}

Monday, December 31, 2012

SPECIAL REPORT--Secrets of a Millionaire Lifestyle Adviser: Michael Reese

NOTE: Information in this article was drawn from publicly available sources, including FINRA (Financial Industry Regulatory Authority), the SEC (U. S. Securities and Exchange Commission) and the State of Michigan. Official Michigan insurance agent licensing information can be found at this link: http://www.dleg.state.mi.us/fis/ind_srch/ins_agnt/insurance_agent_criteria.asp.

INTRODUCTION

Imagine you've retired to a small town in Northern Michigan, and you're looking for investment advice. How would you find an adviser, and why would you trust him with your money? Would you swoon like an overheated teenager at a Justin Bieber concert for a financial planner who calls himself "America's retirement expert"?

You might---and his carefully crafted persona just might convince you that he's indeed worthy of your trust. But you shouldn’t take everything he tells you at face value—and here’s why.

Financial planners have financial aspirations of their own. They make money by getting it from you. This isn't evil in its’ own right. But it is a conflict of interest, and it can pervade everything they do.

Financial planners target older people because they have the largest nest eggs, and the more money they manage, the bigger their take. Also, older people view their money more emotionally than younger people do, because they have so much at stake. And that makes them vulnerable.

WHO IS MICHAEL REESE....REALLY.

On his company’s web site, Traverse City resident and Centennial Wealth Advisors founder Michael Reese describes himself as a “Certified Financial Planner®, Chartered Financial Consultant (note: a financial planning designation for the insurance industry awarded by the American College of Bryn Mawr), and a Chartered Life Underwriter (note: a professional designation for individuals who wish to specialize in life insurance and estate planning)”.

Using a canny mix of Elmer Gantry-like fervor and nearly seamless public relations and marketing, Reese has managed to rise from the middling ranks of financial services brokers to the vaunted (and self-appointed) title of “America’s Retirement Expert”. His numerous appearances on local media, including his radio and TV shows, have allowed him to offer his own Karl Rove-like narrative at the same time he manipulates his image behind the scenes.

Although Reese claims to have spent several years hosting his own financial planning radio program,  it appears to have actually been a self-produced podcast that he paid to air on 106.7 FM in Traverse City. He now buys time on Traverse City's NBC affiliate Channel 7&4 to air another self-produced infomercial-- “The Michael Reese Show”--every Saturday morning. In addition, Reese's book, The Big Retirement Lie, is published by his own private publishing entity, Copper Leaf Publishing, LLC.

In mid-December 2012, Reese's credentials were again inflated by his "celebrity branding agency", Winter Park, FL-based Dicks & Nanton, when D&N crowed that  Reese was "Featured on NBC as Guest on The Consumer's Advocate Show".

The press release conveniently omits the fact that "The Consumer's Advocate Show" is a Dicks & Nanton-produced fluff promotional infomercial, part of the services Reese pays for. You can see Reese's press release below, followed by one for another D&N client, Michael Dinich. Same stuff, all they did was replace the name:

http://www.pitchengine.com/celebritybrandingagency/retirement-planner-michael-reese-featured-on-nbc-as-guest-on-the-consumers-advocate-show

http://www.pitchengine.com/celebritybrandingagency/financial-advisor-michael-dinich-featured-on-nbc-as-guest-on-the-consumers-advocate-show

According to Reese, the biggest challenge he faces when dealing with clients is “mindset.”  He believes a financial investment mindset change is required when a person enters retirement—from a growth and accumulation mode to an asset preservation mode.  Reese states, “My expertise is helping clients understand the need for that kind of portfolio shift.”

Like many financial advisers looking for a way to connect with a prospect, Reese claims that a steep stock market financial loss suffered by his father while a Reese client is the reason he reexamined his investment sales strategies. Reese outlines the story on his web site:

Years ago when Reese became a Registered Representative (note: a stock broker) in the financial services industry he began courting everyone he knew to become his next client.  His father, a new retiree, became one of his first clients and Reese strictly followed the investment protocol by which he was trained and invested his father’s hard earned money and retirement savings using a conservative retirement oriented investment model according to traditional financial investment planning.  Within a few years there was a severe drop in the market and his father lost nearly fifty-percent of his retirement funds.  Reese was devastated by this outcome and felt personally responsible.  According to Reese, “I was left with a decision…either leave the business or find a better answer.  Fortunately, I found a better answer.”  That overwhelming sense of personal responsibility led him to re-examine the portfolio strategies in which he was trained.  He then began to develop his own strategies that focused on the preservation of assets and protecting investment portfolios through intelligent tax planning.

