he        wrtng

     oc s f e s i he ger i    c       u a dic s on     fr t v
    pr es be or isungt Ber Pol y.See s pr ( s u si on afima ie
     ef s ) us t         t cl m ai s
                                  s       tr a       au e he ec d
    d en es .Th , he Coun er ai f l a a mate ofIw bec s t r or
      dence does notshow t Pr m ade any m i epr
    evi                  hat uco                 atons    eral ac .
                                          sr esent i ofm at i f t

                        uco d      nt   o nduce a Thid- t
                     2.Pr Di NotI end t I           r pary
                         nves or o    r he    ger iy
                         l t t Accuie t Ber Polc

         n    ton, he ecor
         I addii t r d evi                ove he hid em equied or
                           dence does notpr t t r el entr r f

       ls go o evai t       i
    W el Far t pr lon is neglgentm i epr
                                   sr esent i Count cl m . The t r
                                          aton    er ai        hid
     em   equies hat he epr or nt or he sr esent i t i
    el entr r t t r esent i ended f t m i epr  aton o nduce

       her o     t     an,    2d                er ai l
    anot t acton i. Sour 982 F. at1504. The Count cl m al     hat
                                                         eges t
    ' her nt
    ei                 ed, hr   ts ii i           age    her
    ' t i ended orexpect t ough i verfcaton ofcover and ot

    epr   atons, o nduce a t r pary i t t acquie t Ber Pol i t
    r esent i t i          hid- t nves or o   r he        cy
                                                     ger i n he

     ec dar k .'     t cl140. u o l ms ha h e s ec d vi c
    s on ymaret' Coun er . 1 Pr c cai t tt er i no r or e den e
    t nt      o nduce Lavast
    i i ended t i          one,W el Far s cl ,t pur
                                  l
                                  s go' i               he  ger ic
                                            ent o chase t Ber Pol y.

     uco'  .                n,
    Pr s Mot at23. O nce agai M s.Hols' deposii t i ony confr s Pr s
                                    ls
                                     i       ton estm       im   uco'

     gum .
    ar ent
                l at hat
                 s                  ovi   nf m i o           ck,
         M s.Holi st ed t when she pr ded i or aton t Ms.Bunsi she had
        edge orexpect i t t i or aton woul be used i connecton w ih any
    knowl           aton hat he nf m i   d         n        i    t

      e he    ger ic    he     i al nt est her n n he  y    ket
    sal oft Ber Pol y ort benefci i er t ei i t secondar m ar ,nor


                                         30
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 31 of 32



    d     nt o nduce any pady t pur
   di she i entt i                    he ger i n he
                                               cy          y
                              o chase t Ber Pol i t secondar

     k t l f I 3, 4.          d                      edge orexpect i of
   mar e . HolsAf. II1 1 She di noteven have any knowl
              i    !                                             aton
                                                                               1
                                                                               .

     y on emplt    endig e on y k tans c i n olig h
                                          on            ger i y
   an c t aed orp n s c dar maret r a t iv vn t e Ber Pol y   c
                                                                I
   i.1 5, mp    ty, en      nsc al s e d t den i er el aln i
                                  e            f           i
   1 1 1 I odan l wh Ms.Bu ik c ld, h di no i t y h s fasc l g 1
   rm v nr,
   fo Co e ty butr t ersai shewas' alngfom W i ngt Tr stCompany, K
                 ah      d       c i
                                 ' l r       lmi on u          ''              I
                                                                               I
       whi    h i wn t i
                    c
   $ 3, chwast e pol yo erat hetme. Ms Holst t i t ts v ied,
                                      . l es ied ha he er i
                                          i   f          f                     i
                                                                               I
   hr     dentfcaton  i   hat           ng t he us , ch
   t ough i ii i questons,t she wasspeaki wih t Tr t whi she knew l
                                                                               I
   t                                                                           I
       he i wnera tetme.I $4.Ha Ms. l k ownsh wa t kn t a j
           c
    obet polyo   t h i d.           i
                               d Hols n      e s alig o
                                                                        J
          r    oyee and notsomeone fom t Tr t shewoul nothave pr ded anyl
    Coventyem pl                    r he us ,       d          ovi
    i                                                                          l
     f ma i     th     ger i n he
                            c         er h h d. d. 1        e or
    n or tonabou t e Ber Pol yi t mann t ats e di I ! 5. Ther f e, I
                                                                               I
     uco,t ough M s.Hols,coul nothave i ended orexpect t i
    Pr   hr           li    d         nt                          hid-
                                                     ed o nduce a t r pady
                                                                               I
    nvest t acquie t Ber Pol i t secondar m ar etbecause Ms.Hols
    i   or o    r he   ger i n he
                            cy          y    k                li
   e tid h ths s e e h rne t
      f                                                          n oI
   tsie ta tiwa n v r e itn, and she nevereven knew she wa? speakig t i
                                                                     I
            her han he iy'   .      he    er ai ai s          t   aw
    anyone ot t t polc s owner Thus,t Count cl m f l as a m aterofI I
                                                              /
     o o l e a s u o i o ma e n se rs nai s f t i fc, u as
                                          o        a
    n t nyb c u ePrc ddn t k a ymirpe e tt n o maer la tb t loI
    b cause ineverit ed f any sat t t i ce a t r padyt pur aset 1
     e      t     n end or     t emen s o ndq hid-   o ch     he
                             .                                                 i
      ger ic     he
    Ber Pol y on t secondar m ar et Accor ngl t Coud wil ersum m ar
                          y    k .      di y, he       lent       y
   j enti Pr s f on t negl m i epr aton Count cl m .
   udgm n uco' avor he   i
                         gent sr esent i    er ai
                                                                               f
                                                                               I

