Class-Action Charges Insurers With Abuse

     DALLAS (CN) – A federal class-action complaint accuses four life insurance firms and their consultants of selling policies that plaintiffs used to fund defined-benefit pension plans but which the IRS investigated as abusive tax shelters. Lead defendants are Indianapolis Life Insurance Co., Hartford Life & Annuity Insurance Co., Pacific Life Insurance Co., and American General Life Insurance Co.




     Also sued are Economic Concepts Inc., ECI Pension Services LLC, and Kenneth Hartstein. The defendants allegedly claimed their products complied with Section 412Ii) of the Internal Revenue Code, but “were later examined by the IRS to determine whether such plans constitute ‘listed transactions’ and/or abusive tax shelters.”
     The plans at issue include Indianapolis Life’s “PenPro” and “Executive VIP” policies; Hartford’s “Stag Whole Life” policy; Pacific Life’s “Flex XII” policy; and American General’s “policies that were used to fund a defined benefit plan under Section 412(i)of the Code. … On information and belief, there are hundreds, if not thousands, of Class Members,” the suit states.
     Plaintiffs, predominantly doctors’ offices, are represented by Diamond McCarthy of Dallas.

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