(2 JIE FILED AUG 8 2003 DEPARTMENT OF FINANCIAL SERVICES SI 4 Docketed by’ d Tom GALLAGHER CHIEF FINANCIAL OFFICER IN THE MATTER OF: RICHARD R. MORRIS CASE NO.: 60581-03-AG / ADMINISTRATIVE COMPLAINT TO: RICHARD R. MORRIS 933 Bayside Bluff Road \ -. Jacksonville, Florida 32259-9025 Oooyes co oath =x Tt RICHARD R. MORRIS os Morris Financial Services, Inc. : r 933 Bayside Bluff Road o fo) Jacksonville, Florida 32259-9025 You, RICHARD R. MORRIS, 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. Pursuant to Chapter 626, Florida Statutes, you, RICHARD R. MORRIS, are currently licensed in this state as a life (2-16), and life and health (2-18) agent. 2. At all times pertinent to the dates and occurrences referred to herein, you RICHARD R. MORRIS were licensed in this state as an insurance agent. 3. At all times pertinent to the dates and occurrences referred to herein, you RICHARD R. MORRIS, were associated with and acted as “account representative” or agent for a company known as 215%* Century Satellite Communications, Inc. (hereafter 218" Century”). 4. You, RICHARD R. MORRIS, offered for sale and sold to Florida residents, various promissory notes and lease agreements (hereafter collectively referred to as “investments”) in 21%* Century through a Florida corporation known as Morris Financial Services, Inc. (hereafter “Morris Financial”), in which you have served as Vice-president. 5. The investments issued, offered for sale and sold by you, RICHARD R. MORRIS, as agent for 21st Century, are securities as defined in Section 517.012(18), Florida Statutes. 6. The investments issued, offered for sale and sold by you, RICHARD R. MORRIS as agent for 21st Century, were not registered with the State of Florida Department of Banking and Finance (“DBF”), as required pursuant to Section 517.07, Florida Statutes, and were not exempt from such registration requirements, either under the provisions of sections 517.051 or 517.061, Florida Statutes. 7. In each count alleged herein, you, RICHARD R. MORRIS, provided the investor with 21st Century sales materials advertising that “each lease or loan agreement is backed up by the Uniform Commercial Code”; that the investment provided not only a fixed rate of return but also “a healthy share of the profits” described as an “average profit before tax of $9.95 per subscriber per month (or 35.6%)"; that funds lent by investors to 21% century are “secured by collateral mortgage on the equipment and the income derived from it, confirmed by a UCC1 and a corporate promissory note”; that lease payments “would consist of a monthly fixed and guaranteed interest payment of 1 percent, plus an additional 25 percent of the annual profits generated by the installation”; and a table showing that a typical $100,000 investment would result in a net return to the investor of $84,445 over a five year period; and that investors would entitled to take 100% depreciation on the “installation equipment” over a five-year period. 8. These advertisement materials were designed to leave all purchasers with the impression that funds invested would be safely held. 9. You, RICHARD R. MORRIS, were jisted as an authorized insurance agent vendor under the Duval Public Schools’ Tax Shelter Annuity Program (or “TSA”). You used this appointment and position of trust to fraudulently and deceptively coerce or mislead, by false or incomplete representations or fraudulent material omissions of or with respect to insurance policies, teachers and other Duval County Public School employees to purchase excessive numbers of annuity, life insurance and viatical contracts which by similar methods of twisting, you later placed in “self-directed individual retirement custodial accounts” provided by Retirement Accounts Incorporated, to be utilized as sources of funds for the 215* century investments you sold to these insurance clients to further increase your commission income. 10. Retirement Accounts, Inc., a “self-directed individual retirement custodial account” acted as a conduit for funds invested in 21% Century by using monies gathered from surrenders of annuity, life insurance and viatical contracts with full knowledge of and at the willful direction of you, RICHARD R. MORRIS. 11. You, RICHARD R. MORRIS, sold a total of $4,716,000.00 worth of 218* Century promissory notes and lease agreements earning you substantial commissions. These individual transactions, more particularly described below, not only resulted in the loss of the invested funds in the sum of $608,901.15, but also in $94,105.35 in penalty fees or surrender charges due to you, RICHARD R. MORRIS, twisting your insurance clients’ annuity and life insurance contracts. In addition, you caused your clients to suffer $4,039.85 in losses on the sale of viatical contracts and viatical fees, for a total loss of funds in the amount of $707,046.35. 12. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your insurance licenses and appointments. COUNT I 13. The above General Allegations are hereby realleged and fully incorporated by reference. 14. Between approximately June 1984 and February 1998, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold 4 several annuities to B.A. (DOB June 30, 1933). These policies were issued by American Life and Casualty Insurance Company, Northern Life Insurance Company, National Western Life Insurance Company and USG annuity and Life Insurance Company. 