STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF FINANCIAL SERVICES,
Petitioner,
vs.
JEAN-ANN DORRELL AND SENIOR FINANCIAL SECURITY, INC.,
Respondents.
/
Case No. 17-3119
RECOMMENDED ORDER
Pursuant to notice, a formal administrative hearing was conducted before Administrative Law Judge Garnett W. Chisenhall of the Division of Administrative Hearings (“DOAH”), in Tavares, Florida, on November 15 through 17, 20, and 21, 2017; and
February 20 and 21, 2018.
APPEARANCES
For Petitioner: David J. Busch, Esquire
Marshawn Michael Griffin, Esquire Department of Financial Services Division of Legal Services
612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
For Respondents: Jed Berman, Esquire
Infantino and Berman Post Office Box 30
Winter Park, Florida 32790
STATEMENT OF THE ISSUE
The issue is whether disciplinary action should be taken against Respondents’ licenses based on the allegations set forth in Petitioner’s Administrative Complaint.
PRELIMINARY STATEMENT
On April 25, 2017, the Department of Financial Services (“the Department”) filed a ten-count Administrative Complaint against Respondents, Jean-Ann Dorrell and Senior Financial Security, Inc. (“SFS”). The Administrative Complaint alleged that Respondents violated numerous statutes and rules governing insurance agents and agencies. On May 15, 2017, Respondents filed an Answer to the Administrative Complaint and requested a formal administrative hearing. The Department referred the instant case to DOAH on May 26, 2017, and the final hearing was scheduled for July 24 through 28, 2017.
On June 29, 2017, Respondents filed an “Unopposed Motion for Continuance” asserting more time was needed to complete discovery. After a telephonic motion hearing on July 10, 2017, the Unopposed Motion for Continuance was granted, and the final hearing was rescheduled for October 10 through 13, 2017.
On August 31, 2017, Respondents filed an “Emergency Verified Motion for Continuance” (“the Motion for Continuance”). In support thereof, the Motion for Continuance stated that
Ms. Dorrell had an urgent family issue and would be unable to
devote a sufficient amount of time to prepare for the final hearing. The Motion for Continuance noted the Department’s objection. However, the Department filed a response on August 31, 2017, stating it “defers to the court’s discretion
regarding whether a continuance is appropriate given Respondent’s allegations.” The undersigned issued an Order on September 1, 2017, granting the Motion for Continuance and requiring the parties to provide mutual dates of availability by September 8, 2017. On September 18, 2017, the undersigned rescheduled the final hearing for November 15 through 17 and November 20
through 22, 2017.
On September 18, 2017, Respondents filed a “Motion to Suppress Evidence Based upon Unreasonable Search and Seizure” (“the Motion to Suppress”). In support thereof, Respondents asserted that Department investigators, acting pursuant to section 624.321(1)(b), Florida Statutes (2014),1/ served
Ms. Dorrell with an investigative subpoena on September 24, 2014. The Motion to Suppress requested entry of an order suppressing:
[A]ll documents, files, insurance policies, insurance policy files and correspondence, emails, office calendar[s], appointment calendars, binder registers, cancelled checks, information relating to escrow and operating accounts, account statements for operating accounts, commission statements and shared commission expenses, customer information, and any other items seized by the agents of [the Department] during the
execution of the unreasonable subpoena on September 30, 2014.
After considering the Department’s response, the undersigned issued an Order on October 6, 2017, denying the Motion to Suppress without prejudice to it being renewed during the final hearing.
Respondents filed a “Renewed and Revised Motion to Suppress Evidence Based upon Unreasonable Search and Seizure” (“the Renewed Motion to Suppress”) on November 10, 2017.
The final hearing was commenced as scheduled on November 15, 2017, and the Department announced that it was dropping Counts II, III, and X from the Administrative Complaint.
The undersigned heard testimony regarding the Renewed Motion to Suppress on November 15, 2017, and orally denied the Renewed Motion to Suppress on November 21, 2017.
The Department presented the testimony of Susan Alexander, Lily LeDuc, Ruth Williams, Deborah Gartner, Frederic Gilpin, Margaret Dial, Donald Geist, Laura Wipperman, Earl Doughman, Diana Johnson, Matthew Plunkitt, Tammy Simpson, Joseph Spinelli, and Jon M. Hartman.
The undersigned accepted the Department’s Exhibits 1 through 20, 39, 40, 45 through 47, 49, 51 through 55, 62 through
64, 67, 70,2/ 74 through 95, 125 through 128, 134, 140 through
143, 146 through 152, 157, 158, 160 through 164, 167 through 176,
179, 180, 182 through 185,3/ 189 through 194, 201 through 222,
263, 379 through 381, 383 through 385, 387, 389 through 395, 397
through 429, 432 through 437, 439, 441 through 459, 462
through 471, 473, 476 through 498, 502 through 513, 515, 517,
519, 521 through 525, 528 through 535, 537 through 542, 544
through 556, 558 through 560, 571 through 610, 612 through 629,
and 632 through 636.
The undersigned reserved ruling on the admissibility of the Department’s Exhibits 34 through 38, 50, and 66. Those exhibits are not accepted into evidence.
The Department did not complete its case-in-chief on November 21, 2017, and the undersigned issued an Order on November 30, 2017, rescheduling the final hearing for February 20 through 23, 2018.
Respondents presented the testimony of Goldie Hester, Lynzi Boatright, and Michael Davis. Ms. Dorrell testified on her own behalf.
The undersigned accepted Respondents’ Exhibits 1, 3, 4, 4a,
9, 16 through 19, 21, 21a, 23, 26, 27 through 33, 35, 38, 40a, 41
through 62, 66, and 70 through 84.
The final hearing was concluded on February 21, 2017, and the undersigned granted Respondents’ request that the parties have 60 days from the transcript filing date to file their proposed recommended orders.
The 13-volume transcript was filed with DOAH on March 12,
2018.
On May 4, 2018, the parties filed a “Joint Motion for
Extension of Time to File Proposed Recommended Orders” (“the Joint Motion”) seeking to have the due date for the proposed recommended orders extended to June 1, 2018. The undersigned granted the Joint Motion via an Order issued on May 7, 2018.
The parties timely filed their Proposed Recommended Orders, and they were considered in the preparation of this Recommended Order.
FINDINGS OF FACT
Background on Annuities
In general, annuities are contracts in which the purchaser, usually an individual, makes one or more premium payments to the seller, usually an insurance company, in return for a series of payments that continue for a fixed period of time or for the life of the purchaser or a designated beneficiary.
In re May, 478 B.R. 431, 433 (Bankr. D. Colo. 2012); Lander v. Hartford Life & Annuity Ins. Co., 251 F.3d 101, 104 (2d Cir.
2001).
“For traditional or ‘fixed annuities,’ the stream of payments begins immediately or soon after the contract is purchased. The contract will specify the amount of interest that will be credited to the [buyer]’s account as well as the amount
of payments to be received under the contract.” Lander, 251 F.3d
at 104. Fixed annuities are similar to certificates of deposit in that the seller of a fixed annuity guarantees that the purchaser will earn a minimum rate of interest over time. Am. Equity Inv. Life Ins. Co. v. SEC, 613 F.3d 166, 168 (D.C. Cir.
2009). In other words, fixed annuities do not lose money.
Fixed annuities are typically thought of as insurance products because the purchaser receives a guaranteed stream of income for life, and the seller assumes “mortality risk.” The seller’s risk arises from the possibility that the purchaser will live longer than expected, thereby receiving benefits that exceed the amount paid to the seller. Id. In re May, 478 B.R. at 434
(noting that “a person typically purchases an annuity to avoid the risk associated with living an unexpectedly long life and running short of financial resources.”).
A fixed annuity is appropriate for someone who desires a guaranteed interest rate without incurring the risk associated with the stock market. Because there is little to no risk, the returns on fixed annuities tend to be lower than the types of annuities discussed below.
In contrast to a fixed annuity, the stream of payments associated with a variable annuity does not start upon purchase of the contract. Instead, the purchaser makes a single payment or a series of payments that are invested in securities of the
purchaser’s choosing. Those securities are typically mutual funds or other types of investments that reflect the purchaser’s investment objectives. Lander, 251 F.3d at 104-05.
From the time that a variable annuity is purchased to the time it begins to pay out, the annuity’s value will fluctuate depending on the performance of the underlying securities in which the purchaser’s principal is invested. Id. at 105.
After a defined number of years, the variable annuity will mature and begin paying benefits to the purchaser. The purchaser is not guaranteed a particular payout. Instead, the payout will vary depending on the value of the portfolio at the annuity’s maturity and the purchaser’s life expectancy. Id.
A variable annuity has characteristics that make it like an insurance product. By providing periodic payments that continue for the purchaser’s life, a variable annuity provides a hedge against the possibility that the purchaser will outlive his or her assets after retirement. Id.
However, a variable annuity is also like a stock mutual fund in that the amount of benefits paid to the purchaser depends on the performance of the investment portfolio. As a result, many purchasers use variable annuities to accumulate greater retirement funds through market speculation. See In re May,
478 B.R. at 434 (explaining that “[m]any annuities are now ‘variable’ rather than fixed, and contemplate that the premiums
collected will be invested in stocks or other equities, and that benefit payments to the annuitant will vary with the success of the annuity’s investment policy. In other words, the annuitant is not guaranteed a fixed level of benefits, rather the payment amount will vary depending upon the value of the stock portfolio upon maturity. Such variable annuities are considered akin to an investment contract, because they place all the investment risk on the [purchaser] and guarantee nothing to the annuitant except an interest in a portfolio of common stocks or other
equities . . . .”)(internal citations omitted).
