FILED THE TREASURER OF THE STATE OF FUGRIDA] PH [2: 38 Man 6 2002 DEPARTMENT OF INSURANCE TOM GALLAGHER . “Treasurer and Insurance Cormmissjoner Docketed by: IN THE MATTER OF: CASE NO. : 60250-02-AG ROBERT LEWIS MCKNIGHT OO- ) [ SS Phe ADMINISTRATIVE COMPLAINT TO: ROBERT LEWIS MCKNIGHT 1601 Big Tree Road Daytona Beach, Florida 32119-8642 Robert Lewis McKnight c/o Ameri-Life & Health Services 2536 Country Side Road Clearwater, Florida 34623-1633 Robert Lewis McKnight c/o Ameri-Life & Health Services 613 South Yonge Street Ormond Beach, Florida 32174 You, ROBERT LEWIS MCKNIGHT, 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 adjuster in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. Pursuant to Chapter 626, Florida Statutes, you, ROBERT LEWIS MCKNIGHT, are currently licensed in this state as life and variable annuity (2-14) agent; life, health and variable annuity (2-15) agent; life (2-16), agent; life and health (2-18) agent; and health (2-40) agent. Your license identification number is A173697. 2. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Insurance (hereinafter referred to as the “Department”) has jurisdiction over your license and appointments. 3. The Equitable Life Assurance Society, located at 1290 Avenue of the Americas, New York, New York 10104 (hereinafter referred to as “Equitable”) is a life and health insurance company with a certificate of authority to do business in the state of Florida. 4. At all times relevant to the dates and occurrences referred to herein you, ROBERT LEWIS MCKNIGHT, were an insurance agent representing by Ameri-Life & Health Services, an insurance agency located 2536 Countyside Boulevard, Clearwater, Florida 34623- 1633 (hereinafter referred to as “Ameri-Life”). COUNT I 5. The above general allegations 1 through 4 are hereby realleged and fully incorporated herein by reference. 6. On September 19, 2000, you, ROBERT LEWIS MCKNIGHT, gave a presentation about annuities, trusts and other investments at the Chili’s restaurant in Ormond Beach, Florida. At that time you, ROBERT LEWIS MCKNIGHT, met Donald T. Mason and his spouse, Kerstin Mason, of 462 Magnolia Street, Ormond Beach, Florida 32176 (hereinafter referred to as the “Masons”) and scheduled an appointment to meet with them at their home. 7. On or about September 22, 2000, you, ROBERT LEWIS MCKNIGHT, met with the Masons at their home and reviewed their then existing life insurance policies and annuities for the purpose of giving them advice. At that time, the Masons had Equitable policy # 49 234 195, a $300,000 variable life “second to die” insurance policy insuring Donald and Kerstin Mason; Equitable policy # 44 256 521, a $50,000 variable life insurance policy insuring Donald Mason; Equitable Contract # 97 661 013, an annuity with an account balance of $113,605.33; Equitable Contract # 97 665 236, an annuity with an account balance of $54,325.83; and Equitable Contract # 99 613 548, an annuity with an account balance of $49,322.53. 8. On or about September 22, 2000, you, ROBERT LEWIS MCKNIGHT, told the Masons that policy # 49 234 195 was not a $300,000 “second to die” life insurance policy that would be paid up in five years, as they believed, and that you could obtain a $300,000 “second to die life” insurance policy for a single premium of $67,000. 9. On or about September 22, 2000, you, ROBERT LEWIS MCKNIGHT, told the Masons that you could obtain $75,000 life insurance policy for the same premium as they were paying for policy # 44 256 521, the $50,000 life insurance policy. 10. On or about September 22, 2000, you, ROBERT LEWIS MCKNIGHT, recommend that the Masons surrender their two life insurance policies and three annuities and use the money realized from the surrender to buy the life insurance policies described in paragraphs 8 and 9 herein. © 11. . The Mason told you that they were uncomfortable with your recommendation, but you, ROBERT LEWIS MCKNIGHT, used high-pressure sales tactics to induce the Masons to agree to surrender their insurance policies and annuities. 12. You, ROBERT LEWIS MCKNIGHT, never obtained a $300,000 “second to die” life insurance policy for a single premium of $65,000 and you, ROBERT LEWIS MCKNIGHT, never obtained a $75,000 life insurance policy for the same premium that the Masons were paying for a $50,000 life insurance policy nor did you obtain any other replacement coverage for these policies and, as a result Equitable did not process the surrender requests for these policies, but Equitable did process the surrender requests for the annuities. these policies and, as a result Equitable did not process the surrender requests for these policies, but Equitable did process the surrender requests for the annuities. 