March 11, 2009
Update: CFO Sink's 'Safeguard Our Seniors' legislation passes first hurdle, another bad agent arrested in Tampa area
Bi-Partisan Legislation Sponsored by Senator Mike Bennett (R-Bradenton) and Representative Keith Fitzgerald (D- Sarasota) Putting "Alligator Teeth" Into Annuity Laws Passes Senate Committee Unanimously
TALLAHASSEE -- In 2006, Bonnie Madden, 81 from Port Richey, purchased two annuities from insurance agent Randolph Kahl-Winter. A year later, her agent engaged in a practice known as "twisting" when he falsely inflated Madden's net worth and converted her annuities into one annuity policy with a different company in order to generate a $52,000 commission for himself. The agent's action would have cost Madden nearly $300,000 of her life savings if the Department of Financial Services had not intervened. Yesterday, CFO Sink's detectives arrested Randolph Kahl-Winter and charged him with Insurance Fraud, a 3rd degree felony, and Grand Theft, a 2nd degree felony for placing Madden into multiple policies, submitting forged documents, and concealing policy information through his business address. If convicted, he faces a maximum prison sentence of five years.
Chief Financial Officer Alex Sink said it is because of Madden, and others like her, that she has teamed up with key lawmakers to push for tougher penalties for unscrupulous agents who defraud senior investors and establish better disclosures and protections upfront for seniors who invest in these products. CFO Sink has heard from hundreds of seniors and their families who say they were convinced to liquidate annuities, CDs, stocks and savings accounts to fund new annuities only to discover these actions robbed them of their savings.
"The number of complaints from Florida seniors about annuities has nearly quadrupled in the last three years," said Sink, whose department has opened 474 investigations on financial fraud involving seniors, with approximately 70 percent of cases related to annuity and life insurance transactions. “Better financial protections for our growing population of senior residents and tougher consequences for those who defraud our seniors demand our immediate attention.”
Yesterday, CFO Sink's Safeguard Our Seniors legislation sponsored by State Senator Mike Bennett (SB 1372) and State Representative Keith Fitzgerald was passed by the Senate Banking and Insurance Committee unanimously.
Under the Safeguard our Seniors legislation, the act of "twisting" or "churning" an annuity to a senior consumer would be a third degree felony, bringing this violation in line with the penalty currently applied to a securities broker-dealer under Florida law. Other protections under the proposed legislation also:
- limit the surrender charge period for an annuity sold to a senior consumer to five years and the surrender charge to 5 percent;
- extend the "free look" period for the purchase of an annuity by a senior consumer from 14 to 60 days;
- authorize the Department to require an agent to make monetary restitution to a senior consumer they’ve harmed;
- prohibit the Department from issuing another license to a former licensee who has had his or her license revoked resulting from the solicitation or sale of an insurance product to a senior consumer.
- require an insurer to provide a cover sheet attached to the policy when an annuity is issued informing the purchaser about the free look period and about how to contact the insurer and the department if they have questions about the annuity.
To learn more when purchasing annuities, visit www.FLSeniors.net, updated with a new video highlighting the stories CFO Sink heard throughout the state. Senior Floridians who believe they may have been the victim of annuity fraud should call 1-877-My-FL-CFO or log on to www.MyFloridaCFO.com to file a complaint.