A fixed index annuity is a hybrid financial product that combines some of the benefits of fixed annuities with the earning potential associated with a security. Am. Equity Inv. Life Ins. Co., 613 F.3d at 168. Like fixed annuities, fixed
index annuities provide downside protection through a minimum guaranteed rate of return. However, the seller of the annuity “credits the purchaser with a return that is based on the performance of a securities index, such as the Dow Jones Industrial Average, Nasdaq 100 Index, or [the] Standard & Poor’s
500 Index.” Id. Therefore, depending on the index’s performance, the return on a fixed index annuity might be much higher than the guaranteed return. Id.
The fixed index annuity may have a participation rate that limits the buyer’s upside. For example, if a particular
fixed index annuity has an 80 percent participation rate and is tied to the Standard and Poor’s 500, then that annuity would return 8 percent if the Standard and Poor’s 500 rose 10 percent that year.
In short, a fixed index annuity provides principal protection in a down stock market. While the potential return is less than what one would expect from a variable annuity, it is greater than what one would expect from a certificate of deposit or a fixed annuity. Therefore, a fixed index annuity appeals to someone who desires an opportunity to experience gains in a good market while also receiving protection from market downturns.
For an additional fee, a purchaser can customize an annuity through the addition of “riders.” For example, an annuity with a guaranteed income rider provides a guaranteed amount of income for the annuity owner’s life. That income stream continues even if declines in the stock market cause the principal to dissipate.
That guaranteed income stream does not start until it is activated by the annuity owner. Until activation, the money associated with the rider grows at a guaranteed rate of return, known as the “roll-up rate,” so long as the annuity owner does not activate the income stream.
That guaranteed income stream can be destroyed if the annuity owner takes a withdrawal from the annuity’s principal.
Surrender charges are another annuity feature and provide that the buyer will be penalized if he or she withdraws money from the annuity. Surrender charges usually apply during the first five to ten years after the annuity’s purchase and gradually decline over time. For example, an annuity could have a 10 percent surrender charge if the owner withdraws money during the first three years after purchase. During the next three-year period, that surrender charge may decrease to 7 percent. By the tenth year after purchase, the surrender charge could have decreased to 3 percent.
Before a sale is completed, Florida law requires that insurance agents ensure that an annuity is “suitable” for the client. For example, section 627.4554(4)(a), Florida Statutes (2012), imposed the following duty on insurers and insurance
agents:
In recommending to a senior consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, an insurance agent, or an insurer if no insurance agent is involved, shall have reasonable grounds for believing that the recommendation is suitable for the senior consumer on the basis of the facts disclosed by the senior consumer as to his or her investments and other insurance products and as to his or her financial situation and needs.
The current version of section 627.4554 does not limit the suitability analysis to senior consumers and sets forth additional detail about the content of a suitability analysis:
When recommending the purchase or exchange of an annuity to a consumer which results in an insurance transaction or series of insurance transactions, the agent, or the insurer where no agent is involved, must have reasonable grounds for believing that the recommendation is suitable for the consumer, based on the consumer’s suitability information, and that there is a reasonable basis to believe all of the following:
The consumer has been reasonably informed of various features of the annuity, such as the potential surrender period and surrender charge; potential tax penalty if the consumer sells, exchanges, surrenders, or annuitizes the annuity; mortality and expense fees; investment advisory fees; potential charges for and features of riders; limitations on interest returns; insurance and investment components; and market risk.
The consumer would benefit from certain features of the annuity, such as tax-deferred growth, annuitization, or the death or living benefit.
The particular annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and riders and similar product enhancements, if any, are suitable; and, in the case of an exchange or replacement, the transaction as a whole is suitable for the particular consumer based on his or her suitability information.
In the case of an exchange or replacement of an annuity, the exchange or replacement is suitable after considering whether the consumer:
Will incur a surrender charge; be subject to the commencement of a new surrender period; lose existing benefits, such as death, living, or other contractual benefits; or be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements;
Would benefit from product enhancements and improvements; and
Has had another annuity exchange or replacement, including an exchange or replacement within the preceding 36 months.
§ 627.4554(5)(a), Fla. Stat. (2018).
Despite section 627.4554, the suitability analysis tends to be subjective in nature. Extreme circumstances notwithstanding, it is fair to say that reasonable people could reach different conclusions about what annuity would be best for a certain person.
The Parties
The Department is the state agency responsible for regulating and licensing insurance agents and agencies. That responsibility includes disciplining licensed agents and agencies for violations of the statutes and rules governing their profession.
At all times relevant to the instant case, Ms. Dorrell was a Florida-licensed insurance agent selling fixed annuities and fixed index annuities. She owns SFS, a licensed insurance
agency located in The Villages, Florida. Ms. Dorrell is not licensed to conduct securities business.
Count I – Frederic Gilpin
Frederic Gilpin was born in 1940 and worked in the automobile industry, primarily as a service manager in dealerships, for 44 years before retiring in 2006.
Mr. Gilpin purchased a Prudential variable annuity in 2006 through Bryan Harris, an investment advisor in Maryland, for
$260,851.14.
By September 30, 2007, the value of Mr. Gilpin’s Prudential variable annuity had increased to $326,557.31. On December 31, 2007, its value had fallen to $319,877.84.
On December 31, 2008, Mr. Gilpin’s Prudential variable annuity was worth only $200,989.32. By March 31, 2009, its value had fallen to $183,217.37. The decrease in the annuity’s underlying value coincided with the precipitous declines experienced by the stock market in 2008 and 2009.
On May 1, 2009, Mr. Gilpin exercised a rider in the Prudential annuity contract that guaranteed a yearly income of
$15,625. That annual income would continue for the rest of his life regardless of the stock market’s performance.
The guaranteed income stream would only be destroyed if Mr. Gilpin withdrew from the annuity’s principal.
Mr. Gilpin and his wife met with Ms. Dorrell in 2012 to discuss their financial situation. Mr. Gilpin reported that he was very concerned with income, preservation of assets, and maximizing growth. According to Ms. Dorrell, Mr. Gilpin “did express to me that he was concerned about a downturn [in the stock market] because he had already gone through one in [2007 and 2008] and lost quite a bit of money in the annuity.”
Mr. Gilpin also told her that he and his wife had committed “financial suicide” because “he had taken excess withdrawals from his variable annuity when they went to buy [their home in Florida] and that they were constantly invading their investments to help their children and they needed to stop that.”
As recommended by Ms. Dorrell, Mr. Gilpin surrendered the Prudential annuity and used the proceeds to purchase a fixed index Security Benefit annuity. The purchase price of approximately $205,000 for the Security Benefit annuity was allocated between two accounts whose performance was tied to the Standard and Poor’s 500.
Mr. Gilpin filled out a Department form titled “Annuity Suitability Questionnaire” on September 26, 2012, and reported that he was purchasing the Security Benefit annuity for “safety of principal + guarantee.” He also reported that he planned to keep the Security Benefit annuity for 10 years.
At the time of this transaction, the Prudential annuity had four more years of surrender charges, and Mr. Gilpin started a new 10-year period of surrender charges associated with the Security Benefit annuity.4/
Mr. Gilpin incurred a surrender charge of $13,077.56 for surrendering the Prudential annuity. The surrender charge was more than offset by the 8 percent bonus (i.e., $16,000) he earned by purchasing the Security Benefit annuity. However, the
8 percent bonus was subject to recapture for the first six years.
With the Security Benefit annuity, Mr. Gilpin could withdraw 10 percent of the money without penalty after the first year.
If Mr. Gilpin waited until 2016 to take income from the Security Benefit annuity, then he would be getting over $17,000 a year in guaranteed income for his lifetime. If he died, then the guaranteed income stream would continue for his wife’s lifetime.
Mr. Gilpin had no pressing need for income in 2012 because he had used the sale from his home in Maryland to acquire a home in Florida, and he had $50,000 left over.
The Prudential annuity did not have a home healthcare doubler, and the Security Benefit annuity did. That feature increases the annuity purchaser’s income stream if he or she becomes disabled.
The Security Benefit annuity had a 100-percent participation rate, and a 7-percent roll up rate. In contrast the Prudential annuity only offered a 5-percent roll up rate.
In retrospect, Mr. Gilpin considers the move from the Prudential annuity to the Security Benefit annuity to be unwise. In recent years, Mr. Gilpin and his wife have experienced significant health issues. By purchasing the Security Benefit annuity and extending the amount of time that their funds were committed to relatively illiquid annuities, the Gilpins would likely have incurred substantial penalties if they had needed to use those funds to finance their medical treatment.
Fortunately, the Gilpins are well-insured and were not compelled to take such drastic measures.
Mr. Gilpin is also critical of Ms. Dorrell for recommending that he move his money from a variable annuity to a fixed index annuity. As a result, his holdings did not appreciate as much when the stock market rebounded from the lows of the most recent recession. Given that the Prudential annuity guaranteed him annual income of $15,625 regardless of valuations in the stock market, Mr. Gilpin stated “[t]here’s no way in the world [the Security Benefit annuity] could have been better for me, especially since the stock market has gone up.”
