LOS ANGELES (CN) - Massachusetts Mutual preyed on a professional athlete by selling him an exorbitantly expensive whole life policy, a former Major League pitcher claims in court.
Kevin Correia claims in Superior Court that MassMutual, Fraser Financial and Insurance Services, financial adviser Bill Crafton and insurance agent Christopher Turoci defrauded him - and that he's not the only one Crafton victimized.
Correia, a 12-year journeyman, claims MassMutual "takes advantage of professional athletes by selling excessive whole life insurance policies that require the payment of exorbitant premiums that the athlete is unlikely to be able to pay over time. As a result, the policy either lapses or the athlete is forced to surrender the policy for only a fraction of the premiums paid."
Correia has particularly harsh words for Crafton in his June 4 lawsuit. He says Crafton, his financial adviser in 2013, encouraged him to buy a whole life policy and selected Turoci as his insurance agent.
Crafton, of San Diego, has held himself out for years as a specialist in advising athletes in the NFL, Major League Baseball and the NHL, according to the lawsuit.
"More recently, Crafton has become known less for his roster of famous athlete clients than for the roster of clients who are suing him for fraud, negligence, and mismanagement of investments," Correia says in the complaint.
(The Courthouse News database shows that several pro athletes have filed lawsuits against Crafton. NFL linebacker Naivote Taulawakeiaho sued him in June 2012 in San Diego Superior Court, alleging fraud and breach of fiduciary duty. NFL cornerback sued him separately on similar charges in the same court on the same day, as did linebacker Matt McCoy. Tight end Brent Celek sued him on similar allegations in 2012 in the Philadelphia Court of Common Pleas. MassMutual is not a defendant in any of those cases.)
The SEC filed fraud charges against Crafton in 2014, claiming he had received more than $1.5 million in undisclosed compensation for steering his professional athlete clients to certain funds and businesses, according to Crafton's January settlement this year .
The SEC order states: "(I)n June 2010, while acting as an investment adviser and while associated with a registered investment adviser, Crafton misappropriated a total of $700,000 from two of his clients and used the funds to redeem, and assign to them, a third client's investment in a private fund that - only days prior to the misappropriation, and as Crafton well knew - had been the subject of an emergency action filed by the Commission, in which a freeze of the fund's assets had been obtained based on allegations it was being operated as a Ponzi-like scheme."
Correia claims his policy was ill-advised and excessive for him and his wife, as the face amount grossly exceeded what his family would need in the event of his untimely death; and that because he was 33 years old and in the last years of his baseball career it was unlikely that he would make enough money to cover the $608,846 in annual premiums for the next 10 years.
"Instead of carefully discussing with plaintiffs the costs and risks of the policy, defendants simply prepared the application for the insurance policy and informed plaintiffs that they should sign the application without further explanation from defendants," the complaint states.
Correia claims that Turoci received "a commission that consisted of a substantial portion of the first year's premium for the policy," and that Turoci shared the commission with Crafton and Fraser Financial.
Correia claims that MassMutual benefitted from his inappropriate policy because it would get the excessive premiums with a small chance that a 33-year-old would die. He claims that MassMutual also knew that there was a high probability that the policy would either lapse due to nonpayment or that he would be forced to surrender the policy for a fraction of the premiums paid.
In fact, Correia says, he and his wife are likely to surrender the policy to recover some of the premiums they have paid.
MassMutual spokesman Jim Lacey told Courthouse News that MassMutual complies with all laws in a closely regulated industry and is frequently commended on its business practices.
"For more than 160 years, MassMutual has helped millions of families and small businesses achieve their financial objectives and protect the ones they love," Lacey said in a statement. "We look forward to sharing our record and defending vigorously against these meritless claims."
The Correias seek punitive damages for negligence, fraud and violations of the California Business & Professions Code. They are represented by Gregory Aldisert with Kinsella Weitzman Iser Kump & Aldisert, of Santa Monica.
Correia pitched in the majors for 12 seasons for five teams, including San Francisco, San Diego and Pittsburgh. He has a 76-95 record with a 4.59 career ERA. He is a free agent, and has not pitched since Sept. 22, 2014.
According to Baseball-Reference.com, Correia has made $22.825 million in his career.
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