Complaint Filed in New York for Alleged Insurance Fraud Scheme on Secondary Market
On October 3, 2014, a lawsuit captioned Visión en Análisis y Estrategia, S.A. de C.V., et al. v. Karl Andersen, et al., was filed in the Southern District of New York alleging an insurance fraud scheme perpetrated against the plaintiffs. According to the complaint, the scheme involved the fraudulent sale of the purported full ownership of a life insurance policy, which turned out to be the sale of only a subordinated interest in the policy.
The complaint states that defendant Tranen Capital Alternative Investment Fund, Ltd. (“Tranen”) was a private investment fund that invested in the secondary life insurance market. The plaintiffs were shareholders in Tranen and were also secondary market purchasers of the life insurance assets held in Tranen’s portfolio. Through a life settlement transaction that occurred in 2009, Tranen acquired the sole beneficial interest in a trust, but the trust retained both the legal ownership of and the beneficial interest in the life insurance policy.
It is further alleged that in 2011, Tranen and other named defendants represented to the plaintiffs that they had a life insurance policy for sale, indicating that Tranen had full ownership of the policy. Based upon such representations, the plaintiffs allegedly purchased what they believed to be full ownership of the policy. Because the trust retained full ownership of the policy, however, the only interest that the plaintiffs received was a subordinated interest in the policy — a materially different interest from that which was allegedly sold to the plaintiffs.
In May 2012, the plaintiffs attempted to broker the sale of the subject policy. It was not until they could not find a buyer for the policy that it was disclosed to the plaintiffs that they were not the rightful owners of the policy. Due to the alleged misrepresentations concerning the true identity of the policy owner(s), the policy lapsed for nonpayment of premium and the plaintiffs’ subordinated interest therein became worthless. The plaintiffs asserted 28 separate causes of action against the various defendants for, among other things, damages as a result of the fraudulent scheme and breaches of fiduciary duties owed to them.