Seeman Holtz Sold Life Insurance-Backed Promissory Note Securities Without License, Class Action Claims [UPDATE]

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National Senior Insurance, better known as insurance agency Seeman Holtz, has promoted and sold securities in the form of promissory notes purportedly collateralized by third-party life insurance policies despite not being registered to do so, a proposed class action alleges. 

The 39-page lawsuit, filed in Florida, claims Seeman Holtz has marketed and sold to investors, primarily seniors, promissory notes the agency has called “longevity linked assets,” which the defendants claimed to invest in life insurance policies that would pay to the note holders “a substantial premium upon the death of the insured.” According to the suit, Seeman Holtz was not registered to sell securities, and its agents were not registered as financial advisors or properly licensed to sell the notes. 

Moreover, the notes themselves, the case claims, were not properly registered as securities and did not qualify for exemption from registration under applicable statutes. 

The foregoing alone, the suit says, entitles every investor to reimbursement of their money.

Further, the lawsuit claims Seeman Holtz and an array of affiliated entities have fraudulently represented to those who invested in the companies that the underlying third-party insurance policy assets were held by a collateral agent to protect those assets. According to the suit, this was not actually the case. 

“In reality, no collateral agent existed and Seeman Holtz comingled all of the policies in the name of, and for the benefit of, Seeman Holtz Property and Casualty, LLC,” the complaint reads, charging that the defendants have “been unwilling or unable to provide Noteholders … with an accounting of the collateral, the value of the collateral, or any other information regarding the value of the Notes.” 

The plaintiff, a 76-year-old Florida woman, and her husband invested in two of Seeman Holtz’s notes upon the belief that their assets would be liquid and repaid upon maturity, the case claims. When the time came for the defendants to repay the notes purchased by the plaintiff, however, Seeman Holtz “told her that the firm was undergoing financial problems,” according to the suit. 

“The effects have been devastating for Plaintiff,” the lawsuit says. “At age 76, [plaintiff] should not be forced to contemplate that her and her husband’s life savings invested with Seeman Holtz have vanished.” 

Seeman Holtz, who markets itself as part of an integrated and intertwined “family of companies,” is not a registered broker-deal with the state of Florida, the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority, the lawsuit alleges. According to the complaint, the agency, using a network of “unregistered financial advisors or dealers,” has sold the “longevity linked assets,” i.e., promissory notes, to investors by misrepresenting that the instruments were safe, secure and backed by a portfolio of life insurance policies that would offer safety of principal and substantial returns. The case also alleges Seeman Holtz misrepresented to proposed class members in the offering documents for the notes that a “PL Entity,” i.e., one of the co-defendant holding companies, would grant a security interest in all assets of the PL Entity, which would be managed by the collateral agent Coral Gables Title and Escrow, Inc (CGTE).

“Upon information and belief, these representations were materially false and misleading because (a) CGTE was administratively dissolved by the State of Florida in September 2015; and (b) the PL Entities either have no collateral or are so undercollateralized to render meaningless the representations that the Notes were secured,” the complaint alleges. 

The lawsuit says that although the notes belonging to proposed class members have matured, Seeman Holtz has “consistently represented to investors that it could not redeem the notes because of a lack of liquidity,” claiming specifically that the agency “needed additional time and was on the cusp of recapitalizing its affiliated property and casualty business in order to obtain the necessary liquidity for the redemptions.”

“That has never happened,” the complaint alleges. 

The lawsuit looks to represent all persons who purchased or held a beneficial interest in one or more of the promissory notes within the applicable limitations period.

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