Calif. Dept. of Corporations Releases Subpoenas for Info on Fraudulent Sale of ‘Death Benefit’ Investments

The California Department of Corporations has issued subpoenas to five entities seeking information on the possible widespread, illegal selling of viaticals or “death benefit” investments in California.

“The purpose of the Department’s inquiry into possible illegal sales of viaticals is to both protect legitimate businesses from fraudulent players, and to caution potential investors against this morbid kind of investment scheme,” said Corporations Commissioner William Wood.

A “viatical,” also referred to as a life settlement or senior settlement, is an investment in a life insurance policy whereby the original insured – usually elderly or terminally ill – sells their “death benefit” to a third party who then solicits investors to buy an interest in the same policy.

Although viatical investments can be legitimate securities and sold legally in California, the Department of Corporations has recently become aware of an increase in deceptive marketing practices such as falsifying information about a policyholder’s health or guaranteeing investors an inflated rate of return.

In March of 2002, the Department obtained an injunction and froze the assets of Carmen J. Palmieri for reportedly defrauding nearly 200 investors of more than $30 million in a Ponzi scheme involving fraudulent death benefit investments. Palmieri pled no contest to 144 counts of criminal and securities fraud and was recently sentenced to 30 years in state prison.

“This inquiry is our first step in finding out just how widespread viaticals fraud is in California, and how we proceed to put an immediate end to it,” added Wood.

The five companies that were issued subpoenas by the Department of Corporations are:

Assured Solutions International, LLC
Las Vegas, Nev.

Wilbanks & Associates, LLC
San Francisco, Calif.

First Financial Capital, Inc.
Belmont, Calif.

Tru-Mor, Inc.
Ontario, Calif.

Tru-Mor Financial Group
Ontario, Calif.

The information requested in the subpoenas must be received by the Department by March 26, 2004.