The Ohio Department of Insurance is examining storied insurance firm Barry Kaye Associates Inc. after a civil suit on a failed life settlements transaction accused the firm of fraud and negligence.
“We’re currently working on that case; it’s with our enforcement attorneys,” said Insurance Department staff attorney Barbara Farrington.
The Insurance Department could not provide details on the examination, as it is in progress.
The suit under scrutiny is titled Levin v. Barry Kaye Associates Inc., et al.
It names the Boca Raton, Fla. firm, which was founded by insurance guru Barry Kaye and his son Howard.
In the complaint, Louis Levin, an 81-year-old client, alleges that in 2006, the younger Mr. Kaye and the firm encouraged him to buy a $5 million life insurance policy on himself and earn a “substantial profit” by selling it to a third party after two years.
In 2008, after paying more than $322,000 in premiums, Mr. Levin wished to sell his policy, but the younger Mr. Kaye said he was unable to locate a buyer, according to the lawsuit.
In the complaint, Mr. Levin alleges that the firm never told him about the risks of the life settlement market, including the possibility that there might be no market in which to sell the policy.
He is suing for breach of contract, unjust enrichment, negligence, fraud and violation of Ohio's securities laws.
A call to Barry Kaye Associates was not immediately returned.