15. During about this same period and thereafter you, RICHARD R. MORRIS, urged B.A. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by B.A., to Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical contract providers, including Life Partners, Inc. These transactions were all done with your knowledge and upon your advice. 16. On or around June 5, 1998, you, RICHARD R. MORRIS, visited B.A. and convinced her to invest $13,000.00 in 21%" Century. B.A. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 17. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using B.A.’s trust in you, as her insurance agent, to convince her to invest in an unauthorized security, at a loss of $13,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted B.A.’s annuity and viatical contracts causing her a loss of $3,382.52 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the Eollowing provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: (a) 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, OF convert any insurance policy or to take out a policy of insurance in another insurer [Section 626.9541 (1) (1), Florida Statutes]; (b) Demonstrated lack of fitness or trustworthiness to engage in the pusiness 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]; (ad) 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]; (e) In the conduct of business under the license or permit, 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]. COUNT II 18. The above General Allegations are hereby realleged and fully incorporated by reference. 19. Between approximately May 1987 and July 1993, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold several annuities to J.A. (DOB August 10, 1927). These policies were issued by American Life and Casualty Insurance Company, National Western Life Insurance Company, and USG Annuity and Life Insurance Company. 20. During about this same period and thereafter you, RICHARD R. MORRIS, urged J.A. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by J.A., to Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical contract providers, including Life Partners, Inc. ‘These transactions were all done with your knowledge and upon your advice. 21. On or around June 5, 1998, you, RICHARD R. MORRIS, visited J.A. and convinced him to invest $33,000.00 in 21°* Century. J.A. had confidence in making that investment because of his prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 22. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using J.A.‘s trust in you, as his insurance agent, to convince him to invest in an unauthorized security, at a loss of $33,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted J.A’s annuity and viatical contracts causing him a loss of $3,826.37 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT III 23. The above General Allegations are hereby realleged and fully incorporated by reference. 24. Between approximately November 1990 and July 1993, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold several annuities to M.E.B. (DOB May 28, 1928). These policies were issued by Life USA, Lincoln National Life Insurarice Company, General Services (later Bankers United Life Assurance Company ) Life Insurance Company, american Life and Casualty Insurance Company, Allianz and USG Annuity and Life Insurance Company. 25. During about this same period and thereafter you, RICHARD R. MORRIS, urged M.E.B. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by M.E.B., to Retirement Accounts, Inc., Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical contract providers, including Life Partners, Inc. and Liberte Capital. These transactions were all done with your knowledge and upon your advice. 26. On or around December 18 and June 25, 1998, you, RICHARD R. MORRIS, visited M.E.B. and convinced her to invest $90,000.00 in 218* century. M.E.B. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 27. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using M.E.B.’s trust in you, as her insurance agent, to convince her to invest in an unauthorized security, at a loss of $90,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted M.E.B.’S annuity and viatical contracts causing her a loss of $37,195.28 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT _IV 28. The above General Allegations are hereby realleged and fully incorporated by reference. 29. Between approximately October and December, 1997, you, RICHARD R. MORRIS, convinced M.B. (DOB March 1, 1928) to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of one or more insurance policies, owned by M.B., to invest in viatical contracts as provided by Life Partners, Inc. These transactions were all done with your knowledge and upon your advice. 30. On or around June 9 and October 6, 1998, you, RICHARD R. MORRIS, visited M.B. and convinced her to invest $47,000.00 in 218 century. M.B. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 31. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using M.B.’S trust in you, as her insurance agent, to convince her to invest in an unauthorized security, at a loss of $47,000.00. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT _V 32. The above General Allegations are hereby realleged and fully incorporated by reference. 10 33. On or about May 9, 1998 you, RICHARD R. MORRIS, convinced H.B. (DOB January 19, 1947) to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of one or more insurance policies, owned by H.B., so as to transfer the resultant funds to Retirement Accounts Inc. These transactions were all done with your knowledge and upon your advice. 34. On or around August 27, 1997, December 12, 1997, July 28, 1998, and May 10, 1999, you, RICHARD R. MORRIS, visited H.B. and convinced him to invest a total of $26,000.00 in 215* Century. H.B. had confidence in making that investment because of his prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 35. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using H.B.’s trust in you, as his insurance agent, to convince him to invest in an unauthorized security, at a loss of $26,000.00 and by twisting caused H.B. to suffer an additional loss of $573.72 in fees and surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. 11 COUNT VI 36. The above General Allegations are hereby realleged and fully incorporated by reference. 37. Between approximately August 1980 and July 1993, you, RICHARD R. MORRIS, sold several annuities to A.D. (DOB October 6, 1931). These policies were issued by National Western Life Insurance Company, Conseco Annuity Assurance Company, and USG Annuity and Life Insurance Company. 38. During about this same period and thereafter you, RICHARD R. MORRIS, together with your wife, Sandra Morris, urged A.D. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by A.D., such as National Annuity Programs, Inc., to Retirement Accounts, Inc., Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical contract providers, including Life Partners, Inc. and Liberte Capital Group. These transactions were all done with your knowledge and upon your advice. 39. On or around December 20, 1997, August 18, 1998, and March 22, 1999, you, RICHARD R. MORRIS, visited A.D. and convinced her to invest a total of $19,000.00 in 218° Century. A.D. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 40. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using A.D’s trust in you, as her insurance 12 agent, to convince her to invest in an unauthorized security, at a loss of $19,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted A.D.’s annuity and viatical contracts causing her a loss of $4,523.66 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT VII 41. The above General Allegations are hereby realleged and fully incorporated by reference. 42. Between approximately August 1985 and September 1993, you, RICHARD R. MORRIS, sold several annuities to J.E. (DOB March 23, 1927). These policies were issued by American Life and Casualty Insurance Company, National Western Life Insurance Company and USG Annuity and Life Insurance Company. 43. During about this same period and thereafter you, RICHARD R. MORRIS, urged J.E. to surrender, terminate, retain, pledge, assign, borrow on, Or convert all or parts of these policies, and other insurance policies owned by J.E., to Sterling Trust Company, trustee, or to Capital Trust Company, aS escrow agents for viatical contract providers, including Life Partners, 13 Ae A AA re me me Inc. These transactions were all done with your knowledge and upon your advice. 44. On or around March 16, 1999, you, RICHARD R. MORRIS, visited J.E. and convinced him to invest $20,000.00 in 21*° Century. J.E. was not comfortable in making these investments because he believed they were part of a ponzi scheme. However, over time, you, RICHARD R. MORRIS, were able to convince J.E. to make the investment by arguing that the viatical investments you had previously sold him were not paying off and that he, J.E. would soon have to begin making premium payments on the viatical contracts. 45. You, RICHARD R. MORRIS, in a further effort to convince J.E. to invest in 215* century, agreed to reimburse J.E. 60% of the loss for the sale of Life Partners, Inc. viatical contracts. tt was only then that J.E. made the 21° century investment, in spite of his concerns, and because of his prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 46. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using J.E.’S trust in you, as his insurance agent, to convince him to invest in an unauthorized security, at a loss of $20,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted J.E.’s annuity and viatical contracts causing him a loss of $10,856.79 in fees or surrender charges, plus a $2,322.00 ($4,322.00 less a $2,000.00 reimbursement from you, RICHARD R. MORRIS) loss on the sale of viatical contracts. 14 IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT VIII 47. The above General Allegations are hereby realleged and fully incorporated by reference. 48. In approximately May 1994, insurance agent Steve Couf sold an annuity to H.G. (DOB December 9, 1930). You, RICHARD R. MORRIS, later acted as H.G.’S insurance agent and advised her to invest the final annuity payment of $12,745.43 from this policy, into 21°* Century in May 1998. 49. During about this same period from June 1998 through June 1999, you, RICHARD R. MORRIS, urged H.G. to invest a total of $33,000.00 in 21%* century. These transactions were done with your knowledge and upon your advice. H.G. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 50. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using H.G.’s trust in you, as her insurance agent, to convince her to invest in an unauthorized security, at a loss of at least $33,000.00. 15 kiN RN I Rn == IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT_IX 51. The above General Allegations are hereby realleged and fully incorporated by reference. 52. Around February 1997, you, RICHARD R. MORRIS, sent a letter to A.M.G. (DOB December 9, 1930), stating that you were the authorized agent of record for the clients of her previous insurance agent, Steve Couf, due to his death. 53. You, RICHARD R. MORRIS, contacted A.M.G. by phone and convinced her to invest $20,000.00 she had received from a viatical settlement in 218* century. This transaction was done with your knowledge and upon your advice. A.M.G. had confidence in making that investment because of her insurance relationship with you, RICHARD R. MORRIS, as summarized above, and because of the letter of introduction you presented her, outlining your credentials, particularly as regards insurance matters. 54, In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using A.M.G.’S trust in you, as her insurance 16 agent, to convince her to invest in an unauthorized security, at a loss of at least $20,000.00. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT _X 55. The above General Allegations are hereby realleged and fully incorporated by reference. 56. Between March 1971 and May 1993, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold several life insurance and annuity policies to L.F.G. (DOB November 18, 1938). These policies were issued by Northern Life Insurance Company, State Mutual Insurance Company, Franklin Life Insurance Company, and USG Annuity and Life Insurance Company . 57. During about this same period and thereafter you, RICHARD R. MORRIS, urged L.F.G. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by L.F.G., dating back to 1971, to Retirement Accounts, Inc., Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical settlement providers, including Life Partners, Inc. 17 and Liberty Capital. These transactions were all done with your knowledge and upon your advice 58. On or around June 29 and September 24, 1998, you, Richard R. Morris, visited L.F.G. and convinced her to invest $38,000.00 in 215 century. L.F.G. had confidence in making that investment because of the assurance you gave her and because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 59. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using L.F.G.’s trust in you, as her insurance agent, to convince her to invest in an unauthorized security, at a loss of at least $38,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted L.F.G.’s annuity and viatical settlement purchase agreements, causing her a loss of more than $5,312.14 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an imsurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT XI 60. The above General Allegations are hereby realleged and fully incorporated by reference. 18 61. Between approximately April 16, 1987 and April 28, 1993, you RICHARD R. MORRIS, sold several annuities to E.G. (DOB December 7, 1923) and to his wife, L.G. These policies were issued by American Life and Casualty Insurance Company and USG Annuity and Life Insurance Company. 62. During about this same period and thereafter you, RICHARD R. MORRIS, urged E.G. and L.G. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by E.G. and L. G. to Retirements Accounts, Inc., and in turn, Liberte Capital Group, Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical settlement providers, including Life Partners, Inc. These transactions were all done with your knowledge and upon your advice. 63. On or around April 1 and July 29, 1998, you, RICHARD R. MORRIS, visited E.G. and L.G. and convinced them to invest a total of $27,000.00 in 21°° Century. E.G. and L.G. had confidence in making that investment because of their prior insurance relationship with you, RICHARD R. MORRIS, as summarized above, and because of the assurances you gave them. 64. In conclusion as to this Count you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using E.G. and L.G.’s trust in you, as their insurance agent, to convince them to invest in an unauthorized security, at a loss of $27,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted E.G. and L.G.’sS annuity and viatical 19 settlement purchase agreements, causing them a loss of $388.11 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT XII 65. The above General Allegations are hereby realleged and fully incorporated by reference. 66. Between approximately November 1987 and May 2000, you, RICHARD R. MORRIS, sold several annuities to G.H. (DOB September 5, 1939). These policies were issued by Northern Life Insurance Company, Great American Life Insurance Company, LifeUSA Insurance Company, General Services Life Insurance Company, State Mutual Insurance Company, American Life and Casualty Insurance Company, National Western Life Insurance Company, Conseco Annuity Assurance Company and USG Annuity and Life Insurance Company . 