This criticism is unfounded. It is exceedingly difficult to predict whether the stock market will go up or down,
and Mr. Gilpen’s testimony enjoys the benefit of “20/20 hindsight.”
A strongly contested point between the Department and Ms. Dorrell concerns whether Mr. Gilpin destroyed his guaranteed income stream by taking an excess withdrawal from the Prudential annuity. If he had, then it would be more difficult for the Department to argue that the Security Benefit annuity was not a suitable replacement for the Prudential annuity.
In that regard, there is evidence suggesting that Mr. Gilpin took an excess withdrawal in 2010 and/or 2011.
For example, Mr. Gilpin appeared to acknowledge during his testimony that he had taken an excess withdrawal from the Prudential policy in order to assist his daughter with purchasing a condominium.5/
Mr. and Mrs. Gilpin’s income tax return for 2010 indicates that they received $44,423.00 from “pensions and annuities.” That amount is listed separately from $15,626 attributed to “IRA distributions.”
The Gilpin’s 2011 income tax return indicates they received $32,005.00 from “IRA distributions” and $43,778.00 from “pensions and annuities.”
The evidence indicating that Mr. Gilpin may have taken an excess withdrawal corresponds with when the Gilpins moved to Florida and bought a house in 2011. According to Ms. Dorrell,
Mr. Gilpin stated during a meeting with her on September 21, 2012, that “he had made an excess withdrawal to buy the house in Florida, because when they were down here, they found something and they didn’t want to lose out, so they took extra money out.”
Also, Ms. Dorrell testified that she called Prudential and confirmed that he took an excess withdrawal in 2011.
However, even if Mr. Gilpin had not destroyed the guaranteed income from the Prudential annuity, the evidence does not clearly and convincingly establish that the Security Benefit annuity was not a suitable replacement for the Prudential annuity.
In sum, the Department failed to prove by clear and convincing evidence that Ms. Dorrell or SFS violated any statutes or rules in conducting business with Mr. Gilpin.
Count IV – Deborah Gartner’s Annuities
Deborah Gartner is a 71-year old widow who met
Ms. Dorrell at an SFS seminar in 2007. Ms. Gartner filled out an SFS form indicating that her net worth was between $500,000 and
$1 million.
In January of 2008, Ms. Gartner met with Ms. Dorrell in order to seek financial advice. Ms. Gartner had $201,344.14 in a Guardian Trust account and $195,182.44 in a Guardian Trust IRA. In addition, Ms. Gartner owned an $80,000 certificate of deposit. On a monthly basis, Ms. Gartner was receiving $1,381 from social
security, $786.15 from a pension, and $4,500 from investment withdrawals. The latter came from depleting principal rather than interest. Ms. Gartner also earned income from teaching one to three Zumba classes a week. One hundred people would attend those classes and pay $10 a person.
At the time of the January 2008 meeting, the stock market was declining, and Ms. Gartner was adamant about getting out of equities. Ms. Dorrell told Ms. Gartner that annuities would be appropriate if she was interested in principal protection and guaranteed income.
Because she lacked a securities license, Ms. Dorrell could not legally recommend or instruct Ms. Gartner to liquidate her equity investments, and Ms. Dorrell credibly denies doing so.
Ms. Gartner was able to liquidate her Guardian Trust accounts without incurring any fees.
The funds from the Guardian Trust accounts were used to purchase two Allianz and two American Equity annuities on February 1, 2008.
The Department criticizes Ms. Dorrell for directing Ms. Gartner’s funds into four annuities rather than just two. Ms. Dorrell explained that this was intended to increase
Ms. Gartner’s income:
Q: Now, Mr. Davis this morning was explaining the reason for having multiple annuities. And if I understood him, it was
that if you have multiple annuities and you want to either take a withdrawal or whatever other thing, you have to do it at a specific amount based upon the amount of the annuity; is that correct?
A: Yes, that’s correct. It’s - - -
Q: Well, for example, if you’re going to take a 10 percent penalty-free withdrawal, if you have a $75,000 annuity, you take $7,500.
A: Right.
Q: If you had a $150,000 annuity, you’re stuck at 15,000.
A. Right.
Q: But if you’ve got two $75,000 annuities, you could take it from one and leave the other one without being reduced?
A: Yeah, some of the companies – some of the companies only allow a penalty-free withdrawal after the first year, but then once somebody makes a penalty-free withdrawal, some of the companies make them wait around another 12 months before they could make another one. So if she only needed $7,500 and she had 15,000 available, but then she needed the rest of it before the
12 months went by, she might have a problem. So that’s the reason I staggered the accounts for her and for many clients that are taking income.
Q: In your opinion, was this suitable for Ms. Gartner at that time?
A: Yes, it was.
Q: Did you believe it was in her best interest?
A: Yes.
In March of 2008, Ms. Gartner used the $80,000 from her certificate of deposit to purchase a Reliance Standard fixed index annuity. At that time, the certificate of deposit was coming due and had been paying 3.9 percent. The Reliance Standard annuity offered 4.5 percent along with an additional
1 percent for the first year. The minimum guaranteed rate was
3 percent.
As for why she recommended that Ms. Gartner purchase the Reliance Standard annuity, Ms. Dorrell testified as follows:
Deborah was very sensitive to creditor protection. Due to what her husband had done for a living, he often told her about making sure your assets are creditor-protected. She had a son that had a problem with being – having assets seized. I believe it was in a divorce or some sort of lawsuit.
And so one of her things that she liked about the annuities is that they gave her creditor protection. So she still had the CD at the bank that was at risk if for some reason something happened and she needed her assets protected. It wasn’t paying as much. She wanted to get more income, and she wanted principal protection and safety.
By January of 2011, Ms. Gartner wanted more income, and Ms. Dorrell recommended that the Reliance Standard annuity be split into two annuities. Surrendering the Reliance Standard annuity caused Ms. Gartner to incur a $5,132.56 surrender charge
and left her with $72,496.03 from the initial $80,000 purchase. She used $43,815 of the $72,496.03 to purchase an American Equity annuity that offered a guaranteed minimum interest rate of
3 percent. However, the American Equity annuity also had
16 years of surrender charges, and the surrender charge for the first year was 20 percent.
Ms. Gartner used $26,185 of the $72,496.03 to purchase a North American annuity.
As for the reasoning behind recommending the surrender of the Reliance Standard annuity, Ms. Dorrell testified as
follows:
A: I recommended, because she wanted more income, and my concern was she was getting to the point where she might be having to live on her IRA monies, which would be a taxable event. So I made a recommendation that we do a split annuity with the money that was in the Reliance to give her more income and less taxes.
Q: Can you explain how that’s done?
A: Yes. So, a split annuity is like a bucket concept. In her case we use two buckets. One was going to be the
immediate annuitization in the North American that would then give her $150 more a month in income with much less taxation. Only a small portion of that payment would be taxable.
And then on the other side was the American Equity which was purchased for accumulation over that same 5-year time frame that the North American would be paid out, so when the North American balance went to zero, she’d have the same amount of money in her American
Equity policy as she started with when she bought both of them.
Q: So how long a period of time would this provide the same income for her?
* * *
A: For the rest of her life. That was the reason for buying the American Equity, because it would remain – when we used the rider on that side, it would give her guaranteed income for as long as she lived and she was concerned about that because her parents were both in their nineties.
Q: In your opinion, were these purchases suitable for her?
A: Yes, they were.
Q: And the surrender of the Reliance Standard, was that suitable?
A: Yes.
Q: Because that was a source of the funds to obtain the other two annuities; is that right?
A: Yes.
Ms. Dorrell also addressed the Department’s allegation that it was ill-advised to incur a $5,132.56 charge for surrendering the Reliance Standard annuity:
Q: It’s been alleged that the liquidation of the Reliance Standard annuity cost
Ms. Gartner $5,132.56 and, apparently, that it shouldn’t have cost her or that it was a bad idea to surrender the policy. Does that take into account what’s known as the market value adjustment?
A: No. So many just straight fixed annuities and some fixed index annuities, in particular we’re speaking of the Reliance Standard fixed annuity, they come with what’s called a market value adjustment. It’s really something that an insurance company determines if they’re going to give them a positive market value adjustment or a negative value adjustment. So a negative market value adjustment could make a higher surrender charge and a positive market value adjustment could make a lower surrender charge, and they’re sort of driven by interest rates.
So at that time, if you remember, you know, 2011 interest rates were, you know, still very low. But it was a good time, if you had an annuity with a market value adjustment, it was a good time to consider changing it because they would still have positive market value adjustments, which by the next year, the next six months later, exactly what I knew would happen is all those market value adjustments went negative.
So not only would it have cost her the percentage rate on the surrender penalty to get out, she would have paid an additional negative market value adjustment. And this way it was timed to better her annuity anyway and she ended up in the positive.
Q: Was there a positive market value adjustment?
A: Yes.
Q: $1,700?
A: Correct.
Q: And was there also a bonus on the American Equity?
A: Yes.
Q: And do you know what the bonus was?
A: 10 percent.
Q: And what was that, about $3,000?
A: I think she put 43,000 in there, so it was about $4,300.
Q: So after the surrender, taking into account the market value adjustment, taking into account the bonus on the American Equity, in fact, wasn’t she $1,000 ahead?
A: Yes.
