Jan 13 2009 11:37 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + S584o7r4ogr Jan. 13 2863 11:47AM PS FILED ae JAN 9 008 HEARERS ENING . ALEX SINK Ong AO aA aiianad nyc IN THE MATTER OF: MICHAEL PATRICK DOWNS CASE NO.: 87874-06-AG _/ TO: MICHAEL PATRICK DOWNS 291 Catalan Boulevard NE St. Petersburg, FL 33704-3845 MICHAEL PATRICK DOWNS Fidelity Assurance, Inc. 5051 66th Street North St. Petersburg, FL 33709-3119 You, MICHAEL PATRICK DOWNS, are hereby notified that, pursuant to Chapter 626, Florida Statutes, the Chief Financial Officer of the State of Florida has caused to he 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, MICHAEL PATRICK DOWNS, License LD, #4071596, 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, MICHAEL PATRICK DOWNS, were licensed in this state as an insurance agent. Jan 13 2009 11:38 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:47AM P4 3. At all times matcrial to the dates and occurrences herein, you, MICHAEI. PATRICK DOWNS, were associated with the Florida entity known as Fidelity Assurance, Tncorporated in St. Petersburg, Florida. 4, Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your insurance licenses and appointments. COUNT! 5. The above General Allegations are hereby realleged and fully incorporated herein by reference. 6. In or about the year 2005, you, MICHAEL PATRICK DOWNS, as a licensed insurance agent in the State of Florida, exploited elderly individuals through knowing and willful misrepresentations, upon which you knew the individual(s) would rely and upon which the individual(s) did rely, concerning terms and conditions of annuities in order to induce these elderly consumers into purchasing new annuities or replacing existing policies, which caused the sale of policies not in the best interest of the insured, but yielded to you substantial commissions therefor. 7. During the year 2005, using fraudulent misrepresentations and/or material omissions regarding the terms and conditions of atmuities, you, MICHAEL PATRICK DOWNS, exploited an elderly Venice female, R.K., by selling her inappropriate annuity investments that were unsuitable for her needs and that you, MICHAET PATRICK DOWNS knew were not suitable for R.E.’s needs. At the time you, MICHAEL PATRICK DOWNS, met with her, R-E. was a ninety-onc (91) year-old female who lived alone, and was also suffering from dementia and/or diminished mental capacity. A fact that you knew or should have known. 8. In or around September 2005, you, MICHAEL PATRICK DOWNS, met with Jan 13 2009 11:38 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:46AM PS R.E. for the purpose of discussing investments. Specifically, R.E.’s stated intent was to explore her options for transferring funds from her then-established investments to other suitable investments, At this time, R.E. was experiencing declining physical and mental health and had little investment experience. As an unsophisticated investor, she relied upon you, MICHAEL PATRICK DOWNS, to act in her best interest and recommend only suitable investments. 9. You, MICHAEL PATRICK DOWNS, through the use of material omissions and fraudulent material misrepresentations, upon which you knew R.E. would rely and upon which R.E. did rely, willfully convinced R.E. that the appropriate investment for her needs was an equity-indexed deferred annuity. 10. On or about September 8, 2005, you, MICHAEL PATRICK DOWNS, willfully convinced R.E. to purchase a flexible-premium, equity-indexed deferred annuity issued by American Investors Life Insurance Company, Inc. (“American Investors”), contract number 500732. Without your elderly client’s understanding of the terms and conditions of the investment you recommended, you, MICHAEL PATRICK DOWNS, willfully placed R.E. in an annuity with a 19% declining fifteen year surrender charge, whereby her access to her money would be limited for the following fifteen years, or until RE. was 106 years of age. This single transactional episode generated approximately $34,937.50 in commissions for you, MICHAEL PATRICK DOWNS, or for Fidelity Assurance, Inc. on your behalf. 11. Within 5 months of your, MICHAEL PATRICK DOWNS’S, sale of American Investors annuity contract number 500732 to R.E., American Investors was forced to refund R.E.’s premium payment, because RE. did not meet the issue age requirements. You, MICHAEL PATRICK DOWNS, were aware, or reasonably should have been aware, of this fact upon your initial consultation with R.E. Jan 13 2009 11:38 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:46AM Pe 12. The aforementioned age requirement, along with R.E.’s obvious lack of understanding of the complexities of equity-indexed deferred annuity investments, and/or R.E.’s financial status and objectives, and/or R.E.’s lack of capacity to consent, did, or should have made you, MICHAEL PATRICK DOWNS, aware that the American Investors annuity number 500732 was unsuitable for R.E.’s needs. 