Aviva Life & Annuity Co. is settling charges against a group of insurance agents who allegedly sold coverage to some 131 church members under false pretenses.
The settlement notice, filed May 10 in the U.S. District Court for the Central District of California., suggests the insurer is a step closer to resolving a year-long court battle in a so-called charity-owned life insurance fraud.
The document does not detail the terms of the settlement between Aviva and the agents, nor does it reveal the rationale leading to this conclusion. It does state, however, that the claims will be dismissed against all but two of the defendants.
Aviva spokesman Steve Carlson said the company would not comment until all the terms are agreed to and finalized. The court has set a date of June 4 for a status conference regarding the dismissal.
In March 2011, Aviva brought charges against six insurance agents, alleging they sold life insurance coverage to parishioners at a Los Angeles church as part of a complicated scam.
Aviva argued that the insured people were told that the premiums would be paid by an outside party and their death benefits would be split among their beneficiaries, the church and the benefactor. That third party was later identified by one of the agents as Citadel Urban Development Foundation Inc., a nonprofit group that caters to inner-city churches.
The insurance applications did not indicate that a third party would be paying the premiums, Aviva said.
Aviva claimed it became suspicious in the fall of 2010 when it discovered that the insured people who bought the coverage had turned over the ownership of the policies to Wilshire Coast Consultants Inc. Wilshire, a named defendant, was the trustee over a group of irrevocable life insurance trusts, each of which owned an Aviva policy on one of the parishioners, according to the suit.
The carrier claimed that the agents violated their producer agreements and that Wilshire and the trusts had no insurable interest in the lives of the insured parishioners. Aviva also sued for $2.1 million.
Earlier this year, Aviva dropped charges against three of the agents: Napoleon Kinney, Candice Hobdy and Rene Williams. Ms. Williams and Ms. Hobdy previously provided testimony against defendants DesignLife Insurance Services LLC, Citadel and Richard C. Huitt, who allegedly solicited churchgoers to take part in the transactions.
The latest update in the case will drop charges against Cheralynne Bridgewater, Kazimir Patelski, Glenda Smith-Lee and DesignLife, leaving only Citadel and Mr. Huitt, the nonprofit's vice president of memberships, as defendants.
A contact number on Citadel's website did not work, and neither the group nor Mr. Huitt appears to have retained counsel.