Sonoma County man’s sour retirement bet reveals risks of investing in quick demise

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In the Amberger case, he invested $ 20,000 in installments of two life insurance policies, each with an estimated face value of approximately $ 100,000.

DIFFICULT MARKET TO MEASURE

The market for life insurance institutions and viatics is difficult to measure. According to Life Settlements Report, which had offices in Petaluma, the total number of transactions in 2015 was around 1,100, with some $ 325 million paid out of a face value of nearly $ 1.6 billion. The report, owned by The Deal, ranked Legacy Benefits 12th in its 2015 ranking, with around 35 settlements sold that year for an estimated $ 6.7 million on a face value of $ 63 million.

The seller of a viatic or life settlement contract places the policy with a receiver or trustee, such as the Cleveland, Ohio-based accounting firm Mills, Potoczak & Co., which held policies purchased by Amberger, according to his lawsuit. Mills Potoczak, accused in the trial of breaching his fiduciary duty, was to “follow the dying insured and warn when the insured died,” according to the trial. Amberger named Mills, Potoczak as co-accused.

“I heard from them once every two and a half years,” Amberger said, then called the company about every year to check if the viators (people insured under the policies) were still alive. .

To make investment more attractive, Legacy Capital Corp. has promised to withhold from the investment sum sufficient to pay all life insurance premiums for a period equal to twice the life expectancy of the company. ‘insured dying,’ the lawsuit said.

ALWAYS PAY FOR THE LOST BET

Because the viator apparently remained alive, after those periods had elapsed after about three years, Amberger had to continue paying the premiums for the underlying insurance policy, additional amounts he estimates to be around $ 2,500, according to the lawsuit. In October 2015, Amberger’s interest in both policies was canceled after he stopped paying premiums.

Premiums for one of the policies were initially paid through an employer benefits program, according to Amberger lawyer Douglas Applegate. Applegate is a partner of Seiler Epstein Ziegler & Applegate, based in San Francisco. The employer of one of the viators was General Electric, according to the lawsuit, which had a group insurance policy with MetLife and paid premiums until the employee retired, Applegate said.

Applegate filed a warrant motion with supporting documents in February in U.S. District Court, opposing the transfer of the case to New York District Court. In the lawsuit, Applegate claimed that Legacy Capital, Legacy Benefits, LLC and Legacy Benefits Corp. would be “controlled by Meir Eliav, a New York resident who owns more than 10% of the shares or interests of each entity.” “

In April 2017, the Legacy Benefits website showed Meir Eliav as president and noted that he had founded Legacy Benefits Corp. in 1991 and Legacy Benefits LLC in 2007.

“As a pioneer in the settlement industry, he was a founding member and past president of the Viatical and Life Settlement Association of America,” the website said. Eliav was born in Argentina and emigrated in 1964 to Israel, where he studied finance and earned an MBA, then embarked on a career in finance and banking, the Legacy website reported.

“We don’t know who the employee is,” Applegate said of one of the viators in the Amberger case. “We don’t know when he stopped working. About a year ago Chris (Amberger) also received an invoice for this policy. That’s when he said, what’s going on here. Premium bills on policies continued to arrive until the end of 2016, Applegate said.

Amberger purchased the viatical investments through Josh Brackett, an agent for Legacy Capital Corp., according to the lawsuit filed in U.S. District Court in San Francisco. Brackett provided Amberger with a report on typical viatic settlement returns that “ranged from a low of 12% to a high of 60%,” the lawsuit said.

Amberger relied on “the opinion of an independent doctor certified by the board that the life expectancy of the viator was in line with the investment targets of a return on investment of 12%”, according to the trial.

TRIAL ROOM IN THE LIMBO

“I will make the discovery,” Applegate said of the lawsuit. “Right now I’m trying to figure out what terrain I’m landing in. We are in limbo with the location. “

He hopes to know if any of the AIDS patients are still alive, although the relevant documents are likely sealed under confidentiality laws affecting medical records.

In the lawsuit, Applegate seeks attorney fees. “It’s a large number,” he said. “You are entitled to interest” of 7% to 10% in California, plus punitive damages, usually up to four times the actual damages. “We’re talking about $ 150,000 to $ 200,000,” Applegate said.

INVESTMENT INCREASED IN THE EARLY OF AIDS

Viatical investments increased during the years when HIV was difficult to treat, according to Applegate. “Both had AIDS,” he said of the health of those insured in Amberger’s investments. Once HIV treatments become more effective, “they’re still sold for some cancers,” Applegate said of viatical investments, but “not very often. They really came for the AIDS epidemic. There is still a small market.

Amberger “invested $ 20,000 of his retirement savings in viatics,” Applegate said. “It was a way for him to expand his retirement portfolio. He was a musician. He didn’t have a lot of money.

“Eventually he grew suspicious,” Applegate said. After hiring another lawyer to write a letter to Legacy, Amberger filed a complaint.

James Dunn covers technology, biotechnology, law, the food industry, banking and finance. Contact him at [email protected] or 707-521-4257

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