13. You, MICHAEL PATRICK DOWNS, in fact, utilized R.E,’s nephew, R.S., as the named annuitant in order to willfully circumvent age restrictions on the equity-indexed deferred annuity investments that you, MICHAEL PATRICK DOWNS, sold to R.E. R.S. never had contact with you, MICHAEL PATRICK DOWNS. R.S8. signed documents, if any, upon the request of his aunt, R.E., and without knowing and/or informed consent. 14. You, MICHAEL PATRICK DOWNS, were or reasonably should have been aware of all of the aforementioned circumstances, and you, MICHAEL PATRICK DOWNS, willfully misrepresented and/or omitted pertinent and material facts in your, MICHAEL PATRICK DOWNS’S, interaction with R.E. in order to secure commissions for you, MICHAEL PATRICK DOWNS, or for Fidelity Assurance, Inc. on your behalf. 15. You, MICHAEL PATRICK DOWNS, stood to personally profit through the transaction(s) with R.E. IT IS THEREFORE CHARGED, that you, MICHAEL PATRICK DOWNS, 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) In tecommending to a senior consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance Jan 13 2009 11:39 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:46AM Pr transactions, an insurance agent, or an insurer if no insurance agent is involved, shall have reasonable grounds for believing that the recommendation is suitable for the senior consumer on the basis of the facts disclosed by the senior consumer as to his or her investments and other insurance products and as to his or her financial situation and needs. [Section 627,4554(4)(a), Florida Statutes]; (b) Before executing a purchase or exchange of an annuity resulting from a recommendation to a senior consumer, an insurance agent, or an insurer if no insurance agent is involved, shall make reasonable efforts to obtain information concerning the senior consumer's financial status, tax status, and investment objectives and such other information used or considered to be reasonable by the insurance agent, or the insurer if no agent is involved, in making the recommendation, [Section 627.4554(4)(a), Florida Statutes]; (c) 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]; (4) —- 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]; (e) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]; (f) 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}; (2) Fraudulent or dishonest practices in the conduct of business under the license or Jan 13 2009 11:39 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:49AM Pa appointment. [Section 626.611(9), Florida Statutes]; (h) —- 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]; qi) Violation of any provision of this code or of any other law applicable to the business of msurance in the course of dealing under the license or appointment. [Section 626.621(2), Florida Statutes); q) Violation of the provision against twisting, as defined in Section 626.9541(1)(1). [Section 626.621(5), Florida Statutes]; (k) 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 or detrimental to the public interest. [Section 626.621(6), Florida Statutes (2004); r(}) 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]; (m) 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 Jan 13 2009 11:39 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:49AM Pa Statutes]; (n) The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing Life Insurance in letter and in spirit by presenting accurately and completely every fact essential to a client's decision, and by being fair in all relations with colleagues and competitors always placing the policyholder's interests first. [Rule 69B-213.210, Florida Administrative Code]. (0) — No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. [Rule 69B-215.230(2), Florida Administrative Code]. co ] 15. The above General Allegations are hereby realleged and fully incorporated hercin by reference. 16. In of about the year 2005, you, MICHAEL PATRICK DOWNS, as a licensed insurance agent in the State of Florida, exploited elderly individuals through knowing and willful misrepresentations, upon which you knew the individual(s) would rely and upon which the individual(s) did rely, concerning terms and conditions of “free prescription coverage” in order Jan 13 2009 11:40 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + S584o7r4ogr Jan. 13 2663 11:49AM Pile to induce these elderly consumers into purchasing new insurance policies or replacing existing insurance policies, which caused the sale of policies not in the best interest of the insured, but yielded to you substantial commissions therefor. 