NY AG Spitzer Sues Coventry for Fraud

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On October 26, 2006 New York Attorney General Eliot Spitzer filed suit in NY state court against life settlement industry leader Coventry First, LLC alleging fraud, antitrust violations and other claims under New York state law. The suit alleges that Coventry made secret payments to life settlement brokers (referred to as “co-brokering fees”) in exchange for the brokers suppressing higher bids from other life settlement companies and convincing their clients to sell their policies at lower prices to Coventry. The suit seeks injunctive relief, financial restitution and monetary damages.

Commenting on the law suit to the New York Times, North Dakota Insurance Commissioner (and NAIC Life Insurance Committee Chair) Jim Poolman said “This is an industry with big ethical problems…This business is filled with corrupt players. And there’s a larger question: should someone profit from another person’s death?” Coventry has responded that there is no factual basis for the suit, that it has no merit and will ultimately fail in the courts.