Entrepreneurs have expanded this business to include policyholders who haven't been diagnosed with terminal illnesses, calling this line of investments "life settlements." Lately, the business has expanded further still to include people who don't yet have life insurance policies, but are encouraged to take out new, very large ones specifically for the purpose of reselling them. This, according to allegations in legal complaints filed by Khrlobian and Khachatourians' former business partner, is the type of business Lighthouse was set up to transact.

Entrepreneurs in this line of business say it has the humanitarian effect of providing money to seniors during what may be a time of great need. Detractors, however, call stranger-originated life insurance a macabre business in which investors, brokers, and speculators sit around hoping people they've bet on will die. Industry experts I've spoken with said they haven't heard of any murders associated with this business practice. But many find it disturbing just the same.

"It's like putting a death warrant on yourself," says Barry Lanier, chief of the bureau of investigations of the Florida Department of Financial Services.

Prescott Cole of California Advocates for Nursing Home Reform urges state legislators to convene hearings about the survey program.
Paolo Vescia
Prescott Cole of California Advocates for Nursing Home Reform urges state legislators to convene hearings about the survey program.
Suite 312 of this Burbank office building is registered as the business office for the company conducting the $1,000 "longevity survey," as well as several linked companies involved in reselling the right to collect life insurance death benefits.
Rena Kosnett
Suite 312 of this Burbank office building is registered as the business office for the company conducting the $1,000 "longevity survey," as well as several linked companies involved in reselling the right to collect life insurance death benefits.

The first hint that the company promoting the Lighthouse longevity survey offer might somehow be connected to the stranger-originated life insurance industry appeared in the San Francisco Bay Area in mid-October in a series of online ads, which urged seniors interested in earning $1,000 in exchange for participating in a survey to respond to lagrimasllena@yahoo.com. Two weeks earlier, the same e-mail address had appeared in online ads promoting "No Premium Life Insurance for Senior Citizens" in Daly City.

"We pay your monthly premium and will be the beneficiaries of your policy," the ads declared. "IN RETURN, YOU RECEIVE A LUMPSOME [sic] OF $120,000 to $150,000 within 60 days! All you need to do is pass the physical examination (again, FREE of charge), and you're set."

"Lagrimasllena" didn't respond to e-mails requesting comment on these advertisements.

But lawsuits recently filed in Southern California, as well as bankruptcy filings and lawsuits involving companies connected to Khrlobian and Khachatourians' businesses, offer more evidence of connections between individuals behind the company offering the "longevity survey" and the business of persuading strangers to take out life insurance policies for resale. These lawsuits detail a complex series of transactions involving a German venture capital firm and several interrelated private companies set up by Manson for his Burbank insurance agent clients.

According to a lawsuit filed by Moses Gazazian, a former partner in Khachatourians and Khrlobian's insurance business, this trio of agents spent several years assembling a tangle of companies dedicated to recruiting elderly insurance-policy holders, outside investors, and speculators in transactions designed to profit from the resale of multimillion-dollar life insurance policies. Again, Manson claims the characterization is incorrect.

Belth says that the middlemen such as Khachatourians, Khrlobian, and Gazazian earn the big, certain profits in the life-settlement business. "The important additional parties are the intermediaries, the ones who stand between the insured and these speculators," he says. "It's the intermediaries who are really cleaning up in this business. They get frequently huge commissions up front, while the speculators hope to make money down the road."

Gazazian's suit claims that his former partners cheated him of a portion of the premiums the companies were supposed to earn. In making his case, Gazazian spells out in detail how the insurance resale scheme functioned. He also provides possible clues to how information gleaned in the Lighthouse "survey program" might be used. "The main purpose of Lighthouse was to act as a marketing company," the lawsuit complaint says, "with respect to securing qualified agents and clients."

Gazazian referred me to his attorney, who did not return calls requesting comment. Manson, the attorney for Khachatourians and Khrlobian, sought to downplay links between the company promoting the "survey program" and his clients' insurance-resale operation, and claims Gazazian's characterization of his former business relationships is incorrect. "Moses Gazazian's claims as I see them below are false, and as I said before, he, his affairs, and the lawsuits relating to him are completely separate from the Survey Trust," Manson wrote in an e-mail. "I strongly discourage you from drawing a connection between Moses and the survey in your story."

According to Gazazian's lawsuit complaint, he, Khachatourians, and Khrlobian traveled to Germany to negotiate a deal with a Berlin venture capital firm in January 2005. The German investors were to front money for multimillion-dollar insurance policies taken out on seniors who had been recruited under the auspices of Lighthouse Insurance Marketing. The investors agreed to pay the policies' premiums — but only for two years, the lawsuit said.

During 2005, Gazazian, Khrlobian, and Khachatourians set up 12 life insurance policies in this way. The policies were set to "mature" — that is, to be resold to speculators — this year. Under a complex commission arrangement, the Burbank middlemen were to receive around $10 million, Gazazian claims. Given that the commissions represented a small fraction of the policies' face value, it appears that Lighthouse had generated policies with death benefits worth many millions of dollars.

Key to this and other life-insurance resale schemes is the two-year "maturation" period, during which investors must front premiums before reselling policies. This corresponds with what in the insurance industry is called a "contestability" period, after which an insurer is restricted in its ability to rescind or cancel a policy. Once ironclad, insurance policies become much more valuable for resale to speculators.

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