FILED MER-20 200 ALEX SINK CHIEF FINANCIAL OFFICER Docketed by: STATE OF FLORIDA IN THE MATTER oF DY ’a3! PL CASE NO.: 87880-07-AG TROY CHARLES WHITT ADMINIS COMPLAINT TO: TROY CHARLES WHITT 1107 East Silver Springs Blvd., #5 Ocala, Florida 34470 TROY CHARLES WHITT 4900 S.E. 11th Avenue Ocala, Florida 34480-6663 TROY CHARLES WHITT Central Florida Insurance Systems 202 N.E. 8th Avenue Ocala, Florida 34470 You, TROY CHARLES WHITT, 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, TROY CHARLES WHITT, License I.D. #A283816 are currently licensed in this state as a Life Agent (2-16), Life & Health Agent (2-18), and Health agent (2-40). 2. At all times pertinent to the dates and occurrences referred to herein, you, TROY CHARLES WHITT, were licensed in this state as an insurance agent. 3. Atall times material to the matters alleged herein, you, TROY CHARLES WHITT, were associated with one or more of the following agencies: “Diversified Health Services,” “Professional Insurance Systems,” “Advanced Senior Services,” “Rex Huffman & Associates,” and/or “Central Florida Insurance Systems.” 4. In June, 1990, you, TROY CHARLES WHITT, were subject to a Settlement Stipulation and related Consent Order issued by the Florida Department of Financial Services (the “Department”), Case #90-L-322WWT, in which you were subject to administrative supervision for a period of six months and a $500 administrative penalty stemming from charges that you misrepresented the terms and conditions of health insurance coverage to Florida consumers. 5. Two years thereafter and while still a licensed agent in Florida, in or around June, 1992, you, TROY CHARLES WHITT, applied for a supplemental Variable Annuity License. At that time, and in direct response to a question on the application regarding whether your license had ever been subject to an administrative penalty, you, TROY CHARLES WHITT, did answer under oath in the negative. You, TROY CHARLES WHITT, knew or reasonably should have known that this answer was materially false, given that your license had been subject to discipline by the Department just two years prior in Case #90-L-322WWT. In July, 1992, you, TROY CHARLES WHITT, signed and submitted an affidavit acknowledging your misstatement under oath relative to this supplemental application, and further acknowledging that any future violations of the Insurance Code or Rules of the Department by you would result in administrative action to suspend or revoke your license(s). 6. Pursuant to Chapter 626, Florida Statutes, the Department has jurisdiction over your insurance licenses and appointments. COUNT I 7. The above General Allegations are hereby realleged and fully incorporated by reference. 8. In or around early 2003, you, TROY CHARLES WHITT, without an objectively reasonable basis for believing such a transaction would result in an actual and demonstrable benefit to the policyholder, caused the surrender of an elderly Florida consumer’s in-force whole life insurance policy and, in its place, the creation of a new universal life insurance policy written through that same insurer. 9. You, TROY CHARLES WHITT, were first introduced to Lady Lake, Florida consumer O.M. by your partner, insurance agent John Dennis Below. On or around February 23, . 2003, you, TROY CHARLES WHITT, and insurance agent John Dennis Below met with O.M., who was at that time approximately 81 years of age. During that meeting, and with the ultimate goal of soliciting your elderly client to purchase an unsuitable insurance policy and/or annuity contract paying high dollar commissions, John Dennis Below and you, TROY CHARLES WHITT, convinced O.M. to allow you to review her in force investments and insurance. 10. During that February, 2003 visit, you, TROY CHARLES WHITT, and your partner convinced O.M. to allow you to review her existing life insurance portfolio. At that time, O.M. owned a whole life insurance policy written through Manufacturers Life Insurance Company, Contract #40 137 234 (the “Manufacturers Whole Life Policy”), which had been in force for approximately 10 years and carried a death benefit of approximately $500,000.00. 11. As a whole life policy, each year it was in force the Manufacturers Whole Life Policy paid significant dividends which purchased additional paid-up insurance and increased the death benefit of O.M.’s policy. At the time of your meeting with O.M. in February, 2003, you, TROY CHARLES WHITT, knew or reasonably should have known that O.M.’s Manufacturers Whole Life Policy carried a death benefit of approximately $500,000.00. Notwithstanding this sizeable and growing death benefit and the continued dividends O.M.’s Manufacturers Whole Life Policy provided, and without regard to the fact that the annual premiums for the policy would never increase, you, TROY CHARLES WHITT, and your partner, John Dennis Below, insisted to O.M. that her whole life policy would “lose value” and that it would “be worth much less in later years.” Contrary to M.N.’s best interests and with no objectively reasonable basis for doing so, you, TROY CHARLES WHITT, recommended to O.M. that she allow you to surrender her Manufacturers Whole Life Policy and replace it with another policy, a new universal life policy issued by the same company, Manufacturers Life. You, TROY CHARLES WHITT, made this recommendation to O.M. without disclosing to her that there were inherent risks involved in such a transaction. 