67. During about this same period and thereafter, you, RICHARD R, MORRIS, together with your wife, Sandra Morris, urged G.H. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by G.H., as for example a VALIC annuity contract number 2003001, to Sterling Trust Company, trustee or to Capital 20 — Se AAR EE a $ Trust Company, aS escrow agents for viatical settlement providers, including Life Partners, Inc. and Liberte Capital Group. These transactions were all done with your knowledge and upon your advice. 68. On or around September 19, 1997, January 12, 1998, July 7, 1998, and September 13, 1999, you RICHARD R. MORRIS, visited G.H. and convinced him to invest $40,000.00 in 215° century. G. H. had confidence in making that investment because of his prior insurance relationship with you, RICHARD R. MORRIS, as summarized above and because of representation, both oral and written, supplied by you. 69. In conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using G.H.’S trust in you, as his insurance agent, to convince him to invest in an unregistered security, at a loss of $40,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted G.H.’s annuity and viatical settlement purchase agreements causing him a loss of $4,506.08 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions ‘of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. 21 COUNT XIII 70. The above General Allegations are hereby realleged and fully incorporated by reference. 71. Between approximately 1970 and April 2000, you, RICHARD -R. MORRIS, together with your wife, Sandra Morris, sold annuities to B.E.H. (DOB June 5, 1945). These policies were issued by Ben Franklin Life Insurance, Jackson National Life Insurance, american Life and Casualty Insurance Company, National Western Life Insurance Company, USG Annuity and Life Insurance Company, State Mutual Insurance Company, Northern Life Insurance Company and Conseco Annuity Assurance Company . 72. During about this same period and thereafter you, RICHARD R. MORRIS, urged B.E.H. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and other insurance policies owned by B.E.H., to Retirements Accounts, Inc., Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical contract providers, including Life Partners, Inc. and Liberte Capital. These transactions were all done with your knowledge and upon your advice. 73. On or around November 4, 1997, January 12, 1998, and March 2, 1999, you RICHARD R. MORRIS, visited B.E.H. and convinced her to invest $77,000.00 in 215* century. B.E.H. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R, MORRIS, as summarized above. 22 74. %In approximately May 2000, you, RICHARD R. MORRIS, assisted B.E.H. in the transfer of over $15,000.00 in funds from Northern Life Insurance Company ana USG Annuity and Life Insurance Company to purchase one or more policies with Conseco Annuity Assurance Company. At that time you were an appointed agent with Conseco, and you knew or should have known that you were severely jeopardizing B.E.H.’s funds because Conseco’s Standard and Poor Rating had been reduced in April 2000 to non- investment grade, while the Northern Life and USG companies held Al and A+ ratings with Standard and Poor and A.M. Best, respectively, at that time. 75. In conclusion as to the Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using B.E.H.’S trust in you, as her insurance agent, to convince her to invest in an unregistered security, at a loss of $77,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted B.E.H.’s annuity and viatical settlement purchase agreements causing her a loss of $9,349.25 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. 23 _ ST 5mm COUNT XIV 76. The above General Allegations are hereby realleged and fully incorporated by reference. 77. On or about February 18, 1998, you, RICHARD R. MORRIS, encouraged O.K. (DOB January 13, 1927) to take funds she had recently received from the pay off on a viatical contract, and invest them in 21°* Century. 78. You, RICHARD R. MORRIS, took over the financial management of O.K.’'S viatical settlement purchase agreements following the death of her former agent, Steven Couf, from whom she had purchased the viaticals. O0.K. had confidence in making the 21° Century investment because of the assurances you gave her with respect to the company and because of her insurance relationship with you, RICHARD R. MORRIS. 79, In conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using O.K.‘s trust in you, as her insurance agent, to convince her to invest in an unregistered security, at a loss of $10,000.00. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. 24 COUNT XV 80. The above General Allegations are hereby realleged and fully incorporated by reference. 81. Between approximately February 1989 and November 1996, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold annuities to T.L.L. (DOB August 22, 1951). These policies were issued by Northern Life Insurance Company, National Western Life Insurance Company, Minnesota Mutual Life, and USG Annuity and Life Company. 