While Reese’s decision to “develop his own strategies” may have indeed been influenced by his father’s purported loss, a 2004 complaint filed by a Geneos Wealth Management customer may have also impacted that decision. (Geneos Wealth Management is just one of the assumed names under which Reese has conducted business during his years in Traverse City.) According to Reese’s official, publicly available FINRA ‘Broker Check’ report, a January 10, 2004 complaint filed by a Reese client alleged a “sales practice violation of over $5,000”.

Reese’s client had a $750,000 investment portfolio, and the FINRA report states the client came to Reese “looking to invest $30,000 in something that would give them a better rate of return than they were currently earning in bank investments”. The client indicated that, “given the small percentage of their portfolio under discussion, substantial liquidity was not a concern”.  However, after meeting with Reese, where he reportedly reviewed the client’s investment objectives and risk tolerance, the client “was persuaded to invest 50 percent of the $750,000 portfolio in the Wells Real Estate Investment Trust paying them a quarterly dividend of 7 percent annualized”.  While there was no admission of wrongdoing by Reese, the complaint was quickly settled for $15, 343.69, six weeks after it was filed.

Reese let his broker's license lapse in August 2006, shortly before creating his current business, Centennial Wealth Advisory. He is, however, a Registered Investment Adviser and licensed as an insurance agent by the State of Michigan (more about that later).

You've probably heard of Real Estate Investment Trusts (REITs). These tax-favored companies invest in a diversified set of real estate or mortgages and, by law, must distribute 90 percent of net earnings to shareholders. They're a good way for retail investors to gain from real estate without directly owning property, locking up large sums for long periods or acting as a landlord.

But REITs come in many flavors—some of them bitter. The best-known REITs are publicly traded on a stock exchange such as the New York Stock Exchange. These 160 listed REITs are well covered by analysts and transparent in their finances and operations. 

The Wells Real Estate Investment Trust (REIT) Reese’s client invested in is one of 65 public, nonlisted REITs, known in the industry as PNLRs. They divulge their finances publicly and offer shares to the public. But they don't list their shares on an exchange. That's one of the many problems they pose for less sophisticated investors.

Nonlisted REITs have been aggressively sold based on their attractive quarterly distributions, or income payments. Some return over 7.0 percent of the initial investment a year with a promise to return the invested principal—at some point in the future.

But they have a host of risks that CDs, bonds and even stocks don't. Many investment advisers don't believe their distributions compensate for those risks. Unlisted REITs raise money by paying brokers and financial advisers handsome commissions, often 10 percent of the sale. Some REITs also charge investors ongoing management fees. A few even charge when you cash out, according to the National Association of Real Estate Investment Trusts.

The Georgia-based Wells REIT II Inc., (the REIT that Reese convinced his client to invest nearly $350,000 in) has raised $6 billion from investors since 2004. But it's used only about $4.7 billion to buy real estate, according to the company's latest quarterly financial report. The rest has been spent on commissions to brokers, other expenses and paying investors who demand to cash out.

SWIM WITH THE SHARKS:  IRA "COLLEGE”


Reese’s strategic realignment also sent him back to school—IRA COLLEGE.  Run by Advisors Excel, an aggressive field marketing organization owned in part by large annuity insurance carriers, IRA College is a two-day marketing seminar designed to help you “achieve the dominance you deserve”.

Cost for attending the chest-thumping seminar is a steep $2,000 and Reese is one of its biggest stars. According to a seminar recent brochure, Reese can teach to you “how to absolutely dominate the IRA market space by becoming the go-to specialist for IRA planning, conversion and tax reduction strategies.

You’ll learn directly from one of the most successful, prominent IRA authorities in the industry. You will gain real world, time-tested strategies and systems. You will walk away with tips, techniques and resources that you can instantly use to generate immediate and sustained results in your practice.

Reese is pitched as an “IRA Expert, Million Dollar Producer” and his bio describes him as
one of the most highly-recognized and sought after advisors in the IRA field, generating well over $1 million in commissions and fees annually while only working two days a week in a town with fewer than 50,000 people. He’s the author of ‘The Big Retirement Lie’; he’s been a featured speaker at Senior Market Advisor Expo; and he has helped turn hundreds of average producers into millionaires with his time-tested IRA training and techniques. At the IRA COLLEGE, you will learn Mike’s targeted approach for attracting highly qualified seminar attendees (participants at Mike’s seminars have no less than $250,000 in their IRAs), piquing their interest with unique IRA strategies that could save them hundreds of thousands in taxes and, most importantly, converting them into lifelong clients.