12. Based upon the trust she placed in you and believing you, TROY CHARLES WHITT, to be acting in her best interests, O.M. did agree to allow you and your partner to surrender her in force Manulife Whole Life Policy for the purpose of creating a new universal life policy, Manulife Contract #59-164-996 (the “Manulife Universal Life Policy”). 13. Additionally, to effectuate this transaction in the way most financially beneficial to your own interests, you, TROY CHARLES WHITT, and your partner further insisted to O.M. that instead of directly investing the cash value proceeds from her Manufacturers Whole Life Policy into the new Manufacturers Universal Life Policy, she should use those cash value proceeds to purchase from you a third contract, an immediate annuity, written through Fidelity & Guaranty Life (“F&G”). As you, TROY CHARLES WHITT, and your partner, John Dennis Below, explained to O.M., this new immediate annuity contract was to be created by you solely as a vehicle to fund O.M.’s new Manufacturers Universal Life Policy. You, TROY CHARLES WHITT, falsely represented to O.M. that doing so would be in her best interests and would, in fact, benefit her. You, TROY CHARLES WHITT, and your partner, John Dennis Below, insisted to O.M. that the payments generated by this immediate annuity would be sufficient to pay in full her annual premiums on a new universal life policy, and that in 7 years the policy would be “paid up,” and she would have to make no further premium payments. In order to make the proposal still more attractive to your elderly client, you, TROY CHARLES WHITT, and your partner, John Dennis Below, further explained to O.M. that once her policy was “paid up” in 7 years, she would then receive from the F&G Annuity nearly $25,000 per year in supplemental income for the rest of her life. 14. Based upon the trust she placed in your partner and in you, TROY CHARLES WHITT, O.M. did in fact agree to allow you to use the cash proceeds from her surrendered Manufacturers Whole Life Policy to create a new immediate annuity, F&G Contract #LS00467 (the “F&G Annuity”), for the purpose of funding the new Manufacturers Universal Life Policy. 15. The inception of the F&G Annuity generated approximately $7,259.00 in commissions for your partner, John Dennis Below, or your agency on his behalf. Paperwork submitted to the carrier names you, TROY CHARLES WHITT, as the writing agent for the Manufacturers Universal Life Policy, which generated approximately $1 1,904.00 in commissions. These transactional occurrences generated for you, TROY CHARLES WHITT, and your partner, John Dennis Below, or your agency on behalf or each of you, approximately $19,163.00 in commissions. 16. By using an annuity as the funding vehicle for the new universal life policy, you, TROY CHARLES WHITT, and your partner, John Dennis Below, were able to more than double the commissions that would have been generated had the proceeds of O.M.’s Manufacturers Whole Life Policy been used to directly fund the new Manufacturers Universal. Life Policy. In addition, it is presumed that the use of an immediate annuity as a funding vehicle for the new Manufacturers Universal Life Policy ultimately would have also made it less likely that internal regulatory controls against churning at Manufacturers Life would be triggered by the egregiousness of this transaction. 17. Moreover, you, TROY CHARLES WHITT, knew or reasonably should have known at the time you recommended to O.M. that she surrender her in-force whole life policy and purchase a new universal life policy that there were inherent risks involved in sucha — transaction. These risks included, but were not limited to: the risk that the new policy would be issued at a higher insurance cost to O.M., based on her new attained age and possibility of change in health; lower policy dividends; the danger that the universal life policy premiums may increase over time, whereas the premiums on O.M.’s. whole life policy would have remained level, and the dividends she earned on her whole life policy, had it been left in force, would likely have soon been substantial enough to offset the cost of the policy’s premiums; and, the threat that the income stream generated by the immediate annuity would, at some point, be insufficient to pay the policy premiums on O.M.’s new universal life policy, placing the policy’s continued existence in jeopardy. 