THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE Tom GALLAGHER IN THE MATTER OF: CASE NO. 43050-02-AG LARRY YALE KRAKOW / ADMINISTRATIVE COMPLAINT TO: LARRY YALE KRAKOW 22181 Trillium Way Boca Raton, FL 33433 LARRY YALE KRAKOW 137 East Woolbright Road Boynton Beach, FL 33435-6047 LARRY YALE KRAKOW c/o Bankers Life Insurance Company 4600 Sheridan Street, Suite 300 Hollywood, FL 33021-3409 You, LARRY YALE KRAKOW, are hereby notified that 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: GENERAL ALLEGATIONS 1. Pursuant to Chapter 626, Florida Statutes, you, LARRY YALE KRAKOW, are currently licensed in this state as a life & variable (2-14) agent, annuity life, health & variable annuity (2-15) agent, a life (2-16) agent, a life and health agent (2-18), and a health agent (2-40). Your agent license number is A145478. 2. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Insurance has jurisdiction over your insurance license and appointments. 3. At all times relevant to the dates and occurrences referred to herein, you, LARRY YALE KRAKOW, were licensed as an insurance agent and an officer and director for JBS Group, Inc. located at 6383 10 Avenue N, Suite #B, Lake Worth, FL 33463-1689. 4. At all times relevant to the dates and occurrences referred to herein, you, LARRY YALE KRAKOW, were licensed in this state as a as a life & variable (2-14) agent, annuity life, health & variable annuity (2-15) agent, a life (2-16) agent, a life and health agent (2-18), and a health agent (2-40). 5. All references herein made to you, LARRY YALE KRAKOW, also include persons working under your direct supervision and control. 6. Pursuant to Section 626.561(1), Florida Statutes, all insurance premiums, return premiums, or other funds belonging to insurers or others received by you, LARRY YALE KRAKOW, in transactions under your licenses, were and remain trust funds received by you ina fiduciary capacity and were to be accounted for and remitted to an insurer or others entitled thereto in the applicable regular course of business. COUNT! 7. The above general allegations are hereby realleged and fully incorporated herein by reference. 8. In or about May 1999, you, LARRY YALE KRAKOW, transacted insurance with Shirley Izenson as she purchased long term care insurance with the insurer, American Pioneer Life Insurance Company (hereinafter referred to as “American Pioneer”). Shirley Izenson provided you with the annual premium payment of $2,136.00. 9. In or about May 2000, Shirley Izenson received the annual renewal premium notice from American Pioneer and noticed the premium had greatly increased. 10. Shirley Izenson contacted you, LARRY YALE KRAKOW, and informed you that maybe her policy benefits should be decreased as the present insurance premium was too high. il. You, LARRY YALE KRAKOW, then informed Shirley Izenson that she should not decreased her benefits and that if she provided you with a payment in the amount of $1,800 for the policy premium, you would give her a $500.00 discount and then you would arrange to pay the premium monthly. Thus, you, LARRY YALE KRAKOW, provided Shirley Izenson with an unlawful rebate. 12. As you, LARRY YALE KRAKOW, instructed, on or about May 26, 2000, Shirley Izenson provided you with a check in the amount of $1,800 for payment of premium. 13. After making the arrangement set forth in paragraph 11 with Shirley Izenson, you, LARRY YALE KRAKOW, then failed to make the payments as agreed and caused Shirley Izenson’s policy to lapse. IT IS THEREFORE CHARGED that you, LARRY YALE KRAKOW, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Insurance which constitute grounds for the suspension or revocation of your licenses and appointments: (a) All premiums, return premiums, or other funds belonging to others received by an agent, ..., in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity. . . . The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other persons entitled thereto. [Section 626.561(1), Florida Statutes]; (b) If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code. [Section 626.61 1(4), Florida Statutes]; (c) 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}; (d) Demonstrated lack of fitness and trustworthiness to engage in the business of insurance. [Section 626.61 1(7), Florida Statutes]; (e) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. [Section 626.61 1(8), Florida Statutes]; (f) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (g) 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 626.611(10), Florida Statutes]; (h) Unlawfully rebating, attempting to unlawfully rebate, or unlawfully dividing or offering to divide his or her commission with another. [Section 626.611(11), Florida Statutes]; (i) 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]; q) 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 IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public or detrimental to the public interest. [Section 626.621(6), Florida Statutes]; (k) No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to Section 626.951 or Section 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. [Section 626.9521(1), Florida Statutes]; () Misrepresentation in insurance applications. — Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. [Section 626.9541(1)(k)1, Florida Statutes]. (m) Unlawful rebates. - Except as otherwise expressly provided by law or in an applicable filing with the department, knowingly: a. Permitting, or offering to make, or making, any contract or agreement as to such contract other than as plainly expressed in the insurance contract issued thereon: b. Paying, allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance contract, any unlawful rebate of premiums payable on the contract, any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; COUNT Il 14. The above general allegations are hereby realleged and fully incorporated herein by reference. 