The brochure goes on to breathlessly promise that you’ll learn the “Simple planning strategies that can provide INCREDIBLE value for your clients and put HUGE dollars in your pocket! (Mike averages over $70,000 per new client using these strategies!)

According to Reese, there are four primary principles that have been foundational to his success.  “First, I specialize in a market and I pay very close attention to that target market.  Second, I continuously work on improving what I do and how I do it.  Third, I must remain very objective and opened minded and always be willing to use different tools.  I continue to attend industry events to learn.  And finally, I don’t try to attract people that don’t fit the model I have found to be very successful.  I don’t try to fit a square peg in a round hole.”

Reese states that, “A fully integrated retirement plan must include an income plan, an investment plan, a tax plan, a healthcare plan, and an estate plan.  However, most people don’t have a complete plan in any one of those areas let alone all five areas.”  He further elaborates, “With pensions disappearing and recession-worn portfolios, ninety percent of my new clients’ primary concern is: ‘How do we take our accounts and use them to generate secure, sustainable lifetime income regardless of what the markets do.’  Clients are more scared of running out of money than dying.”  Reese, however, has developed proven strategies to reduce or eliminate the anxiety historically related to retirement planning.  He continues, “We work in such a way that we guarantee retirement income for our clients and we have done it very successfully.”

HOW DOES REESE DO THAT? (THREE SIMPLE STEPS TO SHEAR A SHEEP)

















How does Reese do it? With insurance.

More accurately, with a combination of annuities and hybrid life insurance he called "Leveraged Life" in a recent IRA COLLEGE webinar. Watch the entire webinar, "Case Design for High Net-Worth Client", at this link: http://bradae.blogspot.com/2009/08/mike-reese-webinar-part-3-case-design.html

Yes, in addition to being a “Investment Adviser Representative” Michael Reese is an insurance agent licensed by the State of Michigan.  According to Michigan licensing records, after voluntarily surrendering his non-resident producer license on October 16, 1998, he became a resident producer in Michigan four days later on October 20, 1998.

Reese represents the following carriers:

