O8- S359 PY FILED APR 28 2009 REPRESENTING ALEX SINK CHIEF FINANCIAL OFFICER Docketed by ELL — STATE OF FLORIDA IN THE MATTER OF: CASE NO. 89300-09-AG TODD ALAN SHERMER ADMINISTRATIVE COMPLAINT TO: TODD ALAN SHERMER 995 Pine Lake Drive Tarpon Springs, Florida 34688-7360 You, TODD ALAN SHERMER, are hereby notified that pursuant to Chapter 626, Florida Statutes, the Chief Financial Officer 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. You, TODD ALAN SHERMER, are currently licensed in the state as a life insurance agent, life and health insurance agent, health insurance agent, and life and variable annuity agent. 2. At all times pertinent to the dates and occurrences referred to below in this Administrative Complaint you, TODD ALAN SHERMER, were licensed as an insurance agent in this state. 3. Pursuant to Chapter 626, Florida Statutes, the Chief Financial Officer of the State of Florida and the Department of Financial Services has jurisdiction over your insurance licenses and your eligibility for licensure and appointment. 4. At all times pertinent to the dates and occurrences referred to herein, you, TODD ALAN SHERMER, were acting on behalf of Phillip & Associates, a Florida corporation. 5. 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, by being fair in all relations with colleagues and competitors, always placing the policyholder’s interests first. Rule 69B-215.210, Florida Administrative Code. COUNT I 6. The above General Allegations numbered one through five are hereby realleged and fully incorporated herein by reference. 7. Mr. and Mrs. S.W. (hereinafter SW) of Newton, Massachusetts and Sarasota, Florida, as of March 2004, had retirement assets including approximately $102,000.00 invested in a Fidelity brokerage account, the interest from which they utilized to supplement their social security payments. 8. SW’s sole concerns about their retirement assets were safety, interest income to help pay living expenses, and easy and penalty free access to their funds in the event of emergencies or other special situations. 9. On or about May 7, 2004, you, TODD ALAN SHERMER, willfully induced SW to use their $102,000 invested in the Fidelity brokerage account, to purchase an Allianz Insurance 2 equity indexed annuity (hereinafter “annuity”). Phillip Roy Wasserman signed the application as agent of record. 10. In the process of inducing the sale and purchase of the annuity, you, TODD ALAN SHERMER, willfully misrepresented and/or omitted material information regarding the nature and sale of the annuity to SW. The misrepresentations and omissions include, but are not limited to, the following: (a) SW stated that they wanted to receive a regular and immediate return to supplement their income, without the return resulting in any reduction of their principal, similar to what was received from their former brokerage account. You, TODD ALAN SHERMER, were aware of this fact. In point of fact, SW’s annuities could not pay out a regular return on principal (referred to in the annuity as a “systematic withdrawal of credit”) until at least the fifth year of the policy. You, TODD ALAN SHERMER, failed to disclose this material fact to SW. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. (b) You, TODD ALAN SHERMER, represented that the annuity would be immediately credited with 10% bonus added to the premium. In point of fact, the “bonus” would be added to the annuitization value of the contract, i.e., what the contract is worth in the event it is “annuitized”, or converted into a stream of payments at the maturity date. The bonus is not available to SW until an undetermined time after the tenth year of the policy. You, TODD ALAN SHERMER, failed to disclose this material fact. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. | (c) You, TODD ALAN SHERMER, failed to disclose to SW that they can only withdraw a sum equal to 5% of their premium once a year and cumulative withdrawals cannot exceed 25% of the premium in total prior to its annuitization without the assessment on of a 3 surrender penalty. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. (d) SW planned to move to Florida in two years and purchase a retirement home. You, TODD ALAN SHERMER, were fully aware of this fact. Yet, you, TODD ALAN SHERMER, failed to disclose to SW that they could not withdraw their funds to purchase the house from the annuity without the payment of the above referenced surrender penalty. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. (e) You, TODD ALAN SHERMER, failed to disclose to SW that they could not have full guaranteed penalty free access to their premium for nine years or until 2013 at which time Mr. SW would be age eighty seven (87). You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. 