The Quantum Group USA, known formerly as Shurwest Broker Network, faces a proposed class action over its sale of life insurance policies linked to structured cash flow products offered by Future Income Payments, who was found in 2015 by state regulatory agencies to have offered illegal usurious loans.
The 28-page page lawsuit says that although the Future Income Payments structured cash flow products, which were marketed as a premium financing device for the life insurance policies sold by the defendant, were found to be unlawful by more than 20 states, The Quantum Group nevertheless continued to sell the policies linked to the illegal loans through 2018. When Future Income Payments ceased operations in mid-2018, those who paid for life insurance policies sold through the Shurwest Broker Network, predecessor-in-interest to Quantum, lost their investments and were at risk of losing their policies entirely since Future Income Payments no longer had the cash flow to pay for them, the case claims.
The plaintiffs, a married South Carolina couple and a Texas resident, look to recover millions in premiums paid by those who bought Future Income Payments loan products linked to Minnesota Life Insurance Company (MLIC) or Securian Life Insurance Company (SLIC) indexed universal life insurance policies sold through Shurwest.
Shurwest, the suit explains, was a broker and master brokerage general agent for both MLIC and SLIC and a member of the Securian Financial Network. According to the lawsuit, the defendant was created by those controlling Shurwest Broker Network, who recently filed for Chapter 11 bankruptcy protection, to shift the company’s operations and assets and “attempt to escape liability” for its conduct.
Per the lawsuit, Future Income Payments engaged from 2012 through 2018 in an illegal loan scheme whereby it would “buy” a portion of a consumer’s pension stream at a discount in exchange for providing the person with a lump sum payment. The consumer would then be obligated to repay Future Income Payments through a series of monthly payments that, in aggregate, always ended up exceeding the amount of the lump sum paid to the individual, the case says. These Future Income Payments financial products were found to be illegal usurious loans, and the company shut down and was placed in receivership after it was found to have misrepresented material aspects of its transactions with consumers, among other federal law violations, according to the suit.
In or around April 2018, Future Income Payments stopped making payments to proposed class members, i.e., the people covered by the suit, and as a result the consumers could no longer fund the life insurance policies sold to them by Shurwest, the lawsuit alleges. Consequently, proposed class members’ policies lapsed, and they were hit with surrender charges and other penalties for policies that never accumulated enough value to provide a source of retirement income for policyholders, the case says.
“At the same time, Plaintiffs and Class members lost whatever they had paid to [Future Income Payments], which was supposed to – but did not – yield a steady stream of cash flows that would have funded the life insurance now lapsed,” the case adds.
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