Insurance Company Name
NAIC # Appointment Type Status
Status Date
BLUE CROSS AND BLUE SHIELD OF MICHIGAN 54291 Accident and Health Active 10/24/2006
COLUMBUS LIFE INSURANCE COMPANY 99937 Life Active 10/24/2006
AMERICAN GENERAL LIFE INSURANCE COMPANY 60488 Accident and Health Active 10/24/2006
AMERICAN GENERAL LIFE INSURANCE COMPANY 60488 Life Active 10/24/2006
AVIVA LIFE AND ANNUITY COMPANY 61689 Life Active 06/17/2009
EQUITRUST LIFE INSURANCE COMPANY 62510 Life Active 10/24/2006
GREAT AMERICAN LIFE INSURANCE COMPANY 63312 Accident and Health Active 10/24/2006
GREAT AMERICAN LIFE INSURANCE COMPANY 63312 Life Active 10/24/2006
JACKSON NATIONAL LIFE INSURANCE COMPANY 65056 Life Active 06/28/2010
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON 65315 Accident and Health Active 10/24/2006
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON 65315 Life Active 10/24/2006
LINCOLN BENEFIT LIFE COMPANY 65595 Accident and Health Active 10/16/2008
LINCOLN BENEFIT LIFE COMPANY 65595 Life Active 10/16/2008
LINCOLN BENEFIT LIFE COMPANY 65595 Variable Contracts Active 10/16/2008
LINCOLN NATIONAL LIFE INSURANCE COMPANY 65676 Accident and Health Active 10/24/2006
LINCOLN NATIONAL LIFE INSURANCE COMPANY 65676 Life Active 10/24/2006
LINCOLN NATIONAL LIFE INSURANCE COMPANY 65676 Variable Contracts Active 10/24/2006
MINNESOTA LIFE INSURANCE COMPANY 66168 Accident and Health Active 08/31/2011
MINNESOTA LIFE INSURANCE COMPANY 66168 Life Active 08/31/2011
MINNESOTA LIFE INSURANCE COMPANY 66168 Variable Contracts Active 08/31/2011
NATIONAL WESTERN LIFE INSURANCE COMPANY 66850 Life Active 11/19/2009
NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE 66974 Accident and Health Active 04/07/2010
NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE 66974 Life Active 10/24/2006
PACIFIC LIFE INSURANCE COMPANY 67466 Accident and Health Active 04/06/2012
PACIFIC LIFE INSURANCE COMPANY 67466 Life Active 04/06/2012
PACIFIC LIFE INSURANCE COMPANY 67466 Variable Contracts Active 04/06/2012
PROTECTIVE LIFE INSURANCE COMPANY 68136 Accident and Health Active 10/24/2006
PROTECTIVE LIFE INSURANCE COMPANY 68136 Life Active 10/24/2006
SECURITY BENEFIT LIFE INSURANCE COMPANY 68675 Life Active 03/01/2011
OXFORD LIFE INSURANCE COMPANY 76112 Accident and Health Active 04/02/2012
OXFORD LIFE INSURANCE COMPANY 76112 Life Active 04/02/2012
TRANSAMERICA LIFE INSURANCE COMPANY 86231 Life Active 10/24/2006
TRANSAMERICA LIFE INSURANCE COMPANY 86231 Variable Contracts Active 10/24/2006
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION 86630 Life Active 10/24/2006
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION 86630 Variable Contracts Active 10/24/2006
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA 90611 Accident and Health Active 10/24/2006
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA 90611 Life Active 10/24/2006
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA 90611 Variable Contracts Active 10/24/2006
FORETHOUGHT LIFE INSURANCE COMPANY 91642 Life Active 10/24/2011
AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY 92738 Life Active 02/24/2009
PHL VARIABLE INSURANCE COMPANY 93548 Life Active 10/19/2010
BANNER LIFE INSURANCE COMPANY 94250 Life Active 10/24/2006
COLUMBUS LIFE INSURANCE COMPANY 99937 Accident and Health Active 10/24/2006
SAGICOR LIFE INSURANCE COMPANY 60445 Life Active 11/23/2010


In addition to selling traditional insurance, Reese specializes in selling indexed annuities.

Annuities are sold as a way to invest hard-earned lifetime of savings in something "safe."  These financial products usually come with lofty promises -- your money is guaranteed to be safe, so it won't ever go down, but you'll still earn money when the stock market goes up.  Sounds great, right?  Sign me up!

Not so fast -- there's a reason this sounds too good to be true.  There's a catch with indexed annuities.  Some indexed annuities are good investments for the right people in the right circumstances.  Others are not.  How do you tell the good ones from the bad?

Let's start with the basics.  What is an indexed annuity?  It's a type of insurance product that works as an investment.  The person buying it invests his or her money into the annuity, which is guaranteed at a minimum rate of interest (under certain conditions), but is also linked to the stock market.  Theoretically, if the market goes up enough in a given year, the annuity will increase, but if the market goes down, the investment doesn't.

Nothing too bad so far.  So where are the hidden dangers?

First, indexed annuities typically have "surrender fees".  What are these?  If you want to sell the annuity, or withdraw money (generally, anything over 10% in a year), you have to pay a price.  Sometimes these surrender fees are manageable -- they have a six or seven year period, with fees starting at 5 to 7 %.

The problem?  Some indexed annuities carry surrender charges of up to 20% or even 25%.  That's right, you may lose up to a quarter of every dollar you take out (once you get past the annual 10% "free" withdrawal).  These surrender periods can also be long -- in the 10 to 15 year range.  This means that you would have to wait 10 to 15 years to take out your own money.

For someone young, this may be worth the wait.  But, again, we're talking about baby boomers and even their parents.  These products sold to people in their mid to late 80's.

What happens if someone needs to go into a nursing home, or assisted living?  What if someone had large medical bills?  What if someone wants to buy a condo, or give money to a loved one to help out?  Most commonly, what happens when someone elderly needs to pay for a caregiver to come to the house and provide help so they don't have to leave home?

If most or all of the savings are tied up in an annuity like this, it's tough luck.  While there are, sometimes, narrow exceptions for nursing home admissions (which are very, very limited so that most people won't qualify for them), everyone else is usually stuck between a rock and a hard place.