18. Within two years of inception, the $24,610 annual annuitization payment from the F&G Annuity that you, TROY CHARLES WHITT, and your partner sold to O.M. was no longer enough to pay the $37,580 in annual premiums required to keep her new Manufacturers Universal Life Policy in force. In or about July, 2005, O.M.’s Manufacturers Universal Life Policy lapsed. IT IS THEREFORE CHARGED that you, TROY CHARLES WHITT, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: (a) Demonstrated lack of fitness or trustworthiness to engage.in the business of insurance. [Section 626.611(7), Florida Statutes]; (b) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. [Section 626.61 1(8), Florida Statutes]; (c) 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]; (d) —_ 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 X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public interest. [Section 626.621(6), Florida Statutes]; (e) 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]; ® Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (g) | Knowingly making any misleading representation 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 with another insurer. [Section 626.9541(1)(1), Florida Statutes]; (h) 1 Churning is the practice whereby policy values in an existing life insurance policy or annuity contract, including, but not limited to, cash, loan values, or dividend values, and in any riders to that policy or contract, are utilized to purchase another insurance policy or annuity contract with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation: a. Without an objectively reasonable basis for believing that the replacement or extraction will result in an actual and demonstrable benefit to the policyholder; b. Ina fashion that is fraudulent, deceptive, or otherwise misleading or that involves a deceptive omission; # * * d. Without informing the applicant that the replacing or additional policy or contract will not be a paid-up policy or that additional premiums will be due, if this is the case. Churning by an insurer or an agent is an unfair method of competition and an unfair or deceptive act or practice. [Section 626.9541(1)(aa), Florida Statutes]; (i) The business of 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, and 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 IT 19. The above General Allegations are hereby realleged and fully incorporated herein by reference. . 20. Asalicensed insurance agent in Florida, you, TROY CHARLES WHITT, have a duty to notify the Department within sixty (60) days after a change of residence address, principal business street address, or mailing address. The two addresses that you, TROY CHARLES WHITT, maintained on file with the Department as your mailing and home addresses, respectively, until February 28, 2008, were 2337 E. Silver Springs Boulevard, Ocala, Florida, 34470-6910; and 7014 S.E. 12th Circle, Ocala, Florida 34480-6653. Neither of these two addresses was a valid current address for you, TROY CHARLES WHITT, since some time prior to March, 2006. You, TROY CHARLES WHITT, failed to notify the Department of changes in your addresses as required under the Insurance Code. IT IS THEREFORE CHARGED that you, TROY CHARLES WHITT, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitutes grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: (a) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.61 1(7), Florida Statutes]; (b) 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) 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]; . (d) Violation of any lawful order or rule of the department, commission, or office. [Section 626.621(3), Florida Statutes]; (e) Every licensee shall notify the department in writing within 60 days after a change of name, residence address, principal business street address, or mailing address. Any licensed agent who has moved his or her residence from this state shall have his or her license and all appointments immediately terminated by the department. Failure to notify the department within the required time period shall result in a find not to exceed $250 for the first offense and, for subsequent offenses, a fine of not less than $500 or suspension or revocation of the license pursuant to s. 626.611 or s. 626.621. [Section 626.551, Florida Statutes]. WHEREFORE, you, TROY CHARLES WHITT, 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 10 626.611, 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 the Department intends to seek aggravation of the total applicable penalty against you, TROY CHARLES WHITT, in consideration of the willfulness of your conduct, your motivation and financial gain, the age or capacity of the victim, and the degree of injury to your victim. Additionally, you are 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. Ne F 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 28-106, 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 an administrative hearing wiil suffice as a written request. The request must be filed with the General Counsel, acting as 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. 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. 11 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. (ce) Astatement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate. (d) Asstatement 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. 12 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 a G day of A pu \ , 2008. IN CHANDLER Deputy Chief Financial Officer 13 . CERTIFICATE OF SERVICE ; ’ THEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF RIGHTS has been furnished to: TROY CHARLES WHITT, 1107 East Silver Springs Blvd., #5, Ocala, Florida 34470; 4900 S.E. 11th Avenue, Ocala, Florida, 34480-6663; and at Central Flori ce Systems, 202 N.E. 8th Avenue, Ocala, Florida, 34470, by Certified Mail this day of 2008. 200 East Gaines'Street Tallahassee, Florida 32399-0333 (850) 413-4230 (850) 488-0697 facsimile 14

Docket for Case No: 08-006221PL