17. During the year 2005, using fraudulent misrepresentations and material omissions regarding the terms and conditions of various insurance policies, you, MICHAEL PATRICK DOWNS, exploited an elderly Saint Petersburg consumer, R.L., by selling her inappropriate ) cancer insurance policy that was unsuitable for her needs and/or that was partially or wholly duplicative of coverage R.L. had through another company. 18, On or about March 15, 2005, you, MICHAEL PATRICK DOWNS, met with elderly Florida consumer R.L. for the purpose of discussing “free prescription drugs” for R.L. You, MICHAEL PATRICK. DOWNS, falsely represented to R.L., who was at the time 91 years of age, that the purchase of an insurance policy through your company was 4 pre-requisite to R.L. receiving free prescription drugs. Further, you, MICHAEL PATRICK DOWNS, falsely represented that a “cancer” insurance policy through National States Insurance Company was appropriate to meet her needs and/or objectives. Further, you, MICHAEL PATRICK. DOWNS, made the aforementioned false statements and representations knowing that R.L, would rely upon them, and R.L. did, in fact, rely upon them. 19. RL. paid the requested premium(s) and filled out an application at your, MICHAEL PATRICK DOWNS’S, direction, 20. In fact, the program(s) through which R.L. obtained free or discounted drugs, if any, were available at little or no charge to R.L. from sources outside of you, MICHAEL PATRICK DOWNS, and/or any of the companies you represent. 21. You, MICHAEL PATRICK DOWNS, were aware of the aforementioned, and Jan 13 2009 11:40 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2689 11:38AM Pil you, MICHAEL PATRICK DOWNS, misrepresented and/or omitted this and other pertinent and material facts in your, MICHAEL PATRICK DOWNS’S, interaction with R.L. in order to secure commissions for you, MICHAEL PATRICK DOWNS, or for Fidelity Assurance, Inc, on your behalf. 22. You, MICHAEL PATRICK DOWNS, stood to personally profit through the transaction(s) with R.L. IT 1S THEREFORE CHARGED, that you, MICHAEL PATRICK DOWNS, 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) 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 626.61 1(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 626.61 1(8), Florida Statutes]: (ce) 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 Jan 13 2009 11:40 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + S584o7r4ogr Jan. 13 2863 11:36AM Pl2 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 Section 626.9541(1)(). [Section 626.621(5), Florida Statutes]; (i) Tn 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 or detrimental to the public interest. [Section 626.621(6), Florida Statutes (2004)]; a) 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]; (k) 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)(), Florida Statutes]; (dy The Business of Life Insurance is hereby declared to be a public trust in which Jan 13 2009 11:41 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:58AM P13 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]. (m) No person shall make, publish, disseminate, circulate, or place before the public, ot cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. [Rule 69B-215.230(2), Florida Administrative Code]. COUNTII 23. The above General Allegations are hereby realleged and fully incorporated herein by reference. 24. In or about the year 2005, you, MICHAEL PATRICK DOWNS, as a licensed insurance agent in the State of Florida, exploited elderly individuals through knowing and willful mMisrepresentations, upon which you knew the individual(s) would rely and upon which the individual(s) did rely, concerning terms and conditions of “free prescription coverage” in order to induce these elderly consumers into purchasing, new insurance policies or replacing existing insurance policies, which caused the sale of policies not in the best interest of the insured, but Jan 13 2009 11:41 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + S584o7r4ogr Jan. 13 2663 11:31AM P14 yielded to you substantial commissions therefor. 