Viatical Article - Viatical Settlement Fraud
Found this article and decided to post it because this was one reason a few years ago that gave viatical settlements a bad name. With more strict regulation from the government and insurance companies, viaticals are no a great tool for terminally ill policy owners.
LEXINGTON, Ky. — A federal judge has dismissed a lawsuit filed by a convicted Lexington insurance executive against two prosecutors.
U.S. District Judge Jennifer Coffman last week denied all motions made by Stephen L. Keller in his suit against U.S. Attorney Greg Van Tatenhove and Assistant U.S. Attorney Patrick Malloy.
Keller, 42, said in his suit, filed May 12, that prosecutors had illegally obtained evidence against him. Keller, who sought $3 billion in damages, is being held at the Federal Medical Center in Lexington.
Coffman said Keller had failed to make the case that he was entitled to compensation.
Keller, a West Liberty native, was convicted in March 2003 on 46 counts of conspiracy, mail fraud, wire fraud, conspiracy to commit money laundering and money laundering in connection with his business, Kelco Inc.
Kelco was a viatical settlement company. It bought life insurance policies from seriously ill policyholders at a discount and sold the policies to investors who would keep the policies in force and collect the death benefit when the original policyholder died.
The government charged that Kelco helped seriously ill people obtain life insurance policies without telling the insurer about their illnesses. After investors bought the policies from Kelco, they were at risk of losing their money if the insurer discovered the fraud.
Keller was sentenced to 14 years in prison, but the 6th U.S. Circuit Court of Appeals said earlier this month that Karl Forester, the judge who presided over the case, used the wrong numbers in calculating the financial loss caused by the fraud and erred in applying federal sentencing guidelines for Keller and two other men convicted in the case.
Forester will resentence the three men. No date has been set for the resentencing hearing.
In January, Keller also received an additional 20-month prison sentence for fleeing the country in October 2003 and missing a federal court hearing. He was arrested in Panama in February 2004.
Source: AP
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