New York Life is a defendant in a new California lawsuit alleging that a former longtime agent engaged in a Ponzi scheme.
Abidog v. New York Life Insurance Co. was filed in California Superior Court on June 18, seeking damages and alleging that a Ponzi scheme that deprived elderly and other unwitting investors of their life savings. The filing was first reported by the law site JD Supra.
Plaintiffs allege that Felix Chu, as a New York Life agent, lured them into investing life insurance proceeds, retirement funds, and other assets in the purchase of unregistered promissory notes.
Chu, who has 24 years experience with New York Life, was barred from the industry by the Financial Industry Regulatory Authority.
Plaintiffs claim Chu coaxed then to purchase New York Life insurance policies and to borrow money from these policies to invest further in the notes. Each of these notes were issued by Felix Chu, his son Derek Chu, or entities they controlled.
The plaintiffs say they lost their life savings after the Chus stopped paying interest and principal on the notes. One of the Plaintiffs was also forced to surrender her New York Life insurance policy due to her inability to pay the premiums after the default on the notes.
The complaint alleges fraud by intentional misrepresentation, fraud by concealment, constructive fraud, breach of fiduciary duty, negligence, negligent misrepresentation, aiding and abetting, along with numerous violations of the California Corporations Code and elder abuse under state law.
Plaintiffs also allege breach of third-party beneficiary contract against defendant NYLIFE Securities for failing to supervise Chu in accordance with FINRA rules.
A spokesman for New York Life declined comment on the lawsuit.
FINRA Bars Chu
According to FINRA Broker Check records, the agency sanctioned Felix Chu on Dec. 19, 2019, barring him from associating with any FINRA Member after he failed to cooperate with its investigation and request for information.
In addition to this regulatory bar, Felix Chu has three customer complaint disclosures, alleging sales practice misconduct, two from 2019 and one filed in May 2021. The two earlier complaints have been settled. They include:
- Plaintiff alleges that beginning in March 2016 until September 2018, she and her late husband were misled into purchasing promissory notes for a total of $305,000. Plaintiff further alleges that they were misled into remitting a check for $75,000 to purchase what they believed to be additional insurance. Plaintiffs are seeking compensatory damages in excess of $380,000, lost income, interest, punitive damages and attorneys’ fees.” The alleged damages were settled for $125,000.
- Plaintiffs allege that beginning in 2015, they were misled into purchasing promissory notes. Plaintiffs are seeking the return of principal, interest, punitive damages and attorneys’ fees. The alleged damages were $836,950 and the matter was settled for $250,000.
- Plaintiffs allege that after April 2, 2018, they were induced to open a retirement account, into which they deposited at least $75,000 and subsequently withdrew $70,000 to invest in promissory notes and they they were also induced to open a joint bank account, later realizing deposited funds were withdrawn. Plaintiffs also assert that they loaned money that was never repaid. They are asking for $230,000 and this complaint is pending.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected] Follow him on Twitter @INNJohnH.
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