82. During about this same period and thereafter, you, RICHARD R. MORRIS urged T.L.L. to surrender, terminate, retain, pledge, assign, borrow, or convert all or parts of these policies, and other insurance policies owned by Mr. Long to Retirements Accounts, Inc., Sterling Trust Company, trustee, or to Capital Trust Company, as escrow agents for viatical settlements providers, including Life Partners, Inc. 83. In 1997, you, RICHARD R. MORRIS, visited T.L.L. and convinced him to invest $6,500.00 in 215° century. T.L.L. had confidence in making that investment because of his prior insurance relationship with you, RICHARD R, MORRIS, as summarized above. 84. In conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using T.L.L.‘s trust in you, as his insurance agent, to convince him to invest in a unregistered security, at a loss of $6,500.00. In addition, you, RICHARD R. MORRI§, repeatedly twisted T.L.L.’s annuity and viatical 25 settlement purchase agreements causing him a loss of $3,673.30 in fees or surrender charges. [IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT_XVI 85. The above General Allegations are hereby realleged and fully incorporated by reference. 86. In 1998, you, RICHARD R. MORRIS, took over the financial management of the annuity and retirement accounts for E.M. (DOB August 1, 1993) following the death of her former agent, Steven Couf. E.M. owned annuities issued by National Western Life Insurance Company and USG Annuity & Life Company. 87. During the years 1997 through 1999 and thereafter, you RICHARD R. MORRIS, urged E.M. to surrender, terminate, retain, pledge, assign, porrow on, or convert all or parts of her annuities and retirement accounts to an investment in 21°° Century. You, RICHARD R. MORRIS, told E.M. that an investment in 218* century was a “no-lose” opportunity. 88. Because of the trust she placed in you, RICHARD R. MORRIS, as her insurance agent, and at your direction, E.M. did in fact borrow, surrender, and convert all or parts of her 26 annuities and retirement accounts, totaling approximately $36,000.00, to Retirement Accounts, Inc., as escrow agents for funds to be transferred to 218* century. These transactions, done with your knowledge and upon your advice, resulted in an additional loss to E.M. of $4,166.50 in fees or surrender charges. 39, In conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using E.M.’s trust in you, as her insurance agent, to convince her to invest in a unregistered security, at a loss of $36,000.00. In addition, you, RICHARD R. MORRIS, twisted E.M.’s annuities and retirement contracts causing her a further loss of $4,166.50 in fees and surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT XVII 90. The above General Allegations are hereby realleged and fully incorporated by reference. 91. Between 1987 and 2000, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold several annuities, viatical settlement purchase agreements, and a disability policy to J.J.M. 27 (DOB February 9, 1943). The policies and purchase agreements were issued by American Life and Casualty Insurance Company, National Western Life Insurance Company, USG Annuity & Life Insurance Company, State Mutual Insurance Company, Life Partners, Inc., and LifeUsa, among others. 92. During about this same period and thereafter you, RICHARD R. MORRIS, also urged J.J.M. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these, other policies, and viatical settlement purchase agreements to fund additional investments and annuities. These transactions were all done with your knowledge and upon your advice. 93. At your direction, J.J.M. surrendered all or parts of some annuities to Retirement Accounts, Inc., which acted as a conduit for funds to be invested in 21%* century. On or around August 6, 1998, and May 20, 1999, you, RICHARD R. MORRIS, convinced J.J.M. to invest $17,500.00 into 215* century. J.Jd.M. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, a summarized above. 94. In conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using J.J.M.’s trust in you, as her insurance agent, to convince her to invest in an unregistered security, at a loss of $17,500.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted her annuities and viatical settlement purchase 28 agreements, causing her a loss of $1,941.93 in fees and surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT XVIII 95. The above General Allegations are hereby realleged and fully incorporated by reference. 96. Between 1984 and 2000, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold several annuities and viatical settlement purchase agreements to D.M. (DOB August 28, 1943). These annuities and viatical settlement purchase agreements were issued by American Life and Casualty Insurance Company, Northern Life Insurance Company, National Western Life Insurance Company, USG Annuity & Life Insurance Company, Lincoln National Insurance Company, Conseco Annuity Assurance Company, and Life Partners, Inc. 97. During about this same period and thereafter, you, RICHARD R. MORRIS, urged D.M. to surrender, terminate, retain, pledge, assign, borrow on, or convert all or parts of these policies, and viatical settlement purchase agreements to fund additional investments and annuities. At your direction, all or 29 part of the funds was transferred to Retirements Accounts, Inc., a conduit for monies to be invested in 21°° Century. These transactions were all done with your knowledge and upon your advice. 