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Multiple investors are suing an insurance and financial services firm in Boca Raton, saying the company failed to keep its promise to pay out millions of dollars when their investments matured.
Seniors who believed they would earn interest as high as 8% annually invested between $100,000 and $10 million in promissory notes purchased from National Senior Insurance Inc. and several affiliates, said Scott L. Silver, a Coral Springs attorney representing plaintiffs in three cases.
“It was a substantial part of their net worth,” Silver said. “What makes this case so horrible is we’re talking about senior citizens who have lost their life savings.”
Lawsuits filed against the company, which does business as Seeman Holtz, include a May 5 complaint filed in Palm Beach Circuit Court by eight investors and a proposed class action suit filed by Silver on June 7 in U.S. District Court in Fort Lauderdale on behalf of Fanny Millstein, 76.
The investors, mostly seniors, say they purchased investment securities from Seeman Holtz and its affiliates that were reportedly backed by life insurance policies owned by the company, the suits state.
The suits name Seeman Holtz founders Marshal Seeman and Eric Holtz as co-defendants.
Five days after Millstein’s suit was filed, Eric Holtz, 54, committed suicide in California, BocaNewsNow reported.
In a statement Tuesday, a Seeman Holtz spokesman said the company “mourns this tragic loss and sends our love and deepest sympathy to Holtz’ wife, children and grandchildren.
The statement said “there is no indication that Eric’s passing is in any way related to this filing.”
Typically, it’s hedge funds and institutional investors, and not individuals, that invest in life insurance securities, Silver said. “Say someone with a terminal illness and a $1 million policy doesn’t need life insurance or needs money to live, and their only asset is their life insurance policy. They can sell that $1 million policy to someone like Seeman Holtz for $600,000.”
The purchaser then agrees to pay the remaining premiums on that policy with money from investors like the elderly plaintiffs. So Seeman Holtz or a company like it would pay the investors $150,000 in interest, for a total investment of $750,000, and then earn $250,000 when it collects on the policy after the original policyholder dies.
Holders of the promissory notes would then get back all of the money they invested.
“When done right, it’s complex and risky. When done wrong, it can be downright toxic,” Silver said. “Here, it appears to have spiraled out of control.”
Millstein’s suit say the promissory notes were issued by several companies controlled by Marshal Seeman and Eric Holtz, including Georgia-based Para Longevity Holdings VI LLC and Emerald Asset Holdings LLC.
But the Seeman Holtz spokesman clarified in an email that Seeman Holtz itself “did not issue nor offer the notes described in the suit.”
“The independent companies that issued and offered the notes are not owned by Seeman Holtz and they are the entities named in the lawsuit. Seeman Holtz does not own an interest in these independent companies. Additionally, there is collateral to back these notes and the management of the independent companies is working to address any investor concerns,” the spokesman said.
Millstein claims she and her husband lost $226,000. Her suit accuses the defendants of committing securities fraud and participating in a criminal enterprise in violation of Florida’s Racketeer Influenced and Corrupt Organizations Act, or RICO.
Agents who sold the promissory notes told the investors that the insurance policy assets were protected because they were held by a collateral agent, Millstein’s suit says.
“In reality, no collateral agent existed and Seeman Holtz commingled all of the policies in the name of, and for the benefit of, Seeman Holtz Property and Casualty,” the suit states. When it came time to redeem her investment, Millstein was told “that the firm was undergoing financial problems,” the suit says.
Loss of the money “has been devastating” for Millstein, the suit claims, adding, “At age 76, [she] should not be forced to contemplate that her and her husband’s life savings invested with Seeman Holtz have vanished.”
The lawsuits accuse Seeman Holtz of selling securities despite not being registered as a broker with either the state of Florida, the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. The agency used a network of “unregistered financial advisors or dealers” who misrepresented that the instruments were safe, secure and backed by a portfolio of safe and secure life insurance policies.
In reality, the collateral agent, Coral Gables Title and Escrow, was dissolved in 2015, and the affiliates that sold the notes either had no collateral or had so little money that its claims were “meaningless,” Millstein’s suit says.
When investors sought to cash out their notes, Seeman Holtz told them the agency lacked “liquidity” and needed additional time because it was on the verge of “recapitalizing its affiliated property and casualty business in order to obtain the necessary liquidity of the redemptions,” which never happened, the suit said.
The suit filed in Palm Beach County by West Palm Beach-based Pike & Lustig LLP on behalf of eight investors lists 16 notes purchased for $1.39 million between 2014 and 2019 that were scheduled to be redeemable between 2019 and 2024.
Silver said his firm has been in contact with at least 100 potential class members who say they invested more than $100 million.