                                  V.       ON
                                  I CONCLUSI                                   I
                                                                               I
                   he or ng t s eby
          Based on t f egoi , i i her                                          I
                                                                               I
                                                                               f
         ORDEREDANDADJ     h t ani Prc i n ua c mp n '
                                  f     e
                      UDGEDta Plitf u oLf Is rn eCo a ys I
                                                                               I
      t or
       on       y dgmen ( 1 1i GRANTED, d t Mo i f Fial
    Mo i f Summar Ju   t DE 77 s       an he ton or n                          I
                                                                               !
                                                                               l
                                                                               J
                                         31                                    1
                                                                               j
                                                                               I
                                                                               I

                                                                               i
                                                                               )
                                                                               !
                                                                               l
Case 9:10-cv-80804-JIC Document 246 Entered on FLSD Docket 11/14/2011 Page 32 of 32

                                                                               I

          y              endantW el Far Bank,N. ,as Securtes I er edi y
   Sum m ar Judgm entofDef        ls go       A.         ii nt m ar
                                                                               l
   DE 8 s     ED. e     l t epaat ialu
                        l                    t onssen t hi
                                                      h
   ( 1 6)i DENI Th couàwi eneras r efn jdgmen c it twi t
   ulng.
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                                                                               l
                           n        s            dal owar Count
         DO NE AND OR ERED i Cham ber atFod Lauder e,Br d     y,

   li,nh
    od s aoNvme,01
   F raoti/ dyfoe br21.                                                        l
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                                              JAM E 1 CO HN
                                                t      es st l
                                              Unle Sk t Di rctJudge
      es ovi
   Copi pr ded to:
            ecor a
   Counselofr d vi CM/ECF
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                                         32
                                                            1011 East Colonial Drive   TEL:     407.894.3797
                                                            Suite 500                  FAX:     407.897.1325
                                                            Orlando, Florida 32803     WEB:     www.thevoiceoftheindustry.com




April 2, 2012

Rosanne Mead
Chair
Viatical Settlements Working Group
National Association of Insurance Commissioners
1100 Walnut Street, Suite 1500
Kansas City, MO 64106-2197

Dear Ms. Mead:


On behalf of the Life Insurance Settlement Association (LISA), I am pleased to offer our association’s perspective on the
activities of the Viatical Settlements Working Group.

We thank you for the opportunity to address the working group during its meeting in early March, and I am attaching a copy of
the comment letter that we presented in advance of that meeting for those that may have missed it. As we observed in this
initial correspondence and as several regulators affirmed at the meeting, the regulation of life settlements has quickly become a
settled area of the law. Life settlement transactions are now comprehensively regulated in nearly every jurisdiction, and all but
a very few of these states have already promulgated related regulations or are actively engaged in the rulemaking process.

The charge from the Life Insurance and Annuities (A) Committee directed the working group to review and consider whether
revisions to the Viatical Settlement Model Regulation are needed for the limited purpose of achieving consistency with the
underlying Viatical Settlement Model Act. Since the working group’s mission is a rather narrow one, we refrain from offering
comments on the informal list of issues presented at the March 4 meeting and look forward to reviewing and commenting on
any draft amendments proposed consistent with the committee’s charge.

LISA also reaffirms its interest in collaborating with the working group as you review the consumer brochures that are part of
the Model Regulation. The brochures were highlighted and uniquely referenced in the working group’s charges, and the
regulator members of the working group agreed in New Orleans that this was an important area of emphasis. LISA and its
members are uniquely qualified to help the working group fulfill its goals of updating the brochures in a manner that is
consistent with the Model Act and, more importantly, providing consumers with useful information related to life settlements.

LISA thanks you and your working group colleagues for your consideration of our comments and for the opportunity to
participate in your future endeavors. We also urge you to call upon us if we can provide additional insight or assist your
discussions and deliberations in any way. Thank you very much.



Sincerely,




Darwin Bayston
Executive Director
                                                       1011 East Colonial Drive   TEL:   407.894.3797
                                                       Suite 500                  FAX:   407.897.1325
                                                       Orlando, Florida 32803     WEB:   www.thevoiceoftheindustry.com




March 1, 2012

Rosanne Mead
Chair
Viatical Settlements Working Group
National Association of Insurance Commissioners
1100 Walnut Street, Suite 1500
Kansas City, MO 64106-2197

Dear Ms. Mead:


On behalf of the Life Insurance Settlement Association (LISA), I am pleased to submit the following comments in
advance of the initial public meeting of the Viatical Settlements Working Group. Our association and its individual
members look forward to actively participating in your meeting on Saturday and during any future discussions and
deliberations that may follow.

