4 ) ) REPRESI a JUN 10 2009 ALEX SINK CHEERS STATE OF FLOR cketed by Zt IN THE MATTER OF: JOHN CHRIS BERNS CASE NO.: 103578-09-AG / ADMINISTRATIVE COMPLAINT TO: JOHN CHRIS BERNS 1038 N. EISENHOWER DR. STE 263 BECKLEY, WV 25801-3116 JOHN CHRIS BERNS 4816 HIDDEN PALM PL. MELBOURNE, FL 32904-9722 JOHN CHRIS BERNS 2731 27" CT, JUPITER, FL 33477 CHARLES D, BARNARD ATTORNEY FOR RESPONDENT JOHN CHRIS BERNS 2370 WILTON DR. WILTON MANORS, FL 33305 You, JOHN CHRIS BERNS, 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, JOHN CHRIS BERNS, are currently licensed in this state as a non-resident life, health, and variable annuity insurance agent. Filed February 17, 2010 10:31 AM Division of Administrative Hearings. 2, At all times pertinent to the allegations contained in this administrative complaint, you, JOHN CHRIS BERNS, were licensed in this state as an insurance agent. 3. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services (Department) has jurisdiction over your licenses and your eligibility for licensure and appointment. COUNT I 6. The above general allegations are realleged and incorporated herein by reference. 7. In the summer of 2005, you, JOHN CHRIS BERNS, met with Ms. K.B. regarding her financial investments. 8, During this meeting, you, JOHN CHRIS BERNS, advised Ms. K.B. to transfer her existing annuity with Fidelity Investments (“Fidelity”) into an annuity with Allianz Life Insurance Company of North America (“Allianz”), You, JOHN CHRIS BERNS, never mentioned surrender charges associated with this transaction and promised Ms, K.B. that she would receive a 10% bonus and access to 10% of the money annually, risk-free, with the Allianz policy. Ms. K.B. signed paperwork that you, JOHN CHRIS BERNS, prepared for her. 9. In June 2006, less than one year after you, JOHN CHRIS BERNS, sold Ms. K.B. the Allianz annuity, you then recommended that she switch her Allianz annuity for an annuity with Conseco Insurance Company (“Conseco”) through a 1035 exchange. A 1035 exchange, the full text of which appears below, allows the owner to avoid tax consequences. 10. (a) General rules: No gain or loss shall be recognized on the exchange of (1) a contract of life insurance for another contract of life insurance or for an endowment or annuity contract; or (2)a contract of endowment insurance (A) for another contract of endowment insurance which provides for regular payments beginning at a date not later than the date payments would have begun under the contract exchanged, or (B) for an annuity contract; or (3) an annuity contract for an annuity contract. [26 U.S.C, 1035] 11, However, you, JOHN CHRIS BERNS, failed to disclose the surrender charges that would be incurred with this swap. In fact, you, JOHN CHRIS BERNS, also answered “no” on the Conseco annuity suitability form to question 11 asking whether penalties or charges would be incurred with this exchange, when in fact they were incurred. IT IS THEREFORE CHARGED THAT you, JOHN CHRIS BERNS, have violated the following rules or statutes which constitute grounds for the suspension or revocation of your licenses and your eligibility for licensure and appointment: (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 626.61 1(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 626.611(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 626.611(9), Florida Statutes]; (f) 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 626.611(13), Florida Statutes]; ~~? a (g) 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]; (h) Violation of the provision against twisting, as defined in s. 626.9541(1)()). [Section 626.621(5), 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 IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; (j) 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); (ls) Twisting.--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, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. [Section 626.9541(1)(1), Florida Statutes]. COUNT IT 16. The above general allegations are realleged and incorporated herein by reference. 17. In 2004, a mutual acquaintance introduced you, JOHN CHRIS BERNS, to Ms. L.N., for the purpose of discussing investments with proceeds from her refinanced mortgages, Ms. L.N. made it clear to you, JOHN CHRIS BERNS, that she wanted immediate liquidity and access to her money. 18. When Ms, L.N. met with you, JOHN CHRIS BERNS, she held retirement funds in a 403(b) account and an annuity with National Western Life Insurance Company (“National Western”). 19. You, JOHN CHRIS BERNS, invested approximately $94,000 of Ms. L.N.’s 403(b) in an annuity with Allianz Life Insurance Company of North America (“Allianz”), the application form of which was-dated July 15, 2005. The Allianz annuity was a tax-qualified contract. 