Insurance mogul Barry Kaye, who has told Florida Atlantic University he will not fulfill his $16 million pledge to the school, is now facing a federal lawsuit in relation to his once mega-profitable life settlement business.
The lawsuit, filed Tuesday in Ohio, claims that Kaye’s Boca Raton firm persuaded an 81-year-old man to purchase a $5 million life insurance policy in 2006 with promises that he later could sell the policy to an investor for a large profit.
After paying more than $322,000 in premiums over two years, plaintiff Louis Levin said his policy was no longer marketable and he was told that a buyer could not be found. During this time, Levin alleges, Kaye received a commission on the policy sold to him.
Kaye’s son Howard Kaye also is named as a defendant in the lawsuit.
Levin’s brother Allen Levin, who also was solicited to buy a life insurance policy but is not a plaintiff in the suit, lived in Boca Raton between 2000 and 2003.
Hundreds of senior citizens attended the meetings in which Kaye explained they could purchase a life insurance policy on themselves, pay the premium for two years and then sell it for a profit. Whoever bought the policy would cash in when the person died.
Levin says in his lawsuit that he was told his policy would sell for between $500,000 and $1 million.
The life settlement industry then fizzled with the economy’s collapse and increased scrutiny from regulators.
Several lawsuits similar to Levin’s have been filed nationwide, including one by television personality Larry King. In 2007, the talk-show host sued a life insurance broker who he said steered him to buy two multimillion-dollar policies in a life settlement deal that was against King’s financial interests.
Levin’s is the first known lawsuit over life settlements against Barry Kaye and Associates.
Source: Palm Beach Post