The Department argues that Ms. Dorrell gave investing advice to Ms. Gartner and that Ms. Dorrell’s actions led to a depletion of Ms. Gartner’s assets. Ms. Dorrell addressed those allegations as follows:
Q: It’s alleged in the administrative complaint that Ms. Gartner’s assets were depleted by the exchange of policies and also that you gave securities advice. First of all, were her assets in any way depleted?
A: No.
Q: She takes at the beginning $300,000 cash. She buys $300,000 worth of annuities. And the annuity companies add 10 percent, so initially she takes $300,000, truly liquid asset[s], but earning very little, and now she’s got $330,000 in the annuities; is that right?
A: Yes.
Q: Is there any depletion of her assets there?
A: No.
Q: Two months later, March of 2008, she takes an $80,000 CD and buys an $80,000 Reliance Standard annuity. Is there any depletion of assets there?
A: No.
Q: Later on she takes the $80,000 Reliance Standard annuity and converts it to a total of almost $80,000 in American Equity and National American?
A: North American, yes.
Q: North American? Is there any depletion of assets there?
A: No.
Q: Do all of these annuities actually earn income?
A: Yes.
Q: Did the principal balance of any of these assets decline?
A: No.
Q: In comparison to the stock market where there’s volatility up and down and your account may vary, did Ms. Gartner’s accounts ever vary or get lower?
A: No.
Q: Do you know the difference between giving advice on insurance and on securities?
A: Yes.
Q: Now, honestly, I’m not quite sure what is advice on securities, but I assume it is sell this one and buy another one?
A: Right.
Q: Did you make any recommendation that she sell a particular security?
A: No, I did not.
Q: Did you make a recommendation that she buy a particular stock?
A: No, I did not.
Q: Other than advising her that she needs to get the source of some funds to buy the annuities, and they would have to come from her accounts, is that the only advice you gave her?
A: Yes.
In sum, the Department failed to prove by clear and convincing evidence that Ms. Dorrell or SFS violated any statutes or rules in conducting business with Ms. Gartner.
Count V – Gartner’s Real Estate
Ms. Gartner and Ms. Dorrell became friends, and
Ms. Gartner sought Ms. Dorrell’s advice in 2012 about selling her home in Summerfield, Florida. At that time, Ms. Gartner wanted to acquire a smaller home in The Villages, Florida. However, Ms. Gartner was having difficulty selling the Summerfield home.
Along with referring Ms. Gartner to a real estate agent, Ms. Dorrell allegedly advised her to stop paying the mortgage on her Summerfield home and to do a short sale.6/ Ms. Dorrell denies making either recommendation.
Ms. Dorrell spent $3,100 on “staging” the Summerfield home in order to make it appear more attractive to potential buyers.
Ms. Gartner and Ms. Dorrell informally agreed that Ms. Gartner would select a house in The Villages, Ms. Dorrell
would purchase it, and Ms. Gartner would then buy the house from her. Ms. Dorrell made the initial purchase because Ms. Gartner lacked funds and/or a good credit rating following the short
sale.
Ms. Gartner and Ms. Dorrell discussed Ms. Gartner
purchasing the villa from Ms. Dorrell, but they never reached a formal agreement on terms.
Because a short sale would have a negative impact on her credit rating, Ms. Dorrell allegedly advised Ms. Gartner to buy a new car prior to executing the short sale.
Ms. Gartner sold her 2003 Mazda Tribute to Ms. Dorrell for $10,000, and Ms. Gartner purchased a new car.
Ms. Dorrell then gave the Mazda Tribute to Diana Johnson, an SFS employee. Ms. Dorrell deemed the car to be income, and Ms. Johnson declared it on her tax return.
Ms. Gartner selected a villa in The Villages, and
Ms. Dorrell purchased it for $229.310.78 on November 1, 2012. Of the aforementioned amount, Ms. Gartner paid $10,000, and
Ms. Dorrell paid the remaining $219,310.78. At this point in time, Ms. Dorrell was the legal owner of the villa.
Ms. Gartner could not move into the villa immediately after the sale because it was being rented, and the tenants’ lease extended through April of 2013.
Ms. Dorrell received the rental payments of $1,800 per month and paid the expenses associated with the villa between November of 2012 and April of 2013. Those expenses included items such as home insurance, cable television, lawn maintenance, and utilities.
By May of 2013, Ms. Gartner had completed a short sale of her Summerfield home. She received a short sale benefit of
$36,775.00 and a seller assistance payment of $3,000.00.
Ms. Gartner moved into the villa in May of 2013. At that point in time, there was no formal agreement between
Ms. Gartner and Ms. Dorrell about when Ms. Dorrell would sell the villa to Ms. Gartner or how Ms. Gartner would pay Dorrell for it.
Ms. Gartner paid no rent to Ms. Dorrell from May of 2013 through April of 2014.
In November of 2014, Ms. Dorrell sold the villa to Ms. Gartner for approximately $219,000, the same price that Ms. Dorrell paid for it.
In order to finance the sale, Ms. Gartner executed a promissory note that would pay Ms. Dorrell $100,000 with
4-percent interest. Ms. Dorrell did not record that promissory note.7/
In order to finance the remainder of the purchase price, Ms. Gartner obtained a reverse mortgage. Ms. Dorrell allegedly pressured Ms. Garter to obtain the reverse mortgage, but Ms. Dorrell denied having any discussions with Ms. Gartner about a reverse mortgage.
There is a substantial amount of disagreement between Ms. Gartner and Ms. Dorrell as to who was entitled to receive the rental payments. They also disagree about the expenses associated with maintaining the villa prior to Ms. Gartner moving in. This is not surprising given the lack of a written agreement between them.
The Department’s Exhibit 185J purports to be an accounting of the rental income and expenses associated with the villa prior to Ms. Gartner moving in, and it suggests that
Ms. Gartner should have received or been credited for an additional $17,950.51. Ms. Dorrell had Diana Johnson prepare Exhibit 185J, but there is substantial reason to question
Ms. Johnson’s credibility about the interpretation of Exhibit 185J.8/
Ms. Gartner ultimately sold the villa for $285,000.
Ms. Dorrell filed a mortgage foreclosure action against Ms. Gartner in order to recover the balance of the money
Ms. Gartner owed her. Part of that litigation involved a reconciliation of expenses associated with the villa prior to Ms. Gartner moving in.
Following a mediation conference on June 6, 2017,
Ms. Gartner agreed to pay $97,500 to Ms. Dorrell in settlement of the foreclosure action.
In the Administrative Complaint, the Department alleges that Ms. Dorrell acted “wrongfully” through the following actions: (a) advising Ms. Gartner to stop making mortgage payments on the Summerfield home; (b) advising Ms. Gartner to buy a new car and purchasing Ms. Gartner’s used car; (c) arranging for the purchase of the villa and accepting a $10,000 deposit from Ms. Gartner without giving her credit for it; (d) not crediting Ms. Gartner for paying expenses associated with taking possession of the villa; (e) directing Ms. Gartner to sign a
$100,000 promissory note; (f) making Ms. Gartner responsible for all of the property taxes owed for the villa in 2014;
pressuring Ms. Gartner to procure a reverse mortgage; and
arranging for Ms. Gartner to use funds from an IRA account to pay off the promissory note.
Ms. Dorrell’s failure to have a written agreement governing her acquisition and subsequent sale of the villa to Ms. Gartner was foolhardy. Without such an agreement, conflicts regarding the villa were inevitable.
However, the evidence does not clearly and convincingly establish that Ms. Dorrell violated any statutes or rules in her dealings with Ms. Gartner.
Count VI – Earl Doughman
Earl Doughman was born on December 6, 1934. After completing a two-year stint of military service in 1958, Mr. Doughman spent the next 40 years managing a company’s inventory. At some point after his retirement,
Mr. Doughman and his wife moved from Cincinnati, Ohio to The Villages.
On August 4, 2008, Mr. Doughman purchased a Midland National Deferred Annuity (“the Midland annuity”) from
Ms. Dorrell. That annuity provided a 5.25-percent guaranteed interest rate for five years. The annuity did not have an income rider or a home healthcare doubler.
In 2013, Mr. Doughman visited SFS to inquire about purchasing another annuity. According to Mr. Doughman, he dealt exclusively with Diana Johnson and never met with Ms. Dorrell about his finances.9/
Ms. Johnson allegedly advised Mr. Doughman to utilize 10-percent penalty free withdrawals from the Midland annuity and a Fidelity and Guaranty annuity to fund the acquisition of a Security Benefit annuity for $29,492.
The Department asserts that the Security Benefit annuity was not a suitable replacement for the Midland annuity.
The Midland annuity was a fixed annuity and the Security Benefit was a fixed index annuity.
The Midland annuity had five more years of surrender charges, and the surrender charge for each year was 10 percent. The purchase of the Security Benefit annuity resulted in
Mr. Doughman beginning a new 10-year term of surrender charges. Those surrender charges were 10 percent for the first five years, but gradually declined to 0 percent by year 10.
As noted above, Mr. Doughman could withdraw 10 percent a year from the Midland annuity without incurring a penalty. With the Security Benefit annuity, he would incur a 10 percent surrender charge after the first year.
The Midland annuity provided a minimum guaranteed interest rate of 1 percent, and the Security Benefit Annuity had no minimum guarantee. However, the Security Benefit annuity came with a 9-percent bonus based on the premium amount. As a result, Mr. Doughman received approximately $2,654.28 upon purchasing the Security Benefit annuity.