The second big "catch" to many of these products is that they can sometimes be so complicated, convoluted and confusing, that many of the insurance agents or financial planners selling them do not even fully understand them.  For example, often, the money is only guaranteed under certain conditions.  Also, the investment doesn't go up except when the stock market goes up A LOT (in some cases; a modest amount in other) in a given year, and even then the annuity will only increase in a very small amount.

There are participation rates, minimum floor guarantees, cap rates, various indexing methods, margin or administrative fees, as well as different valuation, averaging and calculation mechanisms.  We're not talking about simple stuff here.

Although Reese sells them as a way to avoid taxes, let’s take a closer look at that financial strategy.

COST BENEFIT ANALYSIS: HOLD 'EM OR FOLD 'EM

Assume you are a long-term, buy-and-hold investor who wishes to invest $20,000 in either a taxable S&P 500 index fund or a similar S&P 500 index subaccount with identical expenses within a tax-deferred variable annuity. Assume the investment in either option will earn an average annual return of 11.2%, of which 4.5% comes from dividends. In the taxable account, you will pay income taxes on dividends as received. The annuity will impose an M&E (mortality and expense) charge of 1.15% each year. Which investment will give you the most money after taxes at the end of 20 years?

After paying income taxes at a marginal rate of 28% on your annual dividends, the taxable account would have a net annual return of about 9.9%. At the end of 20 years, the investment would have grown to $132,125. Your long-term capital gain would be $112,125 taxable at 20%. After paying your tax of $22,425, you would be left with a total of $109,700.

The annuity would have a net annual return of 10.05% after the M&E charge. At the end of 20 years the investment would grow to $135,778, or some $3,600 more than the taxable account. Your gain would be $115,778. All of that gain, though, is taxable at ordinary rates. If taxed at a marginal rate of 28%, your tax bill would be $32,418. That means you would net $103,360, or about $6,300 less than that of the taxable account.

Hmmm... Maybe the tax deferral in the annuity wasn't everything that it was hyped to be. It seems as though those M&E charges coupled with ordinary income taxation on annuity gains offset the tax advantage during the annuity's accumulation phase. Indeed, your income tax rate would have to drop in 20 years for the annuity to come out on top in this case. Will it? Only you can answer that.

FILLING THE BUCKET: LONG-TERM CARE INSURANCE

As the third phase of Reese’s “leveraged life”, he recommends using some of the proceeds of your IRA to purchase life insurance with long-term care benefits.

But buyers of these life-combo products are facing sharp premium increases—or trimmed benefits—in the coming months, thanks to a new accounting rule that affects the type of life insurance often used with long-term-care riders. People who already hold such policies might see their premiums rise as well.

Life insurance policies with long-term-care riders, known as "hybrid" products, have taken off in the past few years, as reported September 2012 in the Weekend Investor. Sales jumped 56% last year, according to LIMRA (Life Insurance and Market Research Association), an industry-funded research group.

One reason is that they overcome one of the biggest stumbling blocks for buyers of long-term-care policies—writing a big check for a product you hope you will never use. By pairing life insurance with long-term-care benefits, you can lock in a payout for your spouse, children or other heirs, even if you don't use the long-term-care benefit.

As with traditional long-term-care insurance, hybrid policies typically kick in when the policyholder needs help with two "activities of daily living," such as eating or bathing. They either pay you a set amount each month or reimburse long-term-care expenses, but they might not cover care for cognitive loss and could have waiting periods.

"Be careful, because not all long-term-care benefits are created equal," says Katherine Lanious, president of Capital Insurance Insights, a life-insurance wholesaler in Naples, Fla.

The living benefits in these hybrid products are typically limited to the amount of the death benefit. That can be much less than those of a typical long-term-care policy, which generally covers all qualified expenses up to a maximum amount for two to five years. The long-term-care benefits can add as much as 20% to the basic premium of an insurance policy, insurers and planners say.

THE WIND-UP…AND THE PITCH (AN EMOTIONAL DART TO YOUR HEART)







February 2011 Seminar Ad

















The following is a Reese pitch for a recent financial seminar held in the Traverse City area.

Does it bother you that Washington seems to be on a spending spree racking up over $14 Trillion in deficits while bailing out failing companies and “stimulating” the economy? Are you concerned that your future financial security could be jeopardized by inflation and the increased taxation that is sure to result?

Why should you and your family pay for Wall Street’s and Washington’s misdeeds and manipulations?

