{"id":521,"date":"2009-05-27T15:25:47","date_gmt":"2009-05-27T15:25:47","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2009\/05\/merrill_lynch_life_agency_to_p"},"modified":"2022-03-09T15:53:49","modified_gmt":"2022-03-09T21:53:49","slug":"merrill-lynch-life-agency-to-p","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/merrill-lynch-life-agency-to-p\/","title":{"rendered":"Merrill Lynch Life Agency to Pay Illinois Division Of Insurance $18 Million Over Funeral Trust Scam Allegations"},"content":{"rendered":"

\t\t\t\tMerrill Lynch Life Agency Inc.<\/a> will pay $18 million to the Illinois Division of Insurance to settle the state’s investigation into the investment firm’s involvement with a trust fund overseen by the Illinois Funeral Directors Association. The trust was supposed to cover funeral costs for about 49,000 consumers that had prepaid for funeral contracts. The $18 million will be placed in a special fund and will be used to offset losses by association members when delivering on their funeral contract commitments to consumers. <\/p>\n

Merrill Lynch & Co. Inc<\/a>, between 1986 and 1999, had marketed and sold tax-exempt variable universal life insurance policies as investments within the pre-need trust. Unfortunately, in 2007, the trust imploded, and its value dropped from over $300 million to approximately $250 million. <\/p>\n

The Illinois Department of Financial and Professional Regulation then conducted a probe into the trust and discovered that the funds’ trustees had used the policies as investments within the trust. Also state comptroller Dan Hynes is asking the association to account for $10 million that trustees allegedly obtained from the trust as excess management fees.<\/p>\n

According to state regulators, Merrill Lynch Life registered representative Edward L. Schainker, who served as the association’s investment advisor, recommended and sold over 300 policies to its members. The policies were to offer tax-exempt investment returns. Merrill Lynch’s life insurance division put forth 120 policies and received over $32 million in premiums that were invested in bonds and stocks that over the years have dropped in value and placed the trust’s solvency at risk. <\/p>\n

Schainker is accused of violating Illinois insurable-interest laws and of failing to determine whether his investment plan could provide the needed revenue to cover trust liabilities. The Illinois secretary of state’s office has suspended his broker’s license and the state’s insurance division is seeking to revoke Schainker’s insurance license. He also has been ordered to pay civil penalties of $100,000. <\/p>\n

By settling, Merrill Lynch Life is not admitting to the allegations made by the state of Illinois. <\/p>\n

Related Web Resources:<\/strong>
\nMerrill Lynch to pay $18 million to halt state probe into funeral trust fund, Chicago Tribune, May 20, 2009
\nIllinois slams Merrill Lynch Life to the tune of $18M for funeral trust scam, Investment News, May 21, 2009
\nIllinois Funeral Directors Association<\/p>\n

Illinois Department of Financial and Professional Regulation<\/a>
\n Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Merrill Lynch Life Agency Inc. will pay $18 million to the Illinois Division of Insurance to settle the state’s investigation into the investment firm’s involvement with a trust fund overseen by the Illinois Funeral Directors Association. The trust was supposed to cover funeral costs for about 49,000 consumers that had prepaid for funeral contracts. 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