The Midland annuity had a 5.25-percent interest rate cap for the first year. By 2013, the Midland annuity was paying
3 percent.
The participation rate in both annuities was
100 percent.
The Security Benefit annuity had a home healthcare doubler, and the Midland annuity did not.10/ However, the Midland annuity had a death benefit and a terminal illness rider that would result in the waiver of surrender penalties if they were activated.
Ms. Dorrell testified as follows as to why the Security Benefit annuity was more suitable for Mr. Doughman than the Midland annuity:
Q: Why is the Security Benefit [annuity] a better product for Doughman?
A: Because it has the home healthcare doubler that he desperately needed. It has the income rider. It has the upside potential in the stock market with not any downside potential whatsoever. It has a fixed account inside of it that would have paid close to the same amount that the Midland had renewed out at 3 percent. So why wouldn’t he buy something that he can get a bonus on, not lose anything from the Midland, and have the ability to make more money than what he was going to make if he stayed at Midland? It makes perfect sense to move that.
Mr. Doughman was concerned about whether he was actually earning 4 percent on the annuity contract amount as had allegedly been represented to him. Therefore, Mr. Doughman asked Don Geist, an insurance agent with Financial Solutions Group of Florida, to review the terms of this Security Benefit annuity.
Mr. Geist is a competitor of Ms. Dorrell’s and determined that the 4-percent interest rate applied only to the annuity’s income rider.11/
With Mr. Geist’s assistance, Mr. Doughman wrote a letter to Security Benefit on April 14, 2014, seeking the termination of the Security Benefit annuity and a refund of the
$29,492.30 he paid to acquire that annuity.12/
Security Benefit refunded the money that Mr. Doughman had paid to acquire the Security Benefit annuity.
Ms. Dorrell learned of Mr. Doughman’s complaint in April of 2014. In response, she had Ms. Johnson use SFS’s records to prepare a chronology and description of Mr. Doughman’s meetings with SFS. Ms. Johnson then transmitted the following
e-mail to Ms. Dorrell’s attorney on April 29, 2014, indicating that Ms. Johnson did not sell an annuity to Mr. Doughman:
Hi Jed,
Here is a timeline of when the Doughmans came to our office and who they met with:
July 17, 2012 attended Seminar, which Jean was the speaker.
July 31, 2012, met with Goldie, who was a licensed agent and discussed annuities.
August 28, 2013, met with Jean for a review and purchased annuity.
August 29, 2013, brought in beneficiary information and gave to Diana.
October 3, 2013, met with Jean for policy delivery.
February 21, 2014, met with Diana and the Doughmans expressed concern re: a salesman that came to their door inquiring about their finances and dropped off card from Don & Tim Geist from Financial Solutions.
The Department alleges that Ms. Dorrell committed wrongdoing by having unlicensed agency personnel (i.e., Diana Johnson): (a) perform prohibited sales activities with respect to Mr. Doughman’s transactions of insurance; (b) unreasonably recommend the partial surrender of senior consumer Doughman’s existing annuities to fund the purchase of the Security Benefit annuity; (c) misrepresent the percentage return on the Security Benefit policy by including a costly rider to the policy; and
(d) advising Mr. Doughman that the cap on the indexed Security Benefit policy was two points lower than the cap on his indexed Midland annuity.
The evidence does not clearly and convincingly establish that Ms. Dorrell or SFS violated any statutes or rules in dealing with Mr. Doughman.
Count VII – Margaret Dial
Margaret Dial was born in 1950 and earned a high school diploma. She was married for 42 years.
During her marriage, she worked as a bookkeeper until she took an early retirement to care for her mother.
Ms. Dial receives income from a pension and social security. Ms. Dial met Ms. Dorrell in July of 2007 and purchased multiple annuities from her. One of those annuities was an Old Mutual annuity that she purchased on November 11, 2007.
In 2013, Ms. Dorrell advised Ms. Dial to surrender the Old Mutual annuity and use the proceeds to purchase a Security Benefit annuity. After incurring $16,560.39 in surrender charges, Ms. Dial received $129,901.21 in the form of a check mailed to her home.
Ms. Dial then wrote a check for $130,000 to purchase a Security Benefit annuity. The difference between the purchase price of the Security Benefit annuity and the proceeds from the surrender of the Old Mutual annuity was $98.79.
On March 12, 2013, Ms. Dial signed an application to purchase the Security Benefit annuity recommended by Ms. Dorrell for $130,000.
The application associated with the Security Benefit annuity was incorrect because it did not show that it was a replacement for the Old Mutual annuity.
The Department asserts in its proposed recommended order that:
[t]he manner in which [the Old Mutual annuity] was replaced shows that it was a smokescreen to avoid Old Mutual conservation efforts and to make the new purchase look like it was accomplished by fresh money. By
replacing her own business, Dorrell sold the same money twice, making commissions each time, while Ms. Dial incurred a $16,000 surrender penalty.
Instead of encouraging the sale, Dorrell should have conserved the Old Mutual business.
“Conservation” is the term used to describe an insurance company’s effort to retain existing business.
As for why it was problematic that the Security Benefit annuity was not identified as a replacement, Mr. Spinelli testified as follows:
A: Because this case – the first contract, [Old Mutual], was written by Dorrell, and she’s replacing her own business to move it to – having the check sent to the client’s house to avoid a conservation effort because it’s saying that she’s surrendering the policy for cash. A proper replacement, if it was a legitimate replacement, would have been a 1035 exchange from one company to another, therefore, avoiding any taxable events. If it was gains in this policy, which there might have been, by surrendering it, it could have created a tax event. And it also avoided the conservation effort that [Old Mutual] was trying to perform.
And then adding $99 created a different amount that was surrendered. So that’s a big smokescreen to the company that it was a different amount than was surrendered.
Q: So it looks like fresh money, so to speak?
A: Correct. And there was [a] $16,604 surrender charge when that transaction was done. The – that’s the case of that money being sold twice. Dorrell sold that money
twice there. She sold it with [Old Mutual} and then she turned around and sold it again with Security Benefit. She made commission twice on that.
Q: If that were – if, in fact, that had been indicated as a replacement, how do companies look upon – do they look upon these kinds of replacements with a jaundiced eye, so to speak? I’m talking about where the real facts are set forth.
A: The company I work for, they do. They take conservation very seriously, especially in a situation like this where the money’s being sent to somebody’s home.
Q: And so isn’t the reason for the comparison sheet between the two annuities, to try to point out to the underwriting people that, if the facts are true, then they may or may not allow for issuance of the annuity, the replacement annuity; correct?
A: Well, they have to eventually comply with the client’s wishes. If the client insists on surrendering that and making a terrible mistake and paying $16,000 surrender charges, there’s nothing the company can do to stop it. But they can have the agent try to conserve the business.
Q: And that’s what the agent should be doing?
A: Correct.
ALJ: I’ve heard the term conserve. I have a pretty good idea – think I know what it means, but no one’s actually defined it for me. Could you formally define what conserve is?
A: Yeah. Conserve, conservation, you’re conserving the business on the books for that company for your clients. You should be conserving the business for your clients.
Why are they leaving? You know, quality companies have a high retention rate in their business. It’s because of conservation efforts.
ALJ: Okay. Thank you.
A: If you have more business leaving the company, your ratings are going to go down. It’s going to be detrimental to the company. Not just the company, but to the clients they serve.
Ms. Dorrell acknowledged during her direct testimony that she failed to make the proper notation on the application form. However, she disputed Mr. Spinelli’s assertion that her failure prevented Old Mutual from initiating conservation
efforts:
Q: Now, on that third page with respect to the question, “Does this proposed contract replace or change any existing annuity or life insurance policy,” the answer is no. Is that incorrect?
A: It’s incorrect, yes.
Q: Did you notice that when the application was completed and was shown to Margaret Dial?
A: I did not.
Q: Were you with Margaret Dial when the application was shown to her?
A: Yes.
* * *
Q: At some point did you discover that there was an error on the application before the administrative complaint was filed?
A: No.
Q: Okay. Now, what impact would that incorrect answer have in regard to the transaction?
* * *
A: Well, it’s a replacement. I should have checked yes. I mean, that was an error on my part.
Q: Did you do that intentionally?
A: No.
Q: Okay. So, again, did this have an impact on Margaret Dial, financial impact?
A: No. Simply because we had discussed that she would pay a surrender charge, and she knew that she was paying it, and she knew what the bonus was as presented in my illustration to her on the Security Benefit annuity. It showed her the bonus. It showed her how her money grew at 7 percent each year, what the value would be, so she knew it took about a year to get back to where she was, and she was willing to pay that surrender penalty because of all the other benefits she was getting.
Q: I understand. Mr. Spinelli testified though that if an application is not marked that it is a replacement, that there might not be the conservation letter sent to the policy holder.
A: No, there’s a conservation letter sent regardless of that. No insurance company wants to lose business so they – as far as I know, all the companies I work with, they send conservation letters out to the client because they don’t want to lose the business, so they want to make sure that they’re informing the client what they may be giving up.
Q: So in other words, the Old Mutual that was being surrendered, whether it was being replaced or just being surrendered and
Ms. Dial was taking the money, Old Mutual would still send her a conservation letter.
A: Yes.
Q: Because she was cancelling the policy.
