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Poizner should follow this lead and stop this scheme before it attracts additional seniors. Legislators in Sacramento, meanwhile, should call for hearings aimed at uncovering what's being done with the private medical and financial information Khrlobian and Khachatourians are scooping up through their come-on.
"It would be helpful to everybody, including the people selling this," says Prescott Cole, senior attorney for California Advocates for Nursing Home Reform, who has fielded complaints about Lighthouse Insurance Marketing's $1,000 survey program. "If they don't know where this information is going, let's get to the bottom of it. I think it's something both the Assembly and Senate Insurance Committees would like to look into."
The businessmen behind the Lighthouse "survey" have not been forthcoming about what, exactly, they're luring seniors into.
Manson, whose name and Bar Association number appeared in Internet postings relating to the $1,000 "longevity survey" offer, claims ignorance about the ultimate business purpose private information will be used for.
"That's what I can't answer because I don't have a finance degree," said Manson, who spoke with me on behalf of Lighthouse Insurance Marketing during four telephone interviews and an e-mail exchange.
Manson would not deny that Lighthouse transacted with other Khrlobian and Khachatourians companies, which were set up to profit from the resale of life insurance policies. But he said the survey program was separate from that line of business, and that information gleaned from the signed contracts is being collected by a Texas company called Examination Management Services, Inc. (EMSI), which agents peddling the offer told me is involved in similar deals nationwide.
When I asked to speak with an EMSI press spokesperson about the "longevity survey," I was referred to Kevin Malone, head of the company's underwriting business. However, Malone refused to answer questions over the phone, instead demanding I tell him how I found out about the program, and what I knew about it already. He asked me to contact him via e-mail. By press time five days later, however, he had not responded to e-mailed questions asking why EMSI was involved in collecting the information, whether it was being used in the resale of strangers' life insurance policies, and what measures were being taken to protect seniors' private information.
Nonetheless, through court documents, interviews, and other records it's possible to piece together an image of the business Lighthouse Insurance Marketing Inc. was apparently founded to transact.
At the very least, seniors are being lured into signing contracts that confuse even the attorneys and other experts I've shown them to. "There was no way in the world my mother knew what she was signing," Cranford notes.
What does seem apparent is that survey "subjects" are giving their private medical and financial information to a secretive group of companies whose representatives refuse to say what, exactly, is being done with it.
In an age of ubiquitous identity theft, and of growing financial abuse against seniors, this survey offer is unnerving. In 2004, San Francisco Chronicle reporter David Lazarus uncovered the story of how an employee for an India-based company that transcribed doctors' notes threatened to put UCSF Medical Center patients' personal data on the Internet. Like that debacle, the Lighthouse survey promises to create a large trove of once-confidential medical files that could potentially be passed among myriad unspecified people and companies.
Alice Gates, retired senior staff counsel to the California Department of Insurance, says the collection and dissemination of private medical information creates the potential of another UCSF-style private information snafu. "This whole situation is just a disaster like that waiting to happen," said Gates, who examined copies of the forms seniors are asked to sign.
Unlike the UCSF case, however, this information is destined for uses that apparently have little to do with preserving patients' health. Instead, the company coordinating the survey appears to be connected to companies involved in a little-known yet growing business that promoters call the "life settlements" industry, and which detractors call "stranger-originated life insurance."
As morbid as this may sound, so-called stranger-originated life insurance is nothing new. It's part of a multibillion-dollar industry involving venture capitalists, hedge funds, brokers, and insurance agents. Investors seek to profit by selling speculators on the idea that an insurance policy's death benefit will end up paying out more money than will be spent buying the policy from the insured person and then paying premiums until that person dies.
"First you have the insured person," says Joseph Belth, editor of The Insurance Forum, an independent periodical. "Then you have the idea that this person would then sell his ownership in the policy to investors — I call them speculators, because they're speculating in human life."
According to Belth, speculators commit to paying an upfront fee for the rights to collect the policy's death benefit, and agree to pay future premiums. The speculators then have the right to collect the death benefit when the insured person dies.
The practice of reselling life insurance policies to strangers began with the onset of the AIDS epidemic in San Francisco, when relatively young sufferers condemned to death by the disease sold life insurance policies to investors to obtain money during their final years. The practice has evolved into an industry called "viatical settlements," in which people with terminal illnesses sell their life insurance benefits to brokers.