15. In September 2000, you, LARRY YALE KRAKOW, had John Dauphinais, a licensed agent affiliated with JBS Group, Inc., transact insurance with Milton Forman. 16. During the insurance transaction referenced in Paragraph 15, Milton Forman purchased Medicare supplement policies with Celtic Life Insurance Company (referred to as “Celtic Life”) through JBS Group, Inc. for himself and his wife, Eleanor Forman. At that time, Milton Forman paid John Dauphinais $3,250 via credit card for the annual insurance premiums for both his and his wife’s Medicare supplement policies. 17. Milton Forman and his wife Eleanor Forman (hereinafter collectively referred to as “Mr. and Mrs. Forman”) elected to pay the insurance premiums annually as such the annual mode of payment was selected on Mr. and Mrs. Forman’s insurance applications. 18. You, LARRY YALE KRAKOW, signed the insurance applications of Mr. and Mrs. Forman as the producing agent, when in fact, you did not transact insurance with Mr. and Mrs. Forman and you did not complete the insurance applications. 19. After you, LARRY YALE KRAKOW, received $3,250 for the annual premiums payment for Mr. and Mrs. Forman’s Medicare supplement policies, you failed to forward the total amount received to Celtic Life; instead you provided Celtic Life with only the quarterly premium amounts ($500.00 and $341.00 respectively) for Mr. and Mrs. Forman’s policies. 20. By receiving the annual premiums payment as set forth in Paragraph 19 and then only paying the insurer the quarterly premium amounts as set forth in paragraph 20, and by signing Mr. and Mrs. Forman’s insurance applications as the agent of record which sets forth Mr. and Mrs. Forman elected mode of premium payment as stated in paragraph 17, you, LARRY YALE KRAKOW misrepresented to the insurer and to Mr. and Mrs. Forman that you would pay the annual premiums and unlawfully withheld monies belonging to the insurer and the insureds. IT IS THEREFORE CHARGED that you, LARRY YALE KRAKOW, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Insurance which constitute grounds for the suspension or revocation of your licenses and appointments: (a) All premiums, return premiums, or other funds belonging to others received by an agent, ..., in transactions under his license shall be trust funds so received by the licensee ina fiduciary capacity... . The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other persons entitled thereto. [Section 626.561(1), Florida Statutes]; (b) 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]; (c) 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 626.61 1(5), Florida Statutes]; (d) Demonstrated lack of fitness and trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]; (e) 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]; (f) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (g) 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 626.611(10), 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) 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 LX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public or detrimental to the public interest. (Section 626.621(6), Florida Statutes]; q) No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to Section 626.951 or Section 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. [Section 626.9521(1), Florida Statutes]; (k) Misrepresentation in insurance applications. - Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. [Section 626.9541(1)(k)1, Florida Statutes]. WHEREFORE, you, LARRY YALE KRAKOW, are hereby notified that the Treasurer and Insurance Commissioner intends to enter an Order suspending or revoking your licenses and appointments as an insurance agent in this state or to impose such penalties as may be provided under the provisions of Sections 626.611, 626.621, 626.681 and 626.691, Florida Statutes as set out in this Administrative Complaint. You are further notified that any order entered in this case suspending or revoking 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: (a) The name and address of the party making the request, for purpose of service; (b) — Astatement 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 from 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 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 Pe ge, administrative proceeding received prior to the date of this notice sail byydeemed: abandoned unless timely renewed in compliance with the guidelines as set ouLAey es ‘ . Hl D5 Mediation of this matter pursuant to Section 120.573, ron an not. available. No Department attorney will discuss this matter with you until the response has been received by the Department of Insurance. DATED this 23rd day of _ apria , 2002. KENNEY Sty moe Deputy Insurance Commissioner CERTIFICATE OF SERVICE op I HEREBY CERTIFY that a true and correct copy of the foregoing Administrative M 4: oe Ay Ofyee ob . Complaint has been furnished to: Heo ERS ter LARRY YALE KRAKOW 22181 Trillium Way Boca Raton, FL 33433 LARRY YALE KRAKOW 137 East Woolbright Road Boynton Beach, FL 33435-6047 LARRY YALE KRAKOW c/o Bankers Life Insurance Company 4600 Sheridan Street, Suite 300 Hollywood, FL 33021-3409 by Certified Mail/Restricted Delivery this 23rd day of__ April , 2002. Mechele R. McBride, Esquir Florida Bar No. 0079197 Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Fl 32399-0333 (850) 413-4114

Docket for Case No: 02-002007PL