Two investment brokers and their associates are facing charges for stealing nursing home residents’ personal information to perpetrate annuities fraud, the U.S. Securities and Exchange Commission announced. A $4.5 million settlement has been reached with some of the parties.
Brokers Michael A. Horowitz of Los Angeles and Moshe Marc Cohen of New York City created the illegal scheme. They allegedly stole identification information from nursing home residents through a fake charity, and used that information to get insurance companies to issue variable annuities. These are investment vehicles that pay out a death benefit to a beneficiary when the holder dies.
Horowitz and Cohen sold the annuities to wealthy investors with the understanding that the annuity holders would soon die and the investors would collect the death benefit. The brokers made more than $1 million in commissions. They allegedly brought in commodities trader Howard Feder, who helped them facilitate institutional investments in the fraudulent annuities through the auspices of BDL Manager LLC.
As part of an overall $4.5 million settlement, BDL agreed to pay disgorgement and a penalty totaling about $3 million. Feder agreed to pay a $130,000 penalty. Individuals who were charged with helping obtain the nursing home residents’ information also agreed to penalties.