13, You, ROBERT LEWIS MCKNIGHT, directed the funds from the surrender of those annuities described in paragraph 6 to the purchase addition life insurance for Donald Mason in the amount of $193,975 and addition life insurance for Kerstin Mason in the amount of $111,500. The total cost of the premiums for these policies was $194,765.33, which was exactly equal to the amount from the surrender of the annuities. 14. As a result of said purchases, you, ROBERT LEWIS MCKNIGHT, were paid commissions totaling thirty two thousand twelve dollars and forty five cents ($32, 012.45). 15. As a result of misrepresentations made by you, ROBERT LEWIS MCKNIGHT, the Masons believed that the funds from the surrender of the Equitable annuities were going to be used for the purchase of life insurance that would comparable to the Equitable policies and that would replace those policies. The Mason did not knowingly consent to the use of those funds for the purchase of the supplemental life insurance that you sold to them. 16. As a result of the surrender of said annuities, which you, ROBERT LEWIS MCKNIGHT, induced, the Mason incurred surrender penalties in the amount of $9,338.46 and additional income tax. 17. You, ROBERT LEWIS MCKNIGHT, knew or should have known that the Masons did not want to purchase additional life insurance and you, ROBERT LEWIS MCKNIGHT, knew or should have know that the liquidation of the annuities to purchase additional annuities was not in the best interest of the Masons. IT IS THEREFORE CHARGED that you, ROBERT LEWIS MCKNIGHT, have violated or are accountable under one or more of the following provisions of the Florida Insurance Code (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 626.611(5), Florida Statutes] (b) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes] (c) 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] (c) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes] (d) 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] (f) Violation of the provision against twisting, as defined in ss. 626.9541(1)(1). [Section 626.621(5), Florida Statutes] (g) 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] (h) If a life agent, violation of the code of ethics. [Section 626.621(9), Florida Statutes] (i) Misrepresentations and false advertising of insurance policies—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] Gg) Misrepresentations and false advertising of insurance policies.—Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy. [Section 626.9541(1)(a)1, Florida Statutes] (k) 1. 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] () Knowingly making a material omission in the comparison of a life, health, or Medicare supplement insurance replacement policy with the policy it replaces for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. For the purposes of this subparagraph, a material omission includes the failure to advise the insured of the existence and operation of a preexisting condition clause in the replacement policy. [Section 626.9541(1)(k)2, Florida Statutes] (m) 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] WHEREFORE, you, ROBERT LEWIS MCKNIGHT, 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 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 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. The Department must receive your written response 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) 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 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 and SIGNED this__ G@ZA._ day of WMhrth , 2002. K Shoring KENNEY SHIPLEY Deputy Insurance EY aoe CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF RIGHTS has been furnished to ROBERT LEWIS MCKNIGHT, 1601 Big Tree Road, Daytona Beach, Florida 32119-8642; 2536 Country Side Road, Clearwater, Florida 34623-1633; 613 South Yonge Street, Ormond Beach, Florida 32174; by Certified Mail this G% day of argh 2002. =< Ez = WZ = S RICHARD J-SANTURRI Florida Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-033 (850) 413-4188 Fla. Bar No. 318530

Docket for Case No: 02-001188PL