Insurer scammed troops, SEC says

Boston Globe ^ | August 4, 2006

[george76]

A US insurer will pay about $70 million in cash and noncash benefits to thousands of military personnel whose investments with the company earned most of them little or no money...

The Securities and Exchange Commission said that American Amicable Life Insurance Co. of Texas and affiliates targeted service personnel with a product, Horizon Life, and a ``deceptive sales program that falsely suggested that investing in the company's product would make one a millionaire."

Since 2000, about 57,000 armed forces personnel bought the product...

``These companies implemented a deceptive sales program from the top down...

This is not a case of a few rogue agents, but of a centralized, company-sponsored marketing system that pitched an investment and had the effect of deceiving thousands of American military personnel,"...

[Drew68]

I don't know how this company practiced but I recall going to A-School in Pensacola and having my first taste of freedom after navy boot-camp. We were warned of scams involving signing over our TSP (Thrift Savings Plan --kinda like a 401K for government employees) to businesses offering us a huge return.

Sure enough, my first trip to the mall and I encountered a lot of these guys. My haircut gave me away and they swarmed on me with promises of riches!

Fortunately, I knew it was a scam. Sadly, many 18-19 year-old recruits were easily sold.

[george76]

According to the SEC complaint, American-Amicable sales agents were trained to present themselves as "financial advisers" or "financial coaches," rather than insurance agents selling a particular product.

http://www.washingtonpost.com/wp-dyn/content/article/2006/08/03/AR2006080301450.html

[george76]

It is good that the Navy is warning about these scams.

Hopefully more recruits will be careful.

[george76]

The company...also agreed to a five-year ban from sales on any military base, one of the longest suspensions ever imposed in the military insurance market.

http://www.nytimes.com/2006/08/04/business/04military.html?ex=1155268800&en=d81a807c1cdc9ec7&ei=5040&partner=MOREOVERNEWS

[Drew68]

It is good that the Navy is warning about these scams.

Oh yeah, they warn us about this one (and a few others) in an orientation class we were required to attend before we were ever allowed a pass for off-base liberty. I'm sure the other branches do the same thing.

It hate to say it but most of these victims were warned. They chose not to heed these warnings and have no one but themselves to blame for being scammed.

[Slings and Arrows]

Why isn't anyone going to prison over this?

[Drew68]

The company...also agreed to a five-year ban from sales on any military base

I wasn't aware they were allowed on base. The con-men I encountered always hung out at the mall.

[george76]

“Our soldiers are fighting and dying overseas to protect our country and fight terrorism,” said Chief Financial Officer Tom Gallagher, whose office will be assisting the affected soldiers. “To think these men and women were knowingly ripped-off is unconscionable.”

As a result of the investigation, approximately 57,000 current and former service members will receive refunds and modifications to their existing insurance policies, and an additional 13,000 service members and 22,000 civilians will receive increased cash surrender benefits.

“While this is great news to the service men and women who were victimized, it does little to mask the bad taste left by the actions of these entities. Our military men and women deserve to be honored, not taken advantage of,” ...

http://floir.com/PressReleases/ViewMediaRelease.asp?ID=2391

[george76]

Here are some of the settlement terms :

---

Cease soliciting or selling any insurance product on any military installation for five years...

Immediately terminate any agent discovered selling company products on a military installation.

Not accept any insurance applications for Army enlisted personnel with the rank of E-1 through E-3 without proof the applicant has been counseled by a superior officer.

Not offer any gift with a value greater than $5.00 to any individual who has direct command authority over service members who rank between E-1 and E-4.

Not participate in or assist with any class, seminar, or other training for service members who rank between E-1 and E-4.

Not participate in or assist with any class, seminar, or other training for service members regarding personal finance when such class, seminar, or other training occurs on a military base, installation, or reservation.

http://floir.com/PressReleases/ViewMediaRelease.asp?ID=2391

[Grampa Dave]

"I wasn't aware they were allowed on base. The con-men I encountered always hung out at the mall."

During the Kennedy/Johnson years, thugs like this not only came on the bases, they were allowed to be in the ship mess halls for days at a time.

[Drew68]

they were allowed to be in the ship mess halls for days at a time.

We still have civilian vendors on the mess decks (fortunately not scam artists though).

During my last cruise on a carrier, the forward mess looked like a Middle-Eastern bazaar! They were selling everything from swords to watches and jewelry, bottles of wine and shirts --at great prices too!

...the swords and wine were kept locked up until we returned home from deployment. LOL!

[Grampa Dave]

All of us probably remember our first port of call in a third world country. You were assualted from the moment you stepped off the gangway until you came back on by people of all ages trying to sell everything.

[Drew68]

All of us probably remember our first port of call in a third world country.

Oh yeah! I loved the gold souks and bazaars in countries where the American dollar goes very, very far. They may hate us but they sure love pictures of our dead presidents --and sailors love handing them out!

I'll be experiencing these times again before the year is over. The Navy is truly an adventure!