20. Less than a year after investing Ms. L.N.’s 401(b) into the Allianz annuity, on or about February 9, 2006, you, JOHN CHRIS BERNS, took a partial withdrawal from Ms. L.N.’s Allianz annuity in the amount of $70,000 and invested that in an annuity with Conseco Insurance Company (“Conseco”), which was issued as a non tax-qualified contract. 21. You, JOHN CHRIS BERNS, represented to Ms. L.N. that this partial withdrawal was in her best interest as it would “get all the market gains but none of the losses,” and that she would receive at least a 10% annual return. 22. You, JOHN CHRIS BERNS, falsely represented to Ms. L.N, that she would incur no surrender charges with this partial withdrawal. You, JOHN CHRIS BERNS, made material misrepresentations relating to surrender charges on the Conseco annuity suitability form dated February 6, 2006. 23. In point of fact, Ms. L.N. incurred approximately $18,500 in surrender charges as a result of her partial withdrawal from the Allianz annuity. 24, Ms. L.N. only learned of the approximately $18,500 surrender charge from Allianz after it was processed. 25, You, JOHN CHRIS BERNS, made material misrepresentations on the Conseco annuity suitability form dated February 6, 2006, including misrepresentations regarding surrender charges. 26. By commingling funds from a qualified contract with those from a non-qualified contract, Ms. L.N. suffered significant negative tax consequences. 27. Approximately one year later, you, JOHN CHRIS BERNS, took a partial surrender from Ms. L.N.’s existing National Western policy to invest in a second Conseco policy, again without disclosing the approximately $10,000 worth in surrender charges incurred with this withdrawal. IT IS. THEREFORE CHARGED THAT you, JOHN CHRIS BERNS, have violated the following rules or statutes which constitute grounds for the suspension or revocation of your licenses and your eligibility for licensure and appointment: (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 626.61 1(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 626.611(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 626.611(9), Florida Statutes]; (f) 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 626.611(13), Florida Statutes]; (g) 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]; (h) Violation of the provision against twisting, as defined in s. 626.9541(1)(). [Section 626,621(5), 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 IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; G) 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)()1., Florida Statutes]; (k) Twisting.--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, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. [Section 626.9541(1)(1), Florida Statutes]. COUNT II 28. The above general allegations are realleged and incorporated herein by reference. 29, In 2006, you, JOHN CHRIS BERNS, met with Ms. A.N., then age 87, to discuss investments with the approximately $500,000 that she held with Fidelity Investments (“Fidelity”). 30. Ms. A.N. made it clear to you, JOHN CHRIS BERNS, that she wanted immediate liquidity from her potential investments. 31. You, JOHN CHRIS BERNS, represented to Ms. A.N. that by allowing you to invest for her, she would never lose her principal and that after one year of investments with you, she could get $5,000-$7,000 per month and still keep the principal for her children. 32, You, JOHN CHRIS BERNS, submitted an annuity application to Conseco on Ms. A.N.’s behalf for the amount of approximately $511,000, dated August 17, 2007. This application incorrectly listed Ms, A.N.’s year of birth as 1922, instead of her true birth year, 1919. 33. Thereafter, you, JOHN CHRIS BERNS, instructed Ms. A.N. to request what you led her to believe was be the bonus and advance interest payment for purchasing the Conseco policy. 34. On October 23, 2007, months after Ms. A.N.’s application for the Conseco annuity, you, JOHN CHRIS BERNS, submitted a fraudulent amendment to the application, again incorrectly listing Ms. A.N.’s year of birth as 1922, and forging her signature. 35. Ms. A.N. would not have qualified for a Conseco annuity based on the true year of her birth, 1919. Ms, A.N. only qualified for the Conseco annuity based on the 1922 year of birth, which is not her true year of birth and which you, JOHN CHRIS BERNS, knew or should have known when submitting the application and the amendment. IT IS THEREFORE CHARGED THAT you, JOHN CHRIS BERNS, have violated the following rules or statutes which constitute grounds for the suspension or revocation of your licenses and your eligibility for licensure and appointment: (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]; Nee? — (c) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626,611(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 626.611(9), Florida Statutes]; (f) 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 626.611(13), Florida Statutes]; (g) 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]; (h) _ Violation of the provision against twisting, as defined in s. 626.9541(1)(1). [Section 626.621(5), 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 IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public, [Section 626.621(6), Florida Statutes]; (j) 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 (k)(1), Florida Statutes]; ~~ — (k) Twisting.