A: Yes, and they didn’t want to lose the business.
Q: And it’s irrelevant, really, whether it’s being replaced or whether it’s just being cashed out.
A: Right. They send it regardless.
* * *
Q: And this conservation letter that went to Ms. Dial advises her of the surrender charge, doesn’t it?
A: Yes.
Q: $16,560.39?
A: Yes.
The evidence does not clearly and convincingly demonstrate that Ms. Dorrell or SFS violated any statutes or rules in the dealings with Ms. Dial.
Count VIII - Unlicensed Activities
The Department alleges under Count VIII of the Administrative Complaint that Ms. Dorrell and/or SFS employees performed work without having the proper licensure.
Specifically, the Department alleges that SFS employees wrote Lady Bird deeds and wills without being licensed attorneys.
A Lady Bird deed enables a person to designate a child or some other beneficiary as the person who will take possession of the designator’s property after death.
The Department also alleges that Ms. Dorrell and/or SFS employees encouraged clients to liquidate security holdings without being licensed investment professionals.
The Department’s case largely depends on two former SFS employees with questionable credibility.
Laura Wipperman began working for SFS in July of 2010, providing support to Ms. Dorrell as an administrative assistant. Ms. Wipperman did not have an insurance license.
Ms. Wipperman left SFS in March of 2013, supposedly because of Ms. Dorrell’s harsh treatment of her employees. Nevertheless, Ms. Wipperman later returned to SFS as a receptionist.
Ms. Wipperman separated from SFS a second time in June of 2014. Ms. Dorrell was upset that Ms. Wipperman failed to timely prepare a file. After Ms. Dorrell had a tense confrontation with Ms. Wipperman, she told Diana Johnson to fire her.
Because Ms. Wipperman and Ms. Johnson were friends, Ms. Dorrell’s direction probably led to tension between
Ms. Dorrell and Ms. Johnson.
In approximately June of 2014, Ms. Dorrell fired Ms. Johnson for stealing money from SFS’s petty cash fund.
Ms. Wipperman and Ms. Johnson filed a complaint a few weeks later with the Department alleging that Ms. Dorrell had engaged in improper conduct.
Ms. Johnson also joined Ms. Gartner in reporting improper conduct by Ms. Dorrell to an organization called Seniors Versus Crime.
Ms. Johnson unsuccessfully pursued a claim alleging that Ms. Dorrell did not pay her what she was owed after the firing.
Ms. Johnson acquired an insurance license and began working for an SFS competitor in December of 2014.
Ms. Johnson and Ms. Wipperman had obvious reasons to hold a grudge against Ms. Dorrell, and that cast a great deal of doubt on the credibility of their testimony.
In addition, the undersigned found their testimony to be unpersuasive and unsupportive of the allegations made in Count VIII. Ms. Dorrell credibly testified that SFS refers
clients needing wills and/or deeds to attorneys. Also, there was no sufficiently credible testimony to clearly and convincingly
demonstrate that Ms. Dorrell instructed clients to liquidate their securities holdings.
In sum, the Department failed to prove its allegations under Count VIII by clear and convincing evidence.
Count IX - SFS Employees Performing Unlicensed Insurance Activites
The Department’s allegations under Count IX also substantially rely on the testimony of Ms. Wipperman and
Ms. Johnson. They testified that they performed activities that should have been handled by someone with an insurance license.
Those alleged activities included tasks such as selling insurance, reviewing products with clients, and encouraging clients to use penalty-free withdrawal money to acquire new annuities.
As found above, the undersigned does not find the testimony provided by Ms. Wipperman or Ms. Johnson to be credible or persuasive.
In sum, the Department failed to prove any of its allegations under Count IX by clear and convincing evidence.
CONCLUSIONS OF LAW
Pursuant to section 120.57(1), Florida Statutes (2017), DOAH has jurisdiction over the parties and subject matter of this proceeding.
The Department Must Prove Its Allegations by Clear and Convincing Evidence
A proceeding, such as this one, to impose discipline upon a license is penal in nature. State ex rel. Vining v.
Fla. Real Estate Comm'n , 281 So. 2d 487, 491 (Fla. 1973).
Accordingly, the Department must prove the charges against
Ms. Dorrell and SFS by clear and convincing evidence. Dep't of
Banking & Fin., Div. of Sec. & Inv. Prot. v. Osborne Stern & Co., 670 So. 2d 932, 933-34 (Fla. 1996)(citing Ferris v. Turlington,
510 So. 2d 292, 294-95 (Fla. 1987)); Nair v. Dep't of Bus. & Prof'l Reg., Bd. of Med., 654 So. 2d 205, 207 (Fla. 1st DCA
1995).
Regarding the standard of proof, the court in Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983),
stated that:
[C]lear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without
hesitancy, as to the truth of the allegations sought to be established.
Id.
The Florida Supreme Court later adopted the
Slomowitz court's description of clear and convincing evidence.
See In re Davey, 645 So. 2d 398, 404 (Fla. 1994). The First
District Court of Appeal has also followed the Slomowitz test, adding the interpretive comment that “[a]lthough this standard of proof may be met where the evidence is in conflict, . . . it seems to preclude evidence that is ambiguous.” Westinghouse
Elec. Corp. v. Shuler Bros. Inc., 590 So. 2d 986, 988 (Fla. 1st DCA 1991).
Count I – Frederic Gilpin
The Department alleges that Ms. Dorrell and SFS’s actions toward Mr. Gilpin violated the following statutory provisions.
Section 627.4554(4)(a), Florida Statutes (2012), provides in pertinent part that “[i]n recommending to a senior consumer the purchase or exchange of an annuity that results in another insurance transaction . . . an insurance agent . . . must have an objectively reasonable basis for believing that the recommendation is suitable for the senior consumer based on the facts disclosed by the senior consumer ”
Section 627.4554(4)(c)2., Florida Statutes (2012), requires in pertinent part that an insurance agent’s recommendation “shall be objectively reasonable under all the circumstances actually known to the insurer or insurance agent at the time of the recommendation.”
Section 626.611(5), Florida Statutes (2012), subjects an insurance agent to discipline for “[w]illful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract ”
Section 626.611(7), Florida Statutes (2012), subjects an insurance agent to discipline for a “[d]emonstrated lack of fitness or trustworthiness to engage in the business of insurance.”
Section 626.611(8), Florida Statutes (2012), subjects an insurance agent to discipline for a “[d]emonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.”
Section 626.611(9), Florida Statutes (2012), subjects an insurance agent to discipline for “[f]raudulent or dishonest practices in the conduct of business under the license or appointment.”
Section 626.611(13), Florida Statutes (2012), subjects an insurance agent to discipline for a “[w]illful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.”
Section 626.621(2), Florida Statutes (2012), subjects an insurance agent to discipline for a “[v]iolation of any provision of this code or of any other law applicable to the
business of insurance in the course of dealing under the license or appointment.”
Section 626.621(6), Florida Statutes (2012), subjects an insurance agent to discipline for “engaging in unfair methods of competition or in unfair or deceptive acts or practices . . . or having otherwise shown himself or herself to be a source of injury or loss to the public.”
Section 626.621(9), Florida Statutes (2012), provides that it is a violation for life insurance agents to violate their ethical code.
Section 626.9541(1)(a)1., Florida Statutes (2012), provides that it is an unfair practice to misrepresent “the benefits, advantages, conditions, or terms of any insurance policy.”
Section 626.9541(1)(e)1., Florida Statutes (2012), provides that it is an unfair practice to knowingly make “any false material statement.”
Section 626.9541(1)(l), Florida Statutes (2012), provides that it is an unfair practice to knowingly make “any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions . . . with respect to any insurance policies or insurers for the purpose of inducing
. . . any person to . . . surrender . . . any insurance policy or to take out a policy of insurance in another insurer.”
Section 626.9521(2), Florida Statutes (2012), provides that any person who violates any provision of the Unfair Insurance Trade Practices Act is subject to being fined.
The Department also alleges that Ms. Dorrell and SFS’s conduct toward Mr. Gilpin violated provisions within the Florida Administrative Code. One of those provisions is Florida Administrative Code Rule 69B-222.060 which provides that:
The following actions are never allowable by unlicensed personnel.
Comparing insurance products; advising as to insurance needs or insurance matters; or interpreting policies or coverages.
Binding new, additional, or replacement coverage for new or existing customers; or binding coverage on or recording additional property under existing policies.
Soliciting the sale of insurance by telephone, in person, or by other communication. However, the unlicensed person may telephone persons to set appointments for licensed and appointed agents, customer representatives, or solicitors, or to obtain basic policy information as to existing insurance coverage. The unlicensed person may not engage in a substantive discussion of insurance products.
The other rule in question is Florida Administrative Code Rule 69B-215.201, which states that:
The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by
understanding and observing the laws governing Life Insurance in letter and in spirit by presenting accurately and completely every fact essential to a client’s decision, and by being fair in all relations with colleagues and competitors always placing the policyholder’s interests first.
The Department failed to prove any of its allegations involving Mr. Gilpin by clear and convincing evidence.
Count IV – Deborah Gartner’s Annuities
The Department alleges that Ms. Dorrell and SFS’s actions with regard to Ms. Gartner’s annuity transactions violated the following statutory provisions.
Section 626.611(5), Florida Statutes (2007-10), subjects an insurance agent to discipline for “[w]illful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract
. . . .”
