)Q-175I fy AS es APR 11 ong THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE TOM GALLAGHER IN THE MATTER OF: CASE NO. 42919-02-AG KEVIN WAYNE RICE / Low) rR ADMINISTRATIVE COMPLAINT = = TO: KEVIN WAYNE RICE Ny 3475 Ft. Sumter Street > Or Melbourne, Florida 32934 * ey = len] KEVIN WAYNE RICE AMERI-LIFE & HEALTH SERVICES OF — BREVARD COUNTY, INC. 2536 Countryside Blvd. Clearwater, Florida 34623 You, KEVIN WAYNE RICE, are hereby notified that pursuant to Chapters 624 and 626, Florida Statutes, the Insurance Commissioner of the State of Florida has caused to be made an investigation of your activities while licensed as an insurance agent in this state, as a result of which it is alleged that: GENERAL ALLEGATIONS 1. You, KEVIN WAYNE RICE, are currently licensed in this state as a life and variable annuity contracts salesman, as a life, health and variable annuity contracts salesman, as a life insurance agent, as a life and health insurance agent and as a health insurance agent. 2. At all times relevant to the dates and occurrences alleged herein, you, KEVIN WAYNE RICE, were licensed in this state as an insurance agent. 3. Pursuant to Chapter 626, Florida Statutes, the Insurance Commissioner of the State of Florida and the Department of Insurance has jurisdiction over your insurance licenses and your eligibility for licensure and appointment. COUNT I 4. The above General Allegations numbered one (1) through three (3) are hereby realleged and fully incorporated herein by reference. | 5. On or about March, 1999, you, KEVIN WAYNE RICE, solicited Beaulah Spivey of Melboume, Florida, to purchase annuities. Beaulah Spivey is a 68-year old single retiree who desired income and safety and accessibility of principal in regards to her retirement funds. You, KEVIN WAYNE RICE, were aware of this fact. 6. You, KEVIN WAYNE RICE, induced Beaulah Spivey to deposit $183,926.28 into a Conseco Annuity Company annuity. You, KEVIN WAYNE RICE represented to Beaulah Spivey that the annuity purchased by her would enjoy an annual return of approximately 20% to 30%. However, the Conseco annuity is a fixed value annuity in which the annual return is calculated utilizing an actuarial formula linked to the annual performance of the S&P 500 stock market index. The annual return is only guaranteed at a minimum of 3%. You failed to disclose this fact to Beaulah Spivey and she has never enjoyed an annual return as represented. 7. You, KEVIN WAYNE RICE, failed to disclose to Beaulah Spivey that the Conseco annuity purchased by her had a surrender penalty of 20% in the first contract year in the event she attempted to withdraw her money and that she would have to hold the annuity for a minimum of sixteen years before there she would not have to pay surrender penalties in order to withdraw her principal. 8. Your representations to Beaulah Spivey were misrepresentations and material misstatements of fact. Beaulah Spivey would not have purchased. this annuity but for these misrepresentations. 9. You, KEVIN WAYNE RICE, failed to disclose to Beaulah Spivey the actual terms and conditions of the Conseco annuity including, but not limited to, failure to disclose the actual cash surrender value, surrender charges, maturity date and the actual annual yield or rate of return. 10. As a result of these transactions, Beaulah Spivey has suffered significant financial losses. 11. The misleading and deceptive statements were made for the purpose of obtaining a fee, commission, money or other benefit from an insurance company. IT IS THEREFORE CHARGED that you, KEVIN WAYNE RICE, have violated or are accountable under the following provisions of the Florida Insurance Code which constitute grounds for the suspension or revocation of your licenses as an insurance agent in the state: (a) If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code. [Section 626.611 (4), Florida Statutes} (b) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising. [Section 626.611(5), Florida Statutes] (c) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.61 1(7), Florida Statutes} (d) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. [Section 626.611(8), Florida Statutes] (e) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.61 1(9), Florida Statutes] (f) Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment. [Section 626.61 1(10), Florida Statutes] (g) Willful 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 626.61 1(13), Florida Statutes] (h) Violation 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(2), Florida Statutes] (i) Violation of any lawful order or rule of the department. [Section 626.621(3), Florida Statutes] (i) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public. (Section 626.621(6), Florida Statutes] g) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison, which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. [Section 626.9541(1)(a) 1, Florida Statutes] (k) Knowingly: a. Filing with any supervisory or other public official, b. Making, publishing, disseminating, circulating, c. Delivering to any person, d. Placing before the public, e. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement, [Section 626.9541(1)(e) 1, Florida Statutes] f. Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for the purpose of inducing any person to surrender any insurance policy, or take out a policy of insurance in another insurer. [Section 626.9541(1)(1), Florida Statutes] COUNT II 12. The above General Allegations numbered one (1) through three (3) are hereby realleged and fully incorporated herein by reference. 13. On or about October 1999, you, KEVIN WAYNE RICE, solicited Beaulah Spivey of Melbourne, Florida, to make an “investment”. Beaulah Spivey is a 68-year-old single retiree who desired income and safety and accessibility of principal in regards to her retirement funds. 14. You, KEVIN WAYNE RICE, represented to Beaulah Spivey that if she invested $53,054.28 into the product being solicited and sold by you, she would immediately and without tisk double her money, realizing a 100% return. 15. You, KEVIN WAYNE RICE, failed to disclose to Beaulah Spivey that the “investment product” you were soliciting was, in fact, a Shenandoah Life Insurance Company flexible premium adjustable whole life insurance policy. 16. Beaulah Spivey could not have doubled her $53,054.28 investment as represented. What, in fact, was represented by you to Beaulah Spivey to be a 100% retum of $122,755 on her investment was in fact the death benefit of the life insurance policy. The only way the “investment” could have a $122,755 “return” was in the event Beaulah Spivey died and the insurance company paid the policy benefits to her beneficiaries. You, KEVIN WAYNE RICE, were aware of these facts. 17. The life insurance policy, in fact, only has an annual guaranteed rate of return of 4% on its cash value and has a 100% surrender charge penalty. You failed to disclose these facts to Beaulah Spivey. 18. Your representations to Beaulah Spivey were misrepresentations and material misstatements of fact. Beaulah Spivey would not have purchased this life insurance policy but for these misrepresentations. 19. You, KEVIN WAYNE RICE, failed to disclose to Beaulah Spivey that she was purchasing a life insurance policy and failed to disclose the actual terms and conditions of the insurance policy including, but not limited to, failure to disclose the policy benefits, cash surrender value, surrender charges, and the annual yield or rate of return. 20. As a result of these transactions, Beaulah Spivey purchased the life insurance policy and has suffered significant financial losses. 21. The misleading and deceptive statements were made for the purpose of obtaining a fee, commission, money or other benefit from an insurance company. IT IS THEREFORE CHARGED that you, KEVIN WAYNE RICE, have violated or are accountable under the following provisions of the Florida Insurance Code which constitute grounds for the suspension or revocation of your licenses as an insurance agent in the state: Sections 626.611(4); 626.611(5); 626.611(7); 626.611(8); 626.611(9); 626.61 1(10); 626.61 1(13); §26.621(2); 626.611(13); 626.621(2); 626.621(3); 626.621(6); 626.9541(1)(a) 1; 626.9541(1)(e)1; and 626.9541(1)(1), Florida Statutes, as more particularly alleged in Count I above. COUNT II 22. The above General Allegations numbered one (1) through three (3) are hereby realleged and fully incorporated herein by reference. 23. On or about October 4, 1999, you, KEVIN WAYNE RICE, solicited Mary Moak of Melbourne, Florida, to purchase annuities. Mary Moak is a 72-year old single retiree who desired income and safety and accessibility of principal in regards to her retirement funds. You, KEVIN WAYNE RICE, were aware of this fact. 24, You, KEVIN WAYNE RICE, induced Mary Moak to deposit $99,375.07 into an American Equity Investment Life Insurance Company annuity. You, KEVIN WAYNE RICE represented to Mary Moak that the annuity purchased by her would enjoy an annual return of approximately 20% to 30%. However, the American Equity annuity is a fixed value annuity in which the annual return is calculated utilizing an actuarial formula linked to the annual performance of the S&P 500 stock market index. The annual return is only guaranteed at a minimum of 3%. You failed to disclose this fact to Mary Moak and she has never enjoyed an annual return as was represented. 25. You, KEVIN WAYNE RICE, failed to disclose to Mary Moak that the American Equity annuity purchased by her had an upfront 20 % expense load or fee that immediately reduced her principal. You, KEVIN WAYNE RICE, also failed to disclose that the annuity had a surrender penalty of 20% in the first contract year and decreasing thereafter that she would have to pay in the event she attempted to withdraw her money. 26. Your representations to Mary Moak were misrepresentations and material misstatements of fact. Mary Moak would not have purchased this annuity but for these misrepresentations. 27. You, KEVIN WAYNE RICE, failed to disclose to Mary Moak the terms and conditions of the American Equity annuity including, but not limited to, failure to disclose the actual cash surrender value, surrender charges, the expense load fee, and the actual annual yield or rate of return. 