The Wall Street Journal goes back to its roots with an excellent old-fashioned leder this morning.
It’s a well-told tale about 74-year-old Suzy Tomlinson, who died after being last seen with a 36-year-old guy named JB Carlson who’d taken out a $15 million life-insurance policy on her. And it has larger implications for the insurance business, as the WSJ points out:
The dispute over the $15 million policy is a dramatic example of a larger controversy roiling the life-insurance industry over “stranger-originated” policies. In recent years, insurance agents, hedge funds and other investors have induced thousands of elderly people to take out giant policies. Investors then buy these policies, pay the premiums, and collect when the insured dies.
AIG, the insurer, says the policy was fraudulently obtained. And indeed this is all kinds of shady:
The application stated that Ms. Tomlinson would liquidate assets to pay the $387,000 annual premiums. In fact, the insurance trust overseen by Mr. Carlson took out a 30-month loan with an interest rate of 17% a year, filings show.
Insurers generally will sell such a large policy only to a wealthy person or company with a legitimate reason for that much coverage. AIG was provided a financial statement stating Ms. Tomlinson had $46.7 million in assets, including real estate, artwork and $39.8 million in preferred shares of Carlson Media. It was signed by “Kevin League” on the letterhead of “KLS & Associates,” according to court documents.
Mr. League previously had worked for Mr. Carlson. The address listed for KLS was a rented house from which Mr. League was evicted shortly thereafter, his former landlord says. Mr. Carlson says he didn’t prepare the statement and never saw it until he was sued by AIG. He says valuing Ms. Tomlinson’s preferred shares of Carlson Media at $39.8 million was “wildly inaccurate.” Mr. League couldn’t be located…
AIG filed tax returns under seal showing her annual income in the years in question was under $17,000.
Tomlinson drowned in her bathtub after Carlson took her home.
There’s much more here—indeed, I could quote the whole thing. Great work by Leslie Scism and Mark Maremont. Go read it.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.