25. During the year 2005, using fraudulent misrepresentations and material omissions regarding the terms and conditions of various insurance policies, you, MICHAEL PATRICK DOWNS, exploited an elderly Saint Petersburg consumer, M.R., by selling her inappropriate long-term and home health care insurance and life insurance policies that were unsuitable for her needs, 26. On or about May 21, 2005, you, MICHARI, PATRICK DOWNS, met with elderly Florida consumer M.R. for the purpose of discussing “free prescription drugs” for MLR. You, MICHAEL PATRICK DOWNS, falsely represented to M.R., who was at that time 73 years of age, that the purchase of an insurance policy through your company was a pre-requisite to M.R. receiving free prescription drugs. Further, you, MICHAEL PATRICK DOWNS, falsely represented that a long-term and home health care insurance policy through National States Insurance Company was appropriate to meet her needs and/or objectives. Turther, you, MICHAEL PATRICK DOWNS, made the aforementioned false statements and representations knowing that M.R. would rely upon them, and M.R. did, in fact, rely upon them. 27. MR. paid the requested premium(s) and filled out an application at your, MICHAEL PATRICK DOWNS’S, direction. M.R.’S application for this long-term and home health care coverage was subsequently denied. 28. Subsequent to this denial, you, MICIIAEL, PATRICK DOWNS, on or about July 29, 2005 sold MLR. a life insurance policy through National States Insurance Company in order to meet the false pre-requisite for receiving free prescription drugs. 29. Tn fact, the program(s) through which M.R. obtained free or discounted drugs, if any, were available at little or no charge to M.R. from sources outside of you, MICHAEL 12 Jan 13 2009 11:41 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:51AM P15 PATRICK DOWNS, and/or any of the companies you represent. 30. You, MICHAEL PATRICK DOWNS, were aware of the aforementioned, and you, MICHAEL PATRICK DOWNS, misrepresented and/or omitted this and other pertinent and material facts in your, MICHAEL PATRICK DOWNS’S, interaction with MLR. in order to secure commissions for you, MICHAEL PATRICK DOWNS, or for Fidelity Assurance, Inc. on your behalf. 31. You, MICHAEL PATRICK DOWNS, stood to personally profit through the transaction(s) with M.R. IT IS THEREFORE CHARGED, that you, MICHAEL PATRICK DOWNS, 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 cligibility as an insurance agent: (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]; (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. [Scction 626.61 1(8), Florida Statutes]; (e) Fraudulent or dishonest practices in the conduct of business under the licensé or Jan 13 2009 11:42 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:31AM P16 appointment. [Section 626.611(9), Florida Statutes]; (fy 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]; (2) 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 of appointment. [Section 626.621(2), Florida Statutes]; (h) Violation of the provision against twisting, as defined in Section 626.9541(1)(]). [Section 626.621(5), Florida Statutes]; qa) 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 or detrimental to the public interest. [Section 626.621(6), Florida Statutes (2004)); (ji) 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}; (k) 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)(), Florida Jan 13 2009 11:42 FROM : DEPT OF FINANCIAL SERVICES FAX NO. 285845 749R7? Jan. 13 2669 11:52AM P17 Statutes]; (1) The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing Life Insurance in letter and in spirit by presenting accurately and completely every fact essential to a client's decision, 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]. (m) No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading, [Rule 69B-215.230(2), Florida Administrative Code]. COUNT IV 32, The above General Allegations are hereby realleged and fully incorporated hercin by reference. 33. In or about the year 2005, you, MICHAEL PATRICK DOWNS, as a licensed insurance agent in the State of Florida, exploited elderly individuals through knowing and willful misrepresentations, upon which you knew the individuals would rely and upon which the individuals did rely, concerning terms and conditions of annuities in order to induce these elderly Jan 13 2009 11:42 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:52AM P15 consumers into purchasing new annuities or replacing existing policies, which caused the sale of policies not in the best interest of the insured, but yielded to you substantial commissions therefor. 34. During the year 2005, using fraudulent misrepresentations and/or material omissions regarding the terms and conditions of annuitics, you, MICHAEL. PATRICK DOWNS, exploited an elderly Saint Petersburg female, T.P., by selling her inappropriate annuity investments that were unsuitable for her needs and that you, MICHAEL PATRICK DOWNS, knew or should have known were not suitable for her needs. At the time you, MICHAEL PATRICK DOWNS, met with her, T.P. was a eighty (80) year-old female who lived alone. 