NY Life Insurance Agents Sued for Elder Financial Abuse

February 3rd, 2011. By LucyC

Beware of Agents Bearing ‘Gifts’?

What would you do with 20 life insurance policies? Would you even buy 20 life insurance polices? Probably not, that is, if you knew what you were doing. Mary Mullen, an institutionalized senior—in her 80s—with Alzheimer’s disease, did not know what she was doing and so relied on salesmen from New York Life Insurance to take care of her. Instead, they took care of themselves. Those 20 life insurance policies– by the way—cost $600,000—and involved a number of elaborate schemes including an arranged marriage. New York Life, for their part, apparently refuses to investigate the suspicious policies, for which “the primary motivation” was “commissions and premiums.”

The whole sorry saga, which is now the subject of a lawsuit, began in 1994, when, according to Rebecca McFarland, trustee of the Mary Mullen Revocable Trust, one John Palmateer approached Mullen representing himself as an expert in insurance and financial matters. McFarland claims he gained Mary Mullen’s trust by visiting her occasionally, sometimes at the hospital. Of course, most people at this point would ask—’what about her family?’ Well, Mary Mullen had family, but they all lived out of state. Palmateer is accused of keeping the truth about Mullen’s deteriorating health from her family.

Palmateer also stands accused of collaborating with Mullen’s neighbor, Guido “Jack” Chirillo, to defraud the elderly woman of her assets. According to the complaint, “At Palmateer’s suggestion and direction, Chirillo married Mullen, who was then 87 years old, ostensibly to assist with the care of Mullen.” And, you guessed it, her family was never notified. BTW—Chirillo and Mullen never lived together.

The complaint also states, “Palmateer and [Jeffrey] Knight participated in a series of steps to secure control of Mullen and her money…To that end, Palmateer became her health care surrogate; Knight (rather than any of Mullen’s blood relatives) was designated as the alternate health care surrogate; and Palmateer obtained a power of attorney over Mullen. In addition, Palmateer and Knight unduly influenced and advised Mullen to make changes to remove her nephew as successor trustee, to add New York Life Bank & Trust and Jack Chirillo as successor trustees, and to provide that Jack Chirillo would inherit Mullen’s condominium upon her death. To accomplish these changes, Palmateer suggested to Mullen that her nephew was trying to take over her money and put her in a home—none of which was true.”

Sounds like fiction—but it’s fact. And nobody bothered to investigate. Why would they? According to McFarland, the fraudulent activity went on for years before anyone twigged. When McFarland found out and brought the actions of these agents to the attention of New York Life, requesting a full investigation, no investigation took place, and New York Life reportedly “failed to take corrective actions.”

Not surprisingly, McFarland sued New York Life Insurance and Annuity Corp and its salesmen, John Palmateer, John Palmateer II and Jeffrey Knight. “Systematic and continuous steps were taken by defendants to foster a relationship of trust and confidence with Mullen so that multiple annuity sales and replacements could be consummated and substantial commissions could be earned,” McFarland says (Court House News). “Hundreds of thousands of dollars in premiums were obtained by New York Life from Mullen, who was vulnerable at her advanced age and at all times relevant lacked the capacity to consent to these complicated insurance transactions.”

The complaint also states, “Defendants completed the applications and paperwork, filling in the necessary information and then presented the forms to Mullen and simply directed her to sign. In truth, defendants knew or should have known that Mullen could not comprehend the complex products being sold to her, or the forms which were being signed in connection with the transactions and transfers of funds.”

According to McFarland, the evidence of wrong doing is in the annuities themselves, “Based on her circumstances and condition, these annuities did not meet Mullen’s needs, had features that were detrimental to her, caused her financial harm, and were not in her best interests. Mullen was wrongfully influenced and/or her funds were transferred for the purchases of financial products detrimental to her, when all along the primary motivation of defendants for consummating the transactions was commissions and premiums.” (Court House News)

McFarland filed suit in January and is seeking damages for exploitation of a vulnerable adult and elderly person, negligence, breach of fiduciary duty and undue influence. So far, she appears to be the only good guy in this mess. It’s a rather tragic statement that no one caught any of this sooner, or perhaps no one wanted to. And so it serves as a potent cautionary tale.

Tags: elder abuse, Insurance, Insurance Fraud

This was posted on Thursday, February 3rd, 2011 at 11:58 am and is filed under Elder Care Abuse, Financial . Feel free to respond, or trackback. Read our comments policy.