On April 22, 2010, Florida authorities arrested insurance agent Steven M. Brasner, who worked with Infinity Financial Group LLC in Davie, Fla., on charges that he falsified information on elderly clients’ life insurance applications to sell the applications on the secondary market.
Axa Equitable Life Insurance Co. initially notified Florida’s state regulators of the questionable insurance policies, as its clients directly suffered from Brasner’s fraud. In doing so, Axa was adhering to Florida law that requires insurance carriers to report suspected fraud activity. According to Axa’s spokesman Michael Arcaro, “We have a longstanding policy of not knowingly selling a life insurance policy to anyone whose reason for buying it is to sell it to an investor.” The insurer has since rescinded all of the policies.
Florida’s Finance Chief and Attorney General claim that Brasner created a scheme to sell policies taken out on the lives of senior citizens on the secondary market, and then induced elderly investors into buying a policy. As part of the scheme, he falsified the clients’ net worth on the policy applications.
Brasner also misrepresented to these investors that he would pay them 3% to 5% of the face value of the life insurance policies – following the two-year contestability period – when the contracts were sold over the secondary market. He also allegedly told the elderly Axa clients that they wouldn’t have to pay for the premiums out of pocket.
Though it’s legal to sell insurance policies on the secondary market, one cannot purchase insurance with the primary purpose of selling it later, as it violates state insurable interest laws. Axa said it has documented five cases where Brasner filled out life insurance applications for senior citizens and submitted them, accompanied by certifications indicating that the policies would not be sold or transferred on the secondary market.
Brasner made over $1.6 million in commissions on the policies at issue, based on some $78 million in total death benefits. He faces 22 counts of grand theft, insurance fraud and aggravated white collar crime.