35. In or around. October 2005, you, MICHAEL PATRICK. DOWNS, met with T.P. for the purpose of discussing a Medicare Supplement Plan C policy that T.P. wanted io change. 36. During the aforementioned meeting you, MICHAEL’ PATRICK DOWNS, questioned T.P. about her finances and you, MICHAEL PATRICK DOWNS, falsely represented to T.P. that you, MICHAEL PATRICK DOWNS, could secure an investment for T.P. that immediately would pay her a monthly return. As an unsophisticated investor, she relied upon you, MICHAEL PATRICK DOWNS, to act in her best interest and recommend only suitable investments. 37. T.P. made it clear to you, MICHAEL PATRICK DOWNS, that her intent for investing was to secure an immediate, current monthly income for herself, In fact, because of the unsuitability of these annuities for T.P. and the resulting lack of income, T.P. had to take a job at a grocery store bagging groceries and pushing shopping carts from the parking lot just to pay for dental bills and auto repairs, 38. You, MICHAEL PATRICK DOWNS, through the use of material omissions and 16 Jan 13 2009 11:43 FROM : DEPT OF FINANCIAL SERVICES FAX NO. 285845 749R7? Jan. 13 2669 11:52AM Pig fraudulent material misrepresentations, upon which you knew T.P. would rely and upon which T.P. did rely, convinced T.P. that the appropriate investments for her needs were equity-indcxed deferred. annuities. 39, On or about October 27, 2005, you, MICHAEL PATRICK DOWNS, convinced T.P. to purchase a flexible-premium equity-indexed deferred annuity issued by American Investors, contract number 504051. Without your elderly client’s understanding of the (erms and conditions of the investment you recommended, you, MICHAEL PATRICK DOWNS, willfully placed T.P, in an annuity with a 19% declining fifteen year surrender charge, whereby her access to her money would be limited for the following fifteen years, or until R.E. was 95 years of age. This single transactional episode generated approximately $1,922.25 in commissions for you, MICHAEL PATRICK DOWNS, or for Fidelity Assurance, Inc. on your behalf. 40. On or about November 5, 2005, you, MICHAEL PATRICK DOWNS, convinced T.P. to purchase a second flexible premium equity-indexed deferred annuity issued by American Investors, contract number 504465. Without your elderly client’s understanding of the terms and conditions of the investment you recommended, you, MICHAEL PATRICK DOWNS, willfully placed T.P. in an annuity with a 17% declining thirteen year surrender charge, whereby her access to her money would be limited for the following thirteen years, or until R.E. was 93 years ofage. This single transactional episode generated approximately $3,693.60 in commissions for you, MICHAEL PATRICK DOWNS, or Fidelity Assurance, Inc. on your behalf. 41. You, MICHAEL PATRICK DOWNS, instructed T.P. to sign forms without informed consent because she was not given an opportunity to read the forms, and you, MICHAEL PATRICK DOWNS, told T.P. “Don’t worry, its not important, I haven’t read half of them myself.” This among other things demonstrated a “lack of fitness or trustworthiness” or a Jan 13 2009 11:43 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + S584o7r4ogr Jan. 13 26683 11:53AM Pee “lack of reasonably adequate knowledge and technical competence.” 42. T.P’S obvious lack of understanding of the complexities of equily-indexed deferred annuity investments and T.P.’S age did, or should have made you, MICHAEL PATRICK DOWNS, aware that the American Investors annuity policy numbers 504051 and 504465 were unsuitable for T.P.’S needs. 43. American Investors subsequently refunded some or all of T.P.’S payments under the aforementioned policies. 44, You, MICHAEL PATRICK DOWNS, were or reasonably should have been aware of the above-referenced unsuitability, and you, MICHAEL PATRICK DOWNS, willfully misrepresented and/or omitted pertinent and material facts in your, MICHAEL PATRICK DOWNS’S interaction with T.P. in order to secure commissions for you, MICHAEL PATRICK DOWNS, or Fidelity Assurance, Inc. on your behalf. 