28. As a result of these transactions, Mary Moak has suffered significant financial losses, 29. The misleading and deceptive statements were made for the purpose of obtaining a fee, commission, money or other benefit from an insurance company. IT IS THEREFORE CHARGED that you, KEVIN WAYNE RICE, have violated or are accountable under the following provisions of the Florida Insurance Code which constitute grounds for the suspension or revocation of your licenses as an insurance agent in the state: Sections 626.611(4); 626.611(5); 626.611(7); 626.611(8); 626.611(9); 626.611(10), 626.611(13); 626.621(2); 626.611(13); 626.621(2); 626.621(3); 626.621(6); 626.9541(L(@)l; 626.9541(1)(e)1; and 626.9541(1)(1), Florida Statutes, as more particularly alleged in Counts I and II above. COUNT IV 30. The above General Allegations numbered one (1) through three (3) are hereby realleged and fully incorporated herein by reference. 31. On or about April 15, 1999, you, KEVIN WAYNE RICE, solicited Coralee E. Herbst of Indiatlantic, Florida, to purchase annuities. Coralee E. Herbst is a 67-year old single retiree who desired income and safety and accessibility of principal in regards to her retirement funds. You, KEVIN WAYNE RICE, were aware of this fact. 32. You, KEVIN WAYNE RICE, induced Coralee B. Herbst to deposit $80,000 into an American Equity Investment Life Insurance Company annuity. You, KEVIN WAYNE RICE represented to Coralee E. Herbst that the annuity purchased by her would enjoy an annual return of 12 to 20%. However, the American Equity annuity is a fixed value annuity in which the annual return is calculated utilizing an actuarial formula linked to the annual performance of the S&P 500 stock market index. The annual retum is only guaranteed at a minimum of 3%. You failed to disclose this fact to Coralee E. Herbst and she has never enjoyed an annual return as was represented. 33. You, KEVIN WAYNE RICE, failed to disclose to Coralee E. Herbst that the American Equity annuity purchased by her had an upfront 20 % expense load or fee that immediately reduced her principal. You, KEVIN WAYNE RICE, also failed to disclose that the annuity had a surrender penalty of 20% in the first contract year and decreasing thereafter that would have to be paid in the event of withdrawal of the funds. 34. Your representations to Coralee Herbst were misrepresentations and material misstatements of fact. Coralee Herbst would not have purchased this annuity but for these misrepresentations. 35, You, KEVIN WAYNE RICE, failed to disclose to Coralee E. Herbst the terms and conditions of the American Equity annuity including, but not limited to, failure to disclose the actual cash surrender value, surrender charges, the expense load fee, and the actual annual yield or rate of return. 36. As aresult of these transactions, Coralee E. Herbst has suffered significant financial losses. 37. The misleading and deceptive statements were made for the purpose of obtaining a fee, commission, money or other benefit from an insurance company. IT IS THEREFORE CHARGED that you, KEVIN WAYNE RICE, have violated or are accountable under the following provisions of the Florida Insurance Code which constitute grounds for the suspension or revocation of your licenses as an insurance agent in the state: Sections 626.611(4); 626.611(5); 626.611(7); 626.611(8); 626.6119); 626.611(10); 626.611(13); 626.621(2); 626.611(13), 626.621(2);, 626.621(3); 626.621(6); 626.9541(1)(a)1; 626.9541(1)(e)1, and 626.9541(1)(1), Florida Statutes, as more particularly alleged in Counts I and IT above. 10 COUNT V 38. The above General Allegations numbered one (1) through three (3) are hereby realleged and fully incorporated herein by reference. 39, On or about April 14, 1999, you, KEVIN WAYNE RICE, solicited Andrew and Katherine Sayko of Melbourne, Florida, to purchase annuities. The Saykos are retirees who desired income and safety and accessibility of principal in regards to their retirement funds. You, KEVIN WAYNE RICE, were aware of this fact. 40. You, KEVIN WAYNE RICE, induced Mr. and Mrs. Sayko to deposit $45,000 and $7000 respectively into two American Equity Investment Life Insurance Company annuities. You, KEVIN WAYNE RICE represented to Mr. and Mrs. Sayko that the annuities purchased by them would enjoy a minimum annual return of 8% and more. However, the American Equity annuity is a fixed value annuity in which the annual return is calculated utilizing an actuarial formula linked to the annual performance of the S&P 500 stock market index. The annual return is only guaranteed at a minimum of 3%. You failed to disclose this fact to Mr. and Mrs. Sayko and they have never enjoyed an annual return as was represented. 41. You, KEVIN WAYNE RICE, failed to disclose to Mr. and Mrs. Sayko that the American Equity annuities purchased by them have had an upfront 20 % expense load or fee that immediately reduced their principal. You, KEVIN WAYNE RICE, also failed to disclose that the annuities had a surrender penalty of 20% in the first contract year and decreasing thereafter that would have to be paid in the event of withdrawal of the funds. li 42. Your representations to Mr. and Mrs. Sayko were misrepresentations and material misstatements of fact. Mr. and Mrs. Sayko would not have purchased these annuities but for these misrepresentations. 