CHICAGO (CN) – A Malibu attorney trolled Illinois churches for elderly people, to sign them up for exorbitant life insurance policies, with irrevocable trusts as beneficiaries and himself as trustee, Ohio National Life Assurance claims in Federal Court.
The insurer claims that attorney Douglas Davis schemed with independent insurance broker Mavash Morady to make a lot of money from issuing, borrowing against and selling five fraudulently obtained policies.
Ohio National claims that Davis traveled to Illinois churches in and around Chicago, where he persuaded senior citizens to sign life insurance applications, and even offered some of them money in return.
The insurer claims that Davis fabricated the senior citizens’ assets and income, and that Morady substantiated the lies by claiming that she had examined their financial records.
Davis also had the old people sign trust documents, “naming Davis as Trustee and naming the Trusts as owners and beneficiaries of the life insurance policies.” But the insurer says Davis did not have an “insurable interest” in them, nor was he authorized to sell insurance for Ohio National.
Davis allegedly gave a sales pitch at a church meeting that persuaded a 74-year-old man to apply for a $400,000 life insurance policy, by claiming that the would not have to pay premiums, and that he would actually be given $40,000.
Morady then submitted the application, falsely informing Ohio National that the man was worth $1.2 million and that she knew him, according to the complaint.
The insurer says that Davis, Morady or an unknown source paid the premiums, and eventually Davis sold his interest in the policy to an investor.
Ohio National claims that Davis told the old-timers that the insurance policies were “an investment for seniors and would be free.” It claims he offered one man $50,000 to sign the documents.
The insurer says that Davis even persuaded his own mother to engage in the fraudulent scheme by having her apply for a $1 million life insurance policy. Davis and Morady claimed that Shirlee Davis had a net worth of $1.2 million and had an annual income of over $140,000, which was not true, Ohio claims.
Ohio National says Morady made more than $191,000 in commissions from the scheme. The five life insurance policies that were fraudulently obtained through Davis and Morady had a combined face value of $2.8 million, according to the complaint.
The insurer sued Douglas Davis, Mavash Morady, Shirlee Davis, the five trusts, and successor trustees Steven Egbert and Christiana Bank & Trust Co.
It wants the policies voided and damages for fraud, deceptive business practices, unjust enrichment and civil conspiracy.
Lead counsel is Warren von Schleicher, of Smith, von Schleicher & Associates.