Our understanding is that the primary mission of the newly formed Working Group is to examine the two consumer
brochures previously developed by the NAIC – Selling Your Life Insurance Policy: Understanding Viatical Settlements
and Viatical Settlements: Buying Viaticals as Investments – and to consider whether they should be updated or
revised in some way. LISA welcomes a thoughtful review of these brochures and believes it is important that they
remain accurate, fair, and meaningful to potential recipients. While we believe the guidance provided by these
materials remains relevant and current in many respects, the brochures can perhaps be enhanced and improved
with certain targeted revisions. One such recommended revision to the brochure would be to replace the term
“viatical settlement” with “life settlement,” as the former term is not utilized in the marketplace today and is rarely
found in state statutes.

Although the life settlement industry has grown significantly in recent years and benefited many Americans in the
process1, the reality is that there are many policyholders who are not familiar with the benefits of a settlement
transaction or the manner in which it is conducted. For these reasons, LISA has worked extensively and proactively
in the consumer education arena, and we urge Working Group members to review some of the materials that we
have previously developed in this regard. For example, LISA has produced and made available to its members a
consumer education guide entitled The Basics of Life Settlements that describes life settlements, highlights key
considerations for possible viators, and provides additional information in a helpful FAQ format. A copy of the LISA
brochure is attached hereto.



1
 A 2010 U.S. Government Accountability Office report found that, between 2006 and 2009 alone, policy owners
entering into life settlement contracts received an astonishing $5.62 billion more than they would have received from
an insurer if surrendering a policy and an average of 11 times more than the cash surrender value of the policy.
In response to the Working Group’s recent request for input, LISA recommends the development of a single
consumer brochure that can be utilized by consumers who may be considering the sale of an insurance policy. We
believe it would be most beneficial to present factual and helpful consumer information in a single succinct
document, which could also be used by settlement participants to fulfill the statutory requirement of providing a
brochure to viators.

If, however, the Working Group does elect to promulgate a variety of settlement-related brochures, we would urge
you to develop a document for life insurance policyholders that explains the options and rights available to them as
they consider whether and how to cancel or dispose of a life insurance policy. Consumers who possess a life
insurance policy that is unnecessary, underperforming, or no longer affordable often have no understanding of the
alternatives that exist, and providing timely information about the full range of options would help prevent them
from making poor decisions due solely to insufficient knowledge or a lack of information. Several states have
already adopted a requirement that insurance companies provide such disclosures to policyowners prior to the
lapse or surrender of a policy.

We also understand that the Working Group may consider whether to propose revisions to the Viatical Settlements
Model Regulation. LISA and its members see no notable shortcomings in the existing model rule that would warrant
such action at this time, and we see no tangible benefit in reopening the proposal. In addition, life settlement
transactions are now closely and comprehensively regulated in nearly every jurisdiction, and lawmakers in two-
thirds of the states have enacted new laws or amendments to existing statutes over the last five years alone. Nearly
all of these states (including those that have acted recently) have already promulgated regulations in this area or are
actively engaged in the rulemaking process. Considering that the regulation of life settlements is quickly becoming a
settled area of the law and that state policymakers will likely see no need for additional action or have an appetite
for further action of this nature, we urge the Working Group to focus its energies on a consumer brochure. The
Working Group could spend many months crafting revisions to the existing model regulation, but the reality is that
any such proposal is unnecessary at this time and unlikely to be implemented at the state level.

While LISA urges the Working Group not to reopen the Model Regulation, we will be ready to assist your efforts and
to propose specific revisions if you choose to do so. If you decide to proceed, for example, we will be happy to
propose additions to the regulation that address and prohibit certain anti-consumer and anti-competitive practices
engaged in by some insurers. Some insurance companies go to great lengths to block consumers from engaging in
life settlement transactions or attempt to make it impossible for consumers to receive information about the
existence and benefits of the settlement option. In addition, several companies interfere with life settlement
transactions by providing incomplete and insufficient information to policyowners and by failing to promptly verify
coverage and process changes of ownership. There is also evidence that certain insurers change ownership
information (e.g. addresses and identifying information) without authorization or notice to policyowners and that
some routinely pay death benefits without calculating and paying the interest that has accumulated and must be
paid pursuant to state law. In order to address such improper conduct, the regulation could potentially be revised
to explicitly prohibit insurers from (1) restricting or impairing the lawful transfer or assignment of a policy, (2)
making false or misleading statements about life settlements, or (3) prohibiting or restricting an insurance producer
from discussing settlements or negotiating a settlement on a policyholder’s behalf. Again, we see no need to
reopen the regulation at this time, but the issues discussed above will be among those the Working Group should
consider if it elects to press forward.
In conclusion, LISA thanks you and your Working Group colleagues for your consideration of our comments and for
the opportunity to participate in your future endeavors. We also urge you to call upon us if we can provide
additional insight or assist your discussions and deliberations in any way.            Thank you very much.


Sincerely,




Darwin Bayston
Executive Director

				
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