45, You, MICHAEL PATRICK DOWNS, stood to personally prolit through the transaction(s) with T.P. IT IS THEREFORE CHARGED, that you, MICHARI, PATRICK DOWNS, have violated or are accountable the following provisions of the Florida Insurance Code and Rules of the Department of 'inancial Services which constitutcs grounds for the suspension or revocation of your licenses and eligibility as an insurance agent: (a) In recommending to a senior consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or serics of insurance transactions, an insurance agent, or an insurer if no insurance agent is involved, shall have reasonable prounds for believing that the recommendation is suitable for the senior consumer on the basis of the facts disclosed by the senior consumer as to his or her Jan 13 2009 11:43 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2689 11:53AM Pet investments and other insurance products and as to his or her financial situation and needs. [Section 627.4554(4)(a), Florida Statutes]; (b) Before executing a purchase or exchange of an annuity resulting from a recommendation to a senior consumer, an insurance agent, or an insurer if no insurance agent is involved, shall make reasonable efforts to obtain information concerning the senior consumer's financial status, tax status, and investment objectives and such other information used or considered to be reasonable by the insurance agent, or the insurer if no agent is involved, in making the recommendation. [Section 627.4554(4)(a), Florida Statutes]; (c) 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]; and (4) 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]; (e) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes); (ff 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]; (Z) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626,611(9), Florida Statutes]; (h) —- Willful failure to comply with, or willful viclation of, any proper order or rule of the department or willful violation of any provision of this code. [Section 626.611(13), 19 Jan 13 2009 11:44 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + S584o7r4ogr Jan. 13 2863 11:33AM P22 Florida Statutes]; (i) Violation of any provision of this code ot 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]; (i) Violation of the provision against twisting, as defined in Section 626.9541(1)(D. [Section 626.621(5), Florida Statutes]; (k) 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 LX 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 (2005); (l) Knowingly making a false or fraudulent written or oral stalemeni or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, moncy, or other benefit from any insurer, agent, broker, or individual. [Section 626.9541(1)(k)1, Florida Statutes]; (m) Knowingly making any misleading representation or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies ot 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]; (n) The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws Jan 13 2009 11:44 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 2663 11:54AM P23 governing Life Insurance in letter and in spirit by presenting accurately and completely every fact essential 1o 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]. (0) No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any asscrtion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. [Rule 69]3-215,230(2), Florida Administrative Code], WHEREFORE, you, MICHAEL PATRICK DOWNS, 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 penaltics in consideration of the willfulness of your, MICHAEL PATRICK DOWNS’S conduct, 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 cligibility for licensure held by you shall also apply to all other licenses and eligibility held by you under the Florida Insurance Code. 21 Jan 13 2009 11:44 FROM : DEPT OF FINANCIAL SERVICES FAX NO. 285845 749R7? Jan. 13 2669 11:54AM P24 NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department of Financial Services ("Department") pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-106, Florida Administrative Code. The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the 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. 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"), 22 Jan 13 2009 11:45 FROM : DEPT OF FINANCIAL SERVICES FAX NO. 285845 749R7? Jan. 13 2689 11:54AM P25 (b) The name, address, telephone number, facsimile number of the attorncy 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 expénse, 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 23 Jan 13 2009 11:45 FROM :DEPT OF FINANCIAL SERVICES FAX NO. + 85845749? Jan. 13 26683 11:55AM P26 % DATED and SIGNED this | 9 day of ~/@Hud4 » 2008. KAREN CHANDLER Deputy Chief Financial Officer CERTIFICATE OF SERVICE I HEREBY CERTII'Y that true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and.the following ELECTION OF PROCEEDING has been furnished to: MICHALL PATRICK DOWNS 291 Catalan Boulevard NE St. Petersburg, FL 33704-3845 MICHAEL PATRICK DOWNS Fidelity Assurance, Inc. 5051 66th Street North St. Petersburg, FI. 33709-3119 this Gt day of Samuaay 2008. a a Thomas A, “Tad” David, Esq. Florida Department of Financial Services Division of Legal Services 200 East Gaines St. 612 Larson Building Tallahassee, Florida 32399-0333 (850) 413-4164 Florida Bar Number 0706868 24

Docket for Case No: 09-000176PL