Section 626.611(7), Florida Statutes (2007-10), subjects an insurance agent to discipline for a “[d]emonstrated lack of fitness or trustworthiness to engage in the business of insurance.”
Section 626.611(8), Florida Statutes (2007-10), subjects an insurance agent to discipline for a “[d]emonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.”
Section 626.611(9), Florida Statutes (2007-10), subjects an insurance agent to discipline for “[f]raudulent or dishonest practices in the conduct of business under the license or appointment.”
Section 626.611(13), Florida Statutes (2007-10), subjects an insurance agent to discipline for a “[w]illful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.”
Section 626.621(2), Florida Statutes (2007-10), subjects an insurance agent to discipline for a “[v]iolation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment.”
Section 626.621(6), Florida Statutes (2007-10), subjects an insurance agent to discipline for “engaging in unfair methods of competition or in unfair or deceptive acts or practices . . . or having otherwise shown himself or herself to be a source of injury or loss to the public.”
Section 626.621(9), Florida Statutes (2007-10), provides that it is a violation for life insurance agents to violate their ethical code.
Section 626.621(12), Florida Statutes (2007-10), provides an insurance agent from “[k]knowingly aiding, assisting,
procuring, advising, or abetting any person in the violation of or to violate a provision of the insurance code or any order or rule of the department ”
174. Section 626.9541(1)(a)1., Florida Statutes (2007-10), provides that it is an unfair practice to misrepresent “the benefits, advantages, conditions, or terms of any insurance policy.”
175. Section 626.9541(1)(e)1., Florida Statutes (2007-10), provides that it is an unfair practice to knowingly make “any false material statement.”
176. Section 626.9541(1)(1), Florida Statutes (2007-10), provides that it is an unfair practice to knowingly make “any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions . . . with respect to any insurance policies or insurers for the purpose of inducing
. . . any person to . . . surrender . . . any insurance policy or to take out a policy of insurance in another insurer.”
Section 626.9521(2), Florida Statutes (2007-10), provides that any person who violates any provision of the Unfair Insurance Trade Practices Act is subject to being fined.
The Department also alleges that Ms. Dorrell and SFS’s conduct toward Ms. Gartner violated rules 69B-222.060 and 69B- 215.201.
The Department failed to prove any of its allegations involving Ms. Gartner by clear and convincing evidence.
Count V – Gartner’s Real Estate
The Department alleges that Ms. Dorrell’s advice regarding Ms. Gartner’s sale of her former home in Summerfield, Florida and her acquisition of the villa in The Villages violated rule 69B-215.210. That rule provides that:
The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing Life Insurance in letter and in spirit by presenting accurately and completely every fact essential to a client’s decision, and by being fair in all relations with colleagues and competitors always placing the policyholder’s interests first.
Even if the allegations under Count V were to be accepted as true, they do not pertain to the conduct of the business of life insurance. See Elmariah v. Dep’t of Prof’l
Reg., Bd. of Med., 574 So. 2d 164, 165 (Fla. 1st DCA 1990)(stating that “[a]lthough it is generally held that an agency has wide discretion in interpreting a statute which it administers, this discretion is somewhat more limited where the statute being interpreted authorizes sanctions or penalties against a person’s professional license. Statutes providing for the revocation or suspension of a license to practice are deemed
penal in nature and must be strictly construed, with any ambiguity interpreted in favor of the licensee.”). Accordingly, the Department has not proved this charge by clear and convincing evidence.
The Department also alleges that Ms. Dorrell violated section 626.611(7), Florida Statutes (2012-13), which subjects an insurance agent to discipline for a “[d]emonstrated lack of fitness or trustworthiness to engage in the business of insurance.”
The Department failed to demonstrate through clear and convincing evidence that Ms. Dorrell violated any statutes or rules in her dealings with Ms. Gartner.
Count VI – Earl Doughman
The Department alleges that Ms. Dorrell violated the following statutes and rules by having unlicensed agency personnel: (a) performing prohibited sales activities with respect to Mr. Doughman’s transactions of insurance;
(b) unreasonably recommending the partial surrender of senior consumer Doughman’s existing annuities to fund the purchase of the Security Benefit annuity; (c) misrepresenting the percentage return on the Security Benefit policy by including a costly rider to the policy; and (d) advising Mr. Doughman that the cap on the indexed Security Benefit policy was two points lower than the cap on his indexed Midland annuity.
Section 626.7845(2), Florida Statutes (2013), prohibits unlicensed individuals from the unlicensed transaction of insurance.
Section 627.4554(4)(a), Florida Statutes (2012), imposed the following duty on insurers and insurance agents:
In recommending to a senior consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, an insurance agent, or an insurer if no insurance agent is involved, shall have reasonable grounds for believing that the recommendation is suitable for the senior consumer on the basis of the facts disclosed by the senior consumer as to his or her investments and other insurance products and as to his or her financial situation and needs.
187. Sections 626.611(5), 626.611(7), 626.611(8),
626.611(9), 626.611(13), 626.621(2), 626.621(6), 626.621(9),
626.621(12), 626.9541(1)(a)1., 626.9541(1)(e)1., 626.9541(1)(l),
626.9521(2), Florida Statutes (2013), are not materially different than the versions quoted above.
The Department also alleged that Ms. Dorrell violated rules 69B-215.201 and 69B-222.060. The latter provides that:
The following actions are never allowable by unlicensed personnel.
Comparing insurance products; advising as to insurance needs or insurance matters; or interpreting policies or coverages.
Binding new, additional, or replacement coverage for new or existing customers; or
binding coverage on or recording additional property under existing policies.
Soliciting the sale of insurance by telephone, in person, or by other communication. However, the unlicensed person may telephone persons to set appointments for licensed and appointed agents, customer representatives, or solicitors, or to obtain basic policy information as to existing insurance coverage. The unlicensed person may not engage in a substantive discussion of insurance products.
The Department failed to prove by clear and convincing evidence that Ms. Dorrell or SFS violated any statutes or rules in the dealings with Mr. Doughman.
Count VII – Margaret Dial
The Department alleges that Ms. Dorrell and SFS’s actions with regard to Ms. Dial’s annuity transactions violated sections 626.611(5), 626.611(7), 626.611(8), 626.611(9), 626.611(13), 626.621(2), 626.621(6), 626.621(9), 626.9541(1)(a)1., 626.9541(1)(e)1., 626.9541(1)(l), and 626.9521(2), Florida Statutes (2012).
The Department also alleges that Ms. Dorrell and SFS’s conduct toward Ms. Dial violated rules 69B-222.060 and 69B- 215.201.
The Department failed to prove by clear and convincing evidence that Ms. Dorrell or SFS violated any statutes or rules in the dealings with Ms. Dial.
Count VIII - Unlicensed Activities
The Department alleges that Ms. Dorrell and/or SFS violated the following statutory provisions.
Section 626.611, Florida Statutes (2009-14), subjects insurance agents to discipline for demonstrating a “lack of fitness or trustworthiness to engage in the business of insurance.”
Section 631.735, Florida Statutes (2009-14), provides that no person shall:
[M]ake, publish, disseminate, circulate, or place before the public, or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the Insurance Guaranty Association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Florida Life and Health Insurance Guaranty Association Act.
Section 626.794(1), Florida Statutes (2009-14), prohibits a licensed life insurance agent from paying a commission or other valuable consideration to any unlicensed person for services as a life insurance agent.
Section 626.794(2), Florida Statutes (2009-14), prohibits anyone without a license from accepting payment for performing the work of a licensed life insurance agent.
The Department also alleged that Ms. Dorrell and/or SFS violated rule 69B-215.210.
The Department failed to prove any of the allegations under Count VIII by clear and convincing evidence.
Count IX - SFS Employees Performing Unlicensed Insurance Activites
The Department alleges that Ms. Dorrell and/or SFS violated the following statutory provisions.
Section 626.7845(2), Florida Statutes (2009-14), prohibits the unlicensed transaction of life insurance activities.
Section 626.6215(5), Florida Statutes (2009-14), prohibits the owner of an insurance agency from committing any of the following acts with sufficient frequency to make the agency’s operation hazardous to the public: (a) misrepresenting any insurance policy or annuity contract; (b) violating any provision of the Florida Insurance Code; (c) violating any lawful order or rule of the Department; (d) engaging in unfair competition as prohibited under part IX of chapter 626, Florida Statutes;
(e) committing fraudulent or dishonest practices in the conduct
of business; and (f) demonstrating a lack of fitness or trustworthiness to conduct activities related to insurance.
Section 626.611, Florida Statutes (2009-14), subjects an insurance agent to discipline for demonstrating a lack of trustworthiness.
Section 626.611, Florida Statutes (2009-14), subjects an insurance agent to discipline for committing fraudulent or dishonest practices.
Section 626.621(12), Florida Statutes (2009-14), subjects an insurance agent to discipline for knowingly assisting any person in committing a violation of the insurance code.
206. Section 626.9541(1)(e)1., Florida Statutes (2009-14), deems the knowing dissemination of any false material statement to be unfair competition.
The Department also alleges that Ms. Dorrell and/or SFS violated rule 69B-222.060, which prohibits unlicensed personnel from acting as insurance agents.
The Department failed to prove any of the allegations under Count IX by clear and convincing evidence.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order dismissing the Administrative Complaint.