--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, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. [Section 626.9541(1)(D, Florida Statutes]. WHEREFORE, you, JOHN CHRIS BERNS, are hereby notified that the Chief Financial Officer 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, 626.692, and 626.9521, Florida Statutes, and under the other referenced Sections of the Florida Statutes as set out in this Administrative Complaint. In addition, you are notified that the Department intends to seek aggravation of the total applicable penalties in consideration of the willfulness of your, JOHN CHRIS BERNS’S conduct, your prior disciplinary history, the age or capacity of the victims, and the degree of injury to the victims. 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 Tracey Beal, DFS Agency Clerk, Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0390, Your written response must be received by the Department no later than 5:00 p.m. on the twenty-first 10 ee’ ee 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 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) — Astatement 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 11 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 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, DATED and SIGNED this /D day of June, 2009. TAMMY Tig TON Deputy Chief Financial Officer 12 CERTIFICATE OF SERVICE I HEREBY CERTIFY that true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and the following ELECTION OF PROCEEDING has been furnished to: JOHN CHRIS BERNS, 1038 N. EISENHOWER DR. STE 263, BECKLEY, WV 25801-3116; JOHN CHRIS BERNS, 4816 HIDDEN PALM PL., MELBOURNE, FL 32904-9722; JOHN CHRIS BERNS, 2731 27" CT., JUPITER, FL 33477 this {> day of June, 2009. Sy Unmet Annie Wang Florida Bar Number 57863 Department of Financial Services Division of Legal Services 612F Larson Building Tallahassee, Florida 32399-0333 (850) 413-4134 13 oo STATE OF FLORIDA DEPARTMENT OF FINANCIAL SERVICES DIVISION OF LEGAL SERVICES IN THE MATTER OF: JOHN CHRIS BERNS CASE NO.: 103578-09-AG ELECTION OF PROCEEDING I have received and have read the Administrative Complaint filed by the Florida Department of Financial Services ("Department") against me, including the Notice of Rights contained therein, and I understand my options. I am requesting disposition of this matter as indicated below. (CHOOSE ONE) Lt] 3.0] I do not dispute any of the Department’s factual allegations and I do not desire a hearing. I understand that by waiving my right to a hearing, the Department may enter a final order that adopts the Administrative Complaint and imposes the sanctions sought, including suspending or revoking my licenses and appointments as may be appropriate. I do not dispute any of the Department's factual allegations and I hereby elect a proceeding to be conducted in accordance with Section 120.57(2), Florida Statutes. In this regard, I desire to (CHOOSE ONE); [] Submit a written statement and documentary evidence in lieu of a hearing; or {] Personally attend a hearing conducted by a department hearing officer in Tallahassee; or {] Attend that same hearing by way of a telephone conference call. I do dispute one or more of the Department's factual allegations. I hereby request a heating pursuant to Section 120,57(1), Florida Statutes, to be held before the Division of Administrative Hearings, I have attached to this election form the information required by Rule 28-106,2015, Florida Administrative Code, as specified in subparagraph (c) of the Notice of Rights, Specifically, 1 have identified the disputed issues of material fact. TO PRESERVE YOUR RIGHT TO A HEARING, YOU MUST FILE YOUR RESPONSE WITH THE DEPARTMENT OF FINANCIAL SERVICES WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THE ADMINISTRATIVE COMPLAINT. THE RESPONSE MUST BE RECEIVED BY THE DEPARTMENT NO LATER THAN 5:00 P.M. ON THE TWENTY-FIRST DAY AFTER YOUR RECEIPT OF THE ADMINISTRATIVE COMPLAINT. The address for filing is: Tracey Beal, Agency Clerk, Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0390, Signature Print Name Date: Address: Date Administrative Complaint Received: Ifyou are represented by an attorney or qualified Phone No.: representative, please attach to this election form his or her name, address, telephone and fax numbers Fax No. 14

Docket for Case No: 10-000847PL