Apollo Global Caught Betting On Death Through Shell Companies

On Wednesday, a lawsuit was filed against Apollo Global Management Inc (NYSE: APO), alleging that the private equity firm engaged in a fraudulent conspiracy involving illegal life insurance policies, according a report from Bloomberg

The case revolves around the death of Martha Barotz, a New York State resident who, in 2006 was paid $150,000 by Life Accumulation Trust III (LATIII) in exchange for a $5 million life insurance policy on her life. LATIII took out the policy, paid the premiums, and was the sole benefactor. 

Then in 2011, LATIII sold the Barotz trust to a fund allegedly controlled by Apollo. When Martha Barotz died in 2018, the Apollo-controlled fund collected the $5 million payout.

According to the complaint, Apollo allegedly set up a network of sham entities through a secretive affiliate called Financial Credit Investment (FCI) to hold a portfolio of stranger-originated life insurance (STOLI) policies with an estimated aggregated total of $20 billion as of 2019. STOLI policies — which as the name suggests, involve taking out life insurance on a stranger — are illegal in most states.

The Barotz family has been attempting to void the policy taken out on Martha’s life for several years. In January, the Superior Court of Delaware ruled in favor of the Barotz estate, ordering a $6.9 million payout. However, the estate alleges in a new lawsuit that the defendants attempted to dodge the court’s ruling by siphoning money away from the responsible companies and deliberately orchestrating their financial collapse to avoid paying the judgment.

Wells Fargo (NYSE: WFC) and Wilmington Savings Fund Society (NASDAQ: WSFS) are also named in the suit for allegedly providing administration services to FCI. Apollo denies the claims, stating that FCI never participated in the origination of any life insurance policy. 

Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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