11. The misrepresentations and omissions, made by you, TODD ALAN SHERMER, as described herein were false and material misstatements of fact. You, TODD ALAN SHERMER, knew or should have known of these facts. 12. The conduct and actions described herein constitute unfair and deceptive acts or actices in violation of Section 626.9541, Florida Statutes. 13. SW reasonably relied on the representations and information conveyed to them by you, TODD ALAN SHERMER, concerning the annuity. SW would not have purchased the annuity but for these false and misleading representations. You, TODD ALAN SHERMER, were aware or should have been aware of these misrepresentations. 14. The sale of the annuity to SW was inappropriate for a number of reasons. It was not in their best interest; it was neither necessary nor appropriate for person of SW’s age and financial circumstance, as they had no desire or need to restrict their retirement assets in such a fashion; it 4 was without demonstrable benefit, and was made by you, TODD ALAN SHERMER, for the sole purpose of obtaining a fee, commission, money or other benefit from an insurance company. You, TODD ALAN SHERMER, failed to disclose and explain to SW how the purchase would adversely affect their retirement assets and retirement plans. SW has suffered financial harm. 15. As a result, you, TODD ALAN SHERMER, have violated your fiduciary duty to SW and violated a public trust in contravention of Rule 69B-215.210, F lorida Administrative Code. IT IS THEREFORE CHARGED that you, TODD ALAN SHERMER, have violated or are accountable under one or more of the following provisions of the Florida Statutes or Florida Administrative Code, which constitute grounds for the suspension or revocation of your licenses as a Florida insurance agent: (a) 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]; (b) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]; (c) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (qd) —- Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of the Insurance Code. [Section 626.611(13), Florida Statutes]; (e) 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]; (63) Violation of any lawful order or rule of the department. [Section 626.621(3), Florida Statutes]; (g) In the conduct of business under the license or appointment, engaging in unfair methods of competition or unfair or deceptive acts or practices, as prohibited by part IX of this chapter, or have otherwise shown himself or herself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; (h) Knowingly making any false material statement. [Section 626.9541(1\(e)1, Florida Statutes; (i) 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. [Section 626.9541(1)(k)1, Florida Statutes]. COUNT II 16. The above General Allegations numbered one through five are hereby realleged and fully incorporated herein by reference. 17. Ms. J.D. (hereinafter JD) of Bradenton, Florida, as of March 2004, had retirement assets consisting of approximately $251,000.00 invested in an AG Edwards brokerage account. Her retirement income consisted of social security and the interest yield from the brokerage account. 18. As a seventy-one year (71) old single woman, JD’s sole concerns about her retirement assets were safety, interest income to help pay living expenses, and easy and penalty free access to her funds in the event of emergencies or other special situations. In addition, JD suffered from stomach cancer and was also responsible for the sole support and care of her ninety-four (94) year old mother. You, TODD ALAN SHERMER, were made aware of these facts. 6 19. On or about May 7, 2004, you, TODD ALAN SHERMER, willfully induced JD to purchase, with approximately $177,000 in retirement funds, three. deferred annuities an Allianz Insurance equity indexed annuity, an Investors Life equity indexed annuity, and an AmerUs equity indexed annuity. (hereinafter “annuity”). Your employer, Phillip Roy Wasserman, signed the applications as the agent of record. 20. In the process of inducing the sale and purchase of the annuity, you, TODD ALAN SHERMER, willfully misrepresented and/or omitted material information regarding the nature and sale of the annuity. (a) JD stated that she wanted to receive a regular and immediate return to supplement their income, without the return resulting in any reduction of their principal. You, TODD ALAN SHERMER, were aware of this fact. In point of fact, JD’s Allianz annuity could not pay out a regular return on principal (referred to in the annuity as a “systematic withdrawal of credit”) until at least the fifth year of the policy. JD’s Investors annuity and AmerUs annuity could pay out a regular return on principal at any time; however the guaranteed interest rate is only 2.5%, which was inadequate to meet JD’s financial needs. You, TODD ALAN SHERMER, failed to disclose these material facts to JD. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. (b) You, TODD ALAN SHERMER, failed to disclose to JD that she could only withdraw a sum from all three annuities equal to 10% of her premium once a year without assessment of various surrender penalties. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. (c) You, TODD ALAN SHERMER, failed to disclose to JD that she could not have full penalty free access to her funds for at least ten years or until 2014. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. 21. The misrepresentations and omissions, made by you, TODD ALAN SHERMER, described herein were false and material misstatements of fact. You, TODD ALAN SHERMER, either knew or should have known of these facts. 22. The conduct and actions described herein constitute unfair and deceptive acts or practices in violation of Section 626.9541, Florida Statutes. 23. JD reasonably relied on the representations and information conveyed to her by you, TODD ALAN SHERMER, concerning the three annuities. The three annuities would not have been purchased but for your false and misleading representations. You, TODD ALAN SHERMER, were aware or should have been aware of this failure to disclose. 24. The sale of the annuity to JD was inappropriate for a number of reasons. It was not in JD’s best interest; was neither necessary nor appropriate for person of JD’s age and financial circumstance, as she had no desire or need to restrict her retirement assets in such a fashion; it was without demonstrable benefit; and was made by you, TODD ALAN SHERMER, for the sole purpose of obtaining a fee, commission, money or other benefit from an insurance company. JD has suffered financial harm. 25. Asaresult, you, TODD ALAN SHERMER, have violated your fiduciary duty to JD and violated a public trust in violation of Rule 69B-215.210, Florida Administrative Code. IT IS THEREFORE CHARGED that you, TODD ALAN SHERMER, have violated or are accountable under one or more of the following provisions of the Florida Statutes or Florida Administrative Code, which constitute grounds for the suspension or revocation of your licenses 8 as a Florida insurance agent: Sections 626.61 1(5); 626.611(7); 626.6119); 626.611(13); 626.621(2); 626.621(3); 626.621(6); 626.9541(1)(e)1 and 626.9541(1)(k)1, Florida Statutes as more particularly alleged in Count I above. WHEREFORE, you, TODD ALAN SHERMER, are hereby notified that the Chief Financial Officer intends to enter an Order suspending or revoking your licenses, appointments and your eligibility for licensure 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, 626.691, 626.692, and 626.9521, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. You are 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 of Financial Services ("Department") pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-106, 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 GenerAgency Clerk, at the Florida Department of Financial Services, 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 9 TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF SUSPENSION OR REVOCATION WILL BE ENTERED AGAINST YOU. If you request a proceeding, you must provide information that complies with the requirements of Rule 28-106.2015, 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, address, and telephone number, and facsimile number (if any) of the respondent (for the purpose of requesting a hearing in this matter, you are the "respondent"). (b) The name, address, telephone number, facsimile number of the attorney or qualified representative of the respondent (if any) upon whom service of pleadings and other papers shall be made. (c) A statement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate. (d) A statement of when the respondent received notice of the administrative complaint. (e) A statement including the file number to the administrative complaint. 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. 10 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 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. 3 . DATED and SIGNED this 23" dayor Apr. \ 2009. TAMMY mf ON Deputy Chief Financial Officer 11 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING has been furnished by Certified Mail to: TODD ALAN SHERMER, 995 Pine Lake Drive, Tarpon Springs, Florida 34688-7360 onthis 23° day ot April, 2009. ES A. BOSSART, ESQUIRE J ( prison of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 (850) 413-4124 12

Docket for Case No: 09-003859PL