Life Settlements, Larry King and the New York Attorney General

Its not often I get a chance to post something from The Smoking Gun, and even more exciting: Its about life settlements!

According the TSG here, Larry King has claimed that an unscrupulous insurance brokerage swindled him in connection with his sale of $15 million in personal life insurance policies. In a lawsuit filed in U.S. District Court In Los Angeles, the 73-year-old television star alleges that he was targeted in a 2004 scheme hatched by the Maryland-based Meltzer Group.

King charges that Meltzer convinced him to engage in a series of “highly complex life insurance transactions” that resulted in the CNN host’s purchase and flipping of insurance policies with an aggregate value of $15 million. In one instance cited in the lawsuit, King purchased a $10 million policy and, at Meltzer’s direction, immediately sold it for a $550,000 profit. King also sold his interest in an older $5 million policy for $850,000.

The newsman alleges that Meltzer, driven by “greed and avarice,” steered him into deals that were against his financial interests, and that the insurance broker never considered his financial condition, health, and the “likelihood of his future uninsurability.” To his detriment, King claims, the deals disproportionately benefited Meltzer through large commission, bonus[es], and override payments.

The two multimillion-dollar policies on King’s life are now held by third-party firms. One of those companies, Coventry Insurance, is being sued by New York State for bid-rigging and fraud in connection with its leading role in the growing “life settlement” industry. Coventry specializes in the purchase of life insurance policies owned by the aged and ill, with the firm aiming to profit when the elderly seller dies (which is likely what they had in mind when purchasing the $5 million King policy).

King’s lawsuit, which does not specify monetary damages, charges Meltzer and its principal, Alan Meltzer, with breach of fiduciary duty.

I’ll be keeping an eye on this one.

Also posted by Professor Beyer, here.

2 Responses to “Life Settlements, Larry King and the New York Attorney General”

  • Life Settlements are a very consumer friendly and vital tool when investigated and used properly.
    I find it hard to digest that Mr King wasn’t fully informed, especially given he most certainly has a large cadre of gatekeepers. Yes there are some large payouts in LS transactions as there are in Life Insurance Policy sales, in some cases an agent can get 90% of the first year’s premium!! But is Mr King upset because he can’t get more insurance because his health has degraded, or did he just want to get paid more for the policies he partook in manufacturing for resale?
    IMHO he has his own blood on his hands, and seeking a jury trial wow, he can use his celebrity, but will a jury have sympathy for a millionaire that didn’t maximize his payout?

  • I completely agree with Suvacrew. How could Larry King, a highly-educated person, not know or at least be suspicious of what was happening? Seems very unlikely.

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