DONE AND ENTERED this 5th day of November, 2018, in Tallahassee, Leon County, Florida.
S
G. W. CHISENHALL Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 5th day of November, 2018.
ENDNOTES
1/ Section 624.321, Florida Statutes (2014), provides that:
As to any examination, investigation, or hearing being conducted under this code, a person designated by the department or office, respectively:
May administer oaths, examine and cross- examine witnesses, receive oral and documentary evidence; and
Shall have the power to subpoena witnesses, compel their attendance and testimony, and require by subpoena the production of books, papers, records, files, correspondence, documents, or other evidence which is relevant to the inquiry.
If any person refuses to comply with any such subpoena or to testify as to any matter concerning which she or he may be lawfully interrogated, the Circuit Court of Leon County or of the county wherein such
examination, investigation, or hearing is being conducted, or of the county wherein such person resides, may, on the application of the department or office, issue an order requiring such person to comply with the subpoena and to testify.
Subpoenas shall be served, and proof of such service made, in the same manner as if issued by a circuit court. Witness fees, cost, and reasonable travel expenses, if claimed, shall be allowed the same as for testimony in a circuit court.
2/ The parties stipulated that the following pages from Petitioner’s Exhibit 70 could be accepted into evidence: 322, 324, 335, 346, 348, 355, 364, 385 through 387, 399, 400, 403, 406
through 409, 413, 415, 419 through 422, 429, 435 through 439, 443
through 446, 449 through 452, 464, and 465. The undersigned initially reserved ruling on the remaining pages of Exhibit 70. However, on pages 982 and 983 of the transcript, the undersigned ruled that the remaining pages from Petitioner’s Exhibit 70 were admissible, but they would probably be given little weight.
3/ With regard to Petitioner’s Exhibit 185, the undersigned accepted the following attachments thereto into evidence: a, b, c, d, e, f, h, I, j, k, n, o, and v. The undersigned noted on page 1,284 of the transcript that the remainder of the attachments that had not already been accepted into evidence were hearsay and thus admissible. However, the undersigned qualified that statement by specifying that no findings could be based on the hearsay attachments unless they were deemed to supplement or corroborate other nonhearsay evidence.
4/ Mr. Gilpin testified that the surrender charge associated with the Security Benefit annuity “was of no importance to me. I – this is money that had been with [Bryan] Harris and I’d forgotten about. Now I was going to put it with somebody else, and it was going to be forgotten about. I didn’t intend to die within
10 years, so I didn’t pay any attention to it, losing the value of the thing. It – whatever it’s going to be in 10 years, is fine. I’ll be around in 10 years I’m thinking, at that time.”
5/ The following exchange occurred between Mr. Gilpin and Ms. Dorrell’s attorney:
Q: Were you advised of the fact that if you made any excess withdrawals on your Prudential policy that you were not guaranteed $15,000 a year for the rest of your life?
A: I probably was.
Q: And were you also aware that you have taken and had taken excess withdrawals on your Prudential policy?
A: I knew I had taken some money out of it, if I’m understanding your question correctly. Are you saying what transpired between me and [Bryan] Harris?
Q: No. I just want to know if you understood the fact that your Prudential policy in 2012 would not guarantee you
$15,000 a year for the rest of your life because you had taken excess withdrawals?
A: I guess, you could say I was aware of it. Again, it would have been something I would have been thinking about at the time I took the withdrawals out of it. And it had something to do with helping my daughter buy a condominium. I presume that’s why I took that money.
6/ A short sale describes a situation in which a homeowner sells a home for less than its worth.
7/ A witness for the Department speculated that Ms. Dorrell did not record the promissory note because Ms. Gartner would not have been able to obtain a reverse mortgage if the note had been recorded. According to that witness, a recorded promissory note would have prevented the reverse mortgage holder from being the first creditor to get paid.
8/ Ms. Dorrell and Ms. Johnson were on such good terms at one point that Ms. Dorrell paid for Ms. Johnson to attend insurance school. However, tension between Ms. Dorrell and Ms. Johnson probably arose when Ms. Dorrell asked Ms. Johnson to fire Laura Wipperman, a friend of Ms. Johnson’s. In approximately June of 2014, Ms. Dorrell fired Ms. Johnson for allegedly stealing money
from SFS’s petty cash fund. Ms. Wipperman and Ms. Johnson filed a complaint a few weeks later with the Department alleging that Ms. Dorrell had engaged in improper conduct. Ms. Johnson also joined Ms. Gartner in reporting improper conduct by Ms. Dorrell to an organization called Seniors Versus Crime. Furthermore, Ms. Johnson unsuccessfully pursued a claim alleging that
Ms. Dorrell did not pay her what she was owed after the firing.
After leaving SFS, Ms. Johnson worked for a direct competitor of SFS’s in The Villages. In December of 2014, Ms. Johnson acquired an insurance license.
9/ Diane Johnson testified that she sold annuities to
Mr. Doughman. However, an inconsistent statement from her deposition undermines the credibility of that testimony.
10/ Ms. Dorrell testified as follows about how a home healthcare doubler impacts whatever income one is drawing from an annuity:
Some of the companies have a doubler on the programs to where if the client were unable to perform two out of six activities of daily living; bathing, dressing, toileting, eating, transferring, walking. So something as simple as a broken hip or a broken ankle would qualify them to then double the income amount and be able to spend that for long- term healthcare or nursing care.
11/ Ms. Dorrell testified as follows about the operation of an income rider:
Q: I also want to ask you about some other additional products with annuities. Are there certain riders?
A: Yes.
Q: Is one of them an income rider?
A: Yes. You can put an income rider on most annuities, fixed index annuities.
Q: What is the advantage or disadvantage of an income rider?
A: The disadvantage would be that there’s generally a cost. Now, some companies do have income riders that you can add that don’t cost anything, but generally there is a cost for that. So the client pays an additional fee to the company. It does not go to me. But they would pay an additional fee to the company, but then in return, the company might guarantee them an accumulation percent of 6 or 7 percent, until such time they wanted to turn that income rider on.
Q: So, in other words, if I were to buy a
$100,000 annuity and I have a rider and I pay whatever that fee is, I’m also accumulating some money on my $100,000 that will be distributed as income to me?
A: Correct. So it’s kind of a fail-safe. If you’re buying a fixed index annuity and the client is afraid maybe that the market isn’t going to go up and they don’t want to make a zero percentage, and they might need income, so it’s kind of a fail-safe to know that they’ll at least get their rider percentage if there’s no return on the upside of the stock market. Or they could get both, and then that rider also guarantees them income for the rest of their life, even if the balance goes to zero.
Q: I don’t understand what you mean by they turn on the rider.
A: So the client can choose when they want to utilize the rider, and most of the time we like for them to maybe wait five years before turning it on. They don’t have to wait.
They can turn it on as soon as one year, but when we run an illustration, show them how much it increases over the first five years, we generally make a recommendation when they’re purchasing the program to hold it at least five years for maximum accumulation.
Q: Could you compare it to social security in that the longer you wait, the more you get?
A: Yes, exactly.
12/ Mr. Doughman’s letter stated the following:
This letter is to file a formal complaint concerning the Total Value Annuity dated 9/30/2013. Jean A. Dorrell is the listed agent on my annuity.
After a recent phone call to acquire information regarding my annuity, I discovered that I was extremely mislead and all the important details of this contract were never disclosed to me. This links to Elder Financial Abuse.
Jean A. Dorrell was never present during the presentation and sale of my annuity. Jean A. Dorrell was not present during the delivery of my annuity. Jean A. Dorrell never witnessed any process involved with my annuity. Diana Johnson did everything involved with the sale presentation and delivery of my annuity. Why is Jean A. Dorrell the listed agent on my contract? Why did Jean A. Dorrell sign as agent on 8/28/2013? I never saw Jean A. Dorrell on 8/28/2013. I thought Diana Johnson was my agent.
During the presentation, I asked Diana Johnson, “Why should I move from Midland Nations? Midland is paying me 3% guaranteed fixed interest.” Diana told me, “You are going from 3% to 4%.” Diane NEVER disclosed to me that this is a Rider with an ANNUAL initial charge of 0.95% and maximum charge of 1.80%. Diane presented the 4% interest as fixed [and] guaranteed. This makes me very upset!
The initial current interest rate is 1.5% with the Security Benefit Total Value
Annuity. As I mentioned before, my Midland National annuity was earning 3% guaranteed. Also, the cap on my index with Midland was 5.25%. The cap with the Total Value Annuity is only 3.25%. This is not a good replacement from an annuity to annuity.
Selling the Total Value Annuity to me was never Suitable. This appears to be illegal and is definitely Elder Financial Abuse.
It is my hope that this contract be terminated and my initial Purchase Payment of
$29,492.30 be paid out immediately, with no penalties, because I was misled into purchasing this contract under false details regarding the Total Value Annuity.
COPIES FURNISHED:
Jed Berman, Esquire Infantino and Berman Post Office Box 30
Winter Park, Florida 32790 (eServed)
David J. Busch, Esquire Department of Financial Services Division of Legal Services
612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333 (eServed)
Marshawn Michael Griffin, Esquire Department of Financial Services
200 East Gaines Street Tallahassee, Florida 32399 (eServed)
Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services
200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 18, 2019 | Agency Final Order | |
| Nov. 05, 2018 | Recommended Order | The Department failed to prove any of its allegations by clear and convincing evidence. |