Author, Certified Financial Planner®, and Retirement Planning Specialist, Michael Reese, is hosting a FREE seminar to share common-sense financial strategies designed to 

assist you in protecting your financial security regardless of what happens to the economy around you.

Discussion Topics include:

· Income – How will you protect and guarantee your retirement income even if inflation and market “corrections” rear their ugly heads?

· Silver and Gold – Opportunity or bubble? Learn how the world’s best money managers hold precious metals and hedge their risk at the same time.

· Your IRA – Likely your biggest financial position, and also your biggest tax time bomb. Do you know how to protect your valuable IRA against increasing taxation which can devastate your real return?

· Market Neutral Investing – How secure would you feel if you utilized a simple, yet sophisticated approach that positioned you to make money in any market environment?

Don’t miss this opportunity to learn what you’ll never hear about from your bank, broker, or CPA. If you are concerned about government spending, increasing taxes, future inflation, and the current state of the economy, then you don’t want to miss this important event!

This is an educational program only. There is no cost or obligation to attend, and nothing will be sold. You will enjoy a complimentary dinner served immediately after the meeting.

Reservations are required. Seating is limited and fills quickly.

Please call (800) XXX-XXX to reserve your seat!

AMERICA’S RETIREMENT EXPERT? MAYBE NOT.

Although Reese has invested a lot of time and money crafting his fa├žade as “America’s Retirement Expert”, he’s abandoned his quest to trademark the phrase.  According to United States Patent and Trademark Office records, Reese’s trademark action died on October 20, 2011.

Hey, anybody want to be “America’s Retirement Expert”? We hear that job’s open.

Saturday, December 29, 2012

FINALLY-THE BANKERS LIFE FRAUD SUIT DECISION AGAINST SHANNON NELSON, KELLY DACHTLER, RYAN KASHMERICK, ET AL





Traverse City, MI-Five managers and twelve insurance agents previously associated with the Traverse City branch of Bankers Life and Casualty have  settled a civil suit filed in Chicago on April 26, 2011. (The decision is shown above.)

The five biggest fish (all former Bankers Life Traverse City office senior managers)—Shannon Nelson, Kelly Dachtler, Ryan Kashmerick, Timothy Horvath and David Teesdale—didn't wait for the ink on the settlement agreement to dry. They’ve already formed a new company, American Senior Benefits, and have gone right back into the insurance business.

The seventeen had been sued by the company for fraud. The suit alleged “breach of contract, misappropriation of confidential client information and trade secrets.” The seventeen signed Bankers Life agent contracts containing confidentiality, anti-raiding and customer non-solicitation provisions.

Bankers Life, a health and life insurance company with more than 200 branch sales offices across the country, sought compensatory damages, double damages for willful misappropriation of trade secrets, punitive damages, costs, and attorneys’ fees.

Named in the civil complaint filed on April 26, 2011 by Bankers Life in Chicago’s U. S. District Court is former Branch Sales Manager Shannon Nelson. Nelson’s LinkedIn profile states he began his career with Bankers Life as an Agent Development Associate in March 1993, at the Evansville, Indiana branch office. He was named Branch Sales Manager of the Traverse City office in 1994.

Also named: former unit sales managers Kelly Dachtler and Ryan Kashmerick, former unit field trainers Timothy Horvath and David Teesdale, and former agents Troy Baxter, Lisa Benson, John Blanck, Bert Brotherton, John Kime, Seth Kishefsky, Joseph Michalec, Michael Robertson, Kurtis Tulppo, and Johnathan Young. Except for Kime, who lives in suburban Detroit, the defendants are Traverse City area residents.

The Bankers Life Traverse City branch office unraveled in early February 2011, when members of Bankers Life’s human resources department and special investigations unit arrived at its 800 Hastings Street location to conduct on-site investigations prompted by complaints regarding the activities of both former and current agents and managers.

According to court papers, the investigations revealed numerous instances of “fraud and other improper conduct” by all seventeen defendants.

Nelson, Dachtler and Kashmerick disclosed during their interviews with the Bankers Life special investigations unit in February that they had improperly instructed agents to stop placing sales leads on the “do not call” list unless the individuals had requested that “they not be called at least seven times.” According to the court filing, agents that did not follow this instruction were reportedly “subject to retaliation by Nelson, Dachtler and Kashmerick”.

Timothy Horvath acknowledged to Bankers Life investigators during an interview that he had forged “the signature of a policyholder on her policy delivery receipt.”