43. You, KEVIN WAYNE RICE, failed to disclose to Mr. and Mrs. Sayko the terms and conditions of the American Equity annuities including, but not limited to, failure to disclose the actual cash surrender value, surrender charges, the expense load fee, and the actual annual yield or rate of return. 44. As a result of these transactions, Mr. and Mrs. Sayko have suffered significant financial losses. 45. The misleading and deceptive statements were made for the purpose of obtaining a fee, commission, money or other benefit from an insurance company. IT IS THEREFORE CHARGED that you, KEVIN WAYNE RICE, have violated or are accountable under the following provisions of the Florida Insurance Code which constitute grounds for the suspension or revocation of your licenses as an insurance agent in the state: Sections 626.611(4); 626.611(5); 626.611(7); 626.611(8); 626.611(9); 626.611(10); 626.611(13); 626.621(2); 626.611(13); 626.621 (2); 626.621(3); 626.621(6); 626.9541(1)(a)l; 626.9541 (1)(e)1; and 626.9541(1)(1), Florida Statutes, as more particularly alleged in Counts I and IL above. WHEREFORE, you, KEVIN WAYNE RICE, are hereby notified that the Treasurer and Insurance Commissioner intends to enter an Order revoking your licenses and appointments as an insurance agent or to impose such penalties as may be provided under the provisions of Sections 626.611, 626.621, 626.681, 626.691, and 626.9521, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. You are 12 further notified that any order entered in this case revoking or suspending any license or eligibility for licensure held by you shall also apply to all other licenses and eligibility held by you under the Florida Insurance Code. NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department pursuant to sections 120.569 and 120.57, Florida Statutes, and Rule 28-107, Florida Administrative Code. The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the General Counsel as acting Agency Clerk, at the Florida Department of Insurance, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Your written response must be received by the Department no later than 5:00 p.m. on the twenty-first day after your receipt of this notice. Mailing the response on the twenty-first day will not preserve your right to a hearing. YOUR FAILURE TO RESPOND IN WRITING WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THIS NOTICE WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF REVOCATION WILL BE ENTERED AGAINST YOU. If you request a proceeding, you must provide information that complies with the requirements of Rule 28-107.004, Florida Administrative Code. As noted above, completion of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain: 13 (a) The name and address of the party making the request, for purpose of service; (b) A statement that the party is requesting a hearing involving disputed issues of material fact, or a hearing not involving disputed issues of material fact; and (c) A reference to the notice, order to show cause, administrative complaint, or other communication that the party has received form the agency. If a hearing of any type is requested, you have the right to be represented by counsel or other qualified representative at your expense, to present evidence and argument, to call and cross-examine witnesses, and to compel the attendance of witnesses and the production of documents by subpoena. If a proceeding is requested and there is no dispute of material fact, the provisions of section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department has relied, While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary, one will be conducted in Tallahassee, Florida, or by telephonic conference call upon your request. However, if you dispute material facts which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a State administrative law judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department will request that the hearing be conducted in Tallahassee, Florida. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter 14 shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. Mediation of this matter pursuant to section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has been received by the Department of Insurance. DATED this / pc day of (a 2002. y KENNEY SHIPLEY Deputy Insurance Commissioner 15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Administrative Complaint has been furnished by certified United States Mail to: KEVIN WAYNE RICE at 3475 Ft. Sumter Street, Melbourne, Florida 32901, and KEVIN WAYNE RICE at AMERI-LIFE & HEALTH SERVICES OF BREVARD COUNTY, INC., 2536 Countryside Blvd., Clearwater, Florida 34623 this _{ ja day of Lp rec , 2002. AMES A. BOSSART, ESQ ivision of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 (850) 413-4124 16

Docket for Case No: 02-001751PL