§431E-42 - Fraudulent life settlement acts prohibited.

[§431E-42] Fraudulent life settlement acts
prohibited. It is a violation of this chapter for any person, provider,
broker, or any other party related to the business of life settlements, to
commit a fraudulent life settlement act.

For the purposes of this section, "fraudulent
life settlement act" includes:

(1) Acts or omissions committed by any person who,
knowingly and with intent to defraud, for the purpose of depriving another of
property or for pecuniary gain, commits, or permits its employees or agents to
engage in acts including but not limited to:

(A) Presenting, causing to be presented, or
preparing with knowledge and belief that it will be presented to or by a
provider, premium finance lender, broker, insurer, insurance producer, or any
other person, false material information, or concealing material information,
as part of, in support of, or concerning a fact material to one or more of the
following:

(i) An application for the issuance of a policy
or life settlement contract;

(ii) The underwriting of a policy or life
settlement contract;

(iii) A claim for payment or benefit pursuant to
a policy or life settlement contract;

(iv) Premiums paid on a policy;

(v) Payments and changes in ownership or
beneficiary made in accordance with the terms of a policy or life settlement
contract;

(vi) The reinstatement or conversion of a
policy;

(vii) In the solicitation, offer to enter into,
or effectuation of a policy or life settlement contract;

(viii) The issuance of written evidence of a
policy or life settlement contract;

(ix) Any application for or the existence of or
any payments related to a loan secured directly or indirectly by any interest
in a policy; or

(x) Entering into any practice or plan that
involves stranger-originated life insurance;

(B) Failing to disclose to the insurer, where
the insurer requests such disclosure, that the prospective insured has
undergone a life expectancy evaluation by any person or entity other than the
insurer or its authorized representatives in connection with the issuance of
the policy;

(D) In the solicitation, application, or
issuance of a policy, employing any device, scheme, or artifice in violation of
state insurable interest laws;

(2) In the furtherance of a fraud or to prevent the
detection of a fraud, any person commits or permits its employees or its agents
to:

(A) Remove, conceal, alter, destroy, or
sequester from the commissioner the assets or records of a licensee or other
person engaged in the business of life settlements;

(B) Misrepresent or conceal the financial
condition of a licensee, financing entity, insurer, or other person;

(C) Transact the business of life settlements
in violation of laws requiring a license, certificate of authority, or other
legal authority for the transaction of the business of life settlements;

(D) File with the commissioner or the chief
insurance regulatory official of another jurisdiction a document containing
false information or otherwise concealing information about a material fact
from the commissioner;

(E) Engage in embezzlement, theft,
misappropriation, or conversion of moneys, funds, premiums, credits, or other
property of a provider, insurer, insured, owner, insurance, policy owner, or
any other person engaged in the business of life settlements or insurance;

(F) Knowingly and with intent to defraud,
enter into, broker, or otherwise deal in a life settlement contract, the subject
of which is a policy that was obtained by presenting false information
concerning any fact material to the policy or by concealing, for the purpose of
misleading another, information concerning any fact material to the policy,
where the owner or the owner's agent intended to defraud the policy's issuer;

(G) Attempt to commit, assist, aid, or abet in
the commission of, or conspire to commit the acts or omissions specified in
this definition; or

(H) Misrepresent the state of residence of an
owner to be a state or jurisdiction that does not have a law substantially
similar to this chapter for the purpose of evading or avoiding the provisions
of this chapter. [L 2008, c 177, pt of §1]