98. On or about September 28, 1998, you, RICHARD R. MORRIS, visited D.M. and convinced her to invest $7,500.00 of her monies held by Retirement Accounts, Inc., into 215* Century. D.M. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 99. In conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using D.M.’s trust in you, as her insurance agent, to convince her to invest in an unregistered security, at a loss of $7,500.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted D.M.’s annuities and viatical settlement purchase agreements, causing her a loss of $1,963.25 in fees or surrender charges. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541 (1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. 30 COUNT XIX 100. The above General Allegations are hereby realleged and fully incorporated by reference. 101. In or about 1987, you, RICAHRD R. MORRIS, met E.M. (DOB July 11, 1939), when you assisted him with obtaining a student loan for his daughter. 102. In or about 1988, you, RICHARD R. MORRIS, convinced E.M. to roll over IRA funds held by a credit union, into an annuity with Financial Benefit Life Insurance Company . 103. Over the course of the next several years, you, RICHARD R. MORRIS, urged E.M. to surrender, terminate, retain, pledge, borrow on, or convert all or parts of his annuity and other retirement accounts, to other companies, such as USG Annuity and Life Insurance Company, Conseco Annuity Assurance Company, and Retirement Accounts, Inc., as escrow agents for viatical settlement providers, including Life Partners, Inc. These transactions were all done with your knowledge and upon your advice. 104. On or around February 16, 1995, you, RICHARD R. MORRIS, convinced E.M. to surrender viatical settlement purchase agreements to invest $8,401.15 in 21% century. E.M. had confidence in making that investment because of his prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 105. In Conclusion as to this Count, you, RICHARD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using E.M.’s trust in you, as his insurance 31 agent, to invest in an unregistered security, at a loss of $8,401.15. plus an additional $1,717.85 in viatical fees. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. COUNT XX 106. The above General Allegations are hereby realleged and fully incorporated by reference. 107. Between approximately 1965 through 1998, you, RICHARD R. MORRIS, together with your wife, Sandra Morris, sold annuities and viatical settlements purchase agreements to E.R. (DOB November 7, 1928). These policies and purchase agreements were issued by American Life and Casualty Insurance Company, National Western Life Insurance Company, USG Annuity & Life Company, and Life Partners, Inc. 108. During about this same period and thereafter, you RICHARD R. MORRIS, urged E.R. to surrender, retain, pledge, assign, borrow on, convert all or parts of these annuities and others owned by E.R., along with her viatical settlement agreements, to fund investments in various other annuities and 32 viatical settlement agreements. These transactions were all done with your knowledge and upon your advice. 109. On or about May 27, 1998, and December 17, 1998, you, RICHARD R. MORRIS, visited E.R. and convinced her to invest $25,000.00 and $15,000.00 respectively in 218* century. E.R. had confidence in making that investment because of her prior insurance relationship with you, RICHARD R. MORRIS, as summarized above. 110. In conclusion as to this Count, you, RICAHRD R. MORRIS, willfully used your insurance license to circumvent the Florida Insurance Code by using E.R.’s trust in you, as her insurance agent, to convince her to invest in an unregistered security, at a loss of $40,000.00. In addition, you, RICHARD R. MORRIS, repeatedly twisted E.R.’s annuity contracts and viatical settlement purchase agreements causing her a loss of $2,444.45 in surrender charges or fees. IT IS THEREFORE CHARGED that you, RICHARD R. MORRIS, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: Sections 626.9541(1) (1); 626.611(7); 626.611(8); 626.621(6); and 626.611(13), Florida Statutes, as more fully described under Count I above. 33 WHEREFORE, you, RICHARD R. MORRIS, are hereby notified that the Chief Financial Officer 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 Chapter 626.611, 626.621,626.681,626.691, 626.9521, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. NOTICE OF RIGHTS You have a right to request a proceeding to contest this action by the Department pursuant to Sections 120.569 and 120.57, Florida Statutes and Rule Chapter 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 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. 34 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 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 35 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. 36 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 Financial Services. DATED AND SIGNED this _8th day of _August 2003. ' Karen Chandler Deputy Chief Financial Officer 37 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT has been furnished to: RICHARD R. MORRIS, 933 Bayside Bluff Road, Jacksonville, Florida 32259- 9025, by Certified Mail this _gtnh day of August 2003. QV AS David J. Busch Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 (850) 413-4146 38

Docket for Case No: 03-003218PL