Jonathan Young revealed to investigators that he had forged “the signatures of several of his family members on policy applications.” Bankers Life alleges in its suit that Young took out the policies to “qualify for a sales bonus,” and then cancelled the policies shortly thereafter.

The Bankers Life suit claimed that Nelson, Dachtler, Kashermick, Horvath and Young, in anticipation of negative consequences of the investigations conducted in Traverse City, obtained licenses to sell insurance products for North American Company for Life & Health Insurance (North American), a competitor of Bankers Life. The suit maintained that these five defendants then “resigned from and/or voluntarily terminated their contracts with Bankers Life and solicited the other defendants to terminate their contracts from Bankers Life and join North American”.

A review of the State of Michigan’s Office of Financial and Insurance Regulation licensing records confirms that Nelson, Dachtler, Kashermick, Horvath and Young first obtained licenses to sell insurance products for North American between March 9 and March 20, 2011.

Bankers Life claimed that they then instructed the other twelve defendants to “obtain a license with North American and prepare to sever their relationships with Bankers Life”.

Shortly before resigning, all seventeen defendants “accessed Bankers Life’s Sales Productivity Network and/or Bankers Life’s Centralized marketing database and downloaded thousands of proprietary policyholder records and prospecting resources”—information that could be used to target specific policyholders and tailor proposals directly to them. The downloaded information included protected health information regulated by the Health Insurance Portability and Accountability Act (HIPAA).

Among the highlights asserted by Bankers Life in the court filings are:

-Shannon Nelson was the first to access the Centralized Marketing Database. Beginning in late February 2011, after he was aware of the investigation, he “downloaded multiple prospect and customer lists”. (Michigan licensing records verify that Nelson was appointed to North American on March 20, 2011 and resigned from Bankers Life on March 31, 2011.)

-Kelly Dachtler received her appointment with North American on March 13, 2011 and submitted her resignation from Bankers Life on March 26, 2011. According to the Bankers Life suit, Dachtler “downloaded policyholder records on March 14, 15, 16, 19, 22, 23, 24 and 26”. Dachtler capped her downloading with a “policyholder list containing hundreds of records on March 27, the day after she submitted her resignation”.

- Ryan Kashmerick received his appointment with North American on March 9, 2011 and submitted his resignation from Bankers Life on March 20, 2011. During the interim, Kashmerick “downloaded a significant number of policyholder records on March 9, 10, 14 and 15”.

- Timothy Horvath received his appointment with North American on March 10, 2011 and submitted his resignation from Bankers Life on March 18, 2011. Horvath “downloaded over one thousand policyholder records on March 17, the day before he submitted his resignation”.

-David Teesdale received his appointment with North American on March 15, 2011 and submitted his resignation from Bankers Life on March 23, 2011. Teesdale “downloaded hundreds of policyholder records the very day of his resignation, and downloaded several policyholder records the day after he resigned”.

Bankers Life maintained “the defendants removed the records from the database and branch office with the intent to use the information in their new positions with North America”.

In addition to the allegations of “misappropriation of trade secrets and confidential client files”, the suit claimed that four defendants admitted during their interviews to “contacting Bankers Life policyholders for the purpose of having them cancel or replace policies issued to them by Bankers Life”.

Kurtis Tulppo and Joseph Michalec were among those Bankers Life claimed contacted numerous policyholders, some by phone and some in writing.

The suit alleged Tulppo contacted a policyholder by phone, telling her that he left Bankers Life because of “bad business” but that he could help her with any questions that she may have, and they he could get her a “better deal” with another company.

And after terminating his agreement with Bankers Life, Michalec allegedly contacted a prospective Bankers Life policyholder and “solicited her to cancel her insurance applications with Bankers Life and take out policies with a competitor”. As a result, Bankers Life claimed the policyholder cancelled her applications with the company.

Michigan corporation records confirm that Central Licensing Bureau, Inc., an Arkansas-based insurance industry compliance service, filed paperwork to incorporate “American Senior Benefits, LLC” on April 25, 2011—one day before Bankers Life filed its civil suit.

Michigan classifies American Senior Benefits, LLC a “foreign limited liability company” as it was originally formed in Ohio. Launched under the name, HealthMark Sales of Ohio, LLC on May 25, 2001, the company changed its name three times over the next nine years before finally settling on its present identity in 2010.

Shannon Nelson, the former Bankers Life Traverse City branch sales manager, heads the new company as its Regional Sales Manager. Nelson’s senior management team includes former Bankers Life colleagues Kelly Dachtler, Jonathan Young, and John Blanck, who joined American Senior Benefits as Senior Partners. Nelson named former Bankers Life Unit Sales Manager Ryan Kashmerick the new Branch Sales Manager, and fellow alum David Teesdale was added to the staff as the company’s new Executive Administrator.

American Senior Benefits is located in Traverse City’s Harbour View Center at 333 W. Grandview Parkway.

Caveat emptor, baby!

Thursday, December 27, 2012

Who is Michael Reese? (Really.)

Imagine you've retired to a small town in Northern Michigan, and you're looking for investment advice. How would you find an adviser, and why would you trust him with your money? 

Would you swoon like an overheated teenager at a Justin Bieber concert for guy who calls himself "America's retirement expert"?

You might---and his carefully crafted media persona might convince you that he's trustworthy. But don't believe everything he tells you.

What he says about himself...and what it really means...a Glistening, Quivering Underbelly "Special Report" coming in 2013.

 

Wednesday, December 26, 2012

David Hunter: Charlevoix man goes from "medical miracle" to Traverse City Craigslist rental scammer (nice work if you can get it, right?)

LEFT: David L. Hunter

TRAVERSE CITY, MI -- A Charlevoix man signed only a one-month lease on a Traverse City home earlier this year.

But in the short time David Hunter lived there, police say he grew to know its qualities well, allegedly giving several tours to potential renters while acting as an owner.

He signed several one-year lease agreements with potential renters and collected six $1,000 payments for security deposits, The Traverse City Record-Eagle reports. 

The leases were to start after he moved out. Renters reportedly contacted police after Hunter, 38, offered only excuses of why they couldn't move in on time. They heard of the home through a Craigslist ad.

Hunter faces a felony count of false pretenses between $1,000 and $20,000.

If the name sounds familiar, here's why: Hunter was featured on TV 7&4 on June 23, 2010 (see below). He claimed to have had a "medical miracle"...yeah, sure. He also claims on his LinkedIn profile to run a company called "B&W Records". Come on David, the only records you have are on your ever-growing rap sheet!


CHARLEVOIX, MI -- A medical diagnosis put one Northern Michigan man and his family on edge.
David Hunter was preparing for what he thought could be the end of his life.
"I had pain that seemed to be in my left tonsil, and it was so bad, I knew I needed to go in and get some antibiotics," said David Hunter.

This is where the story starts for David, a 36 year old man who says he's in good health.  He went to Charlevoix Area Hospital Sunday.  Doctors performed a CT-scan to determine what was wrong, and he said the results were passed on to a local hospital because Charlevoix doesn't have a radiologist on staff.  The results came in.

"They wheeled me into the room and told me I had three brain aneurysms, and one was leaking," said Hunter.

It was determined to be so bad, he said hospitals in the area weren't capable to perform the emergency surgery that was needed.

"I just started to tear up, I started to think, wow, me?  I mean, you never just think that'd happen to you.  I was scared to death," said Hunter.

He was airlifted to U-of-M Hospital in Ann Arbor.  His family, torn up by the results, rushed downstate to be with him.  Doctors looked at the results, performed tests, and this is where the story turns.
"I thought I was going to die, or there was a chance I was going to die, I thought I was going to have major brain surgery, and then nothing, I'm completely fine," said Hunter.

Monday, doctors told him they couldn't find anything wrong.  A diagnosis that shocked his family.
"It's still like stumbling through a dream, it doesn't seem real, it doesn't seem real," said his mom Kathy Hunter.

“I'm still trying to make sense of it, I'd love to know what happened, because then I can wrap my hands about it a little more," said David.

(Wonder if he stiffed the hospital for the medical treatment?)

TRAVERSE CITY SCAMMER OF THE YEAR - 2012

William Lowder Named Northwest Michigan's Scam Kingpin

Lowder and wife bankrupt in 2004, but by 2006 this annuity scammer begins giving his teacher wife Kim cash "gifts" that ultimately total nearly two hundred thousand dollars. 

And she claims not to know? 

Somebody should go back to school (are you listening, TCAPS?).

 


Official State of Michigan documents tell the sordid tale:


http://www.michigan.gov/documents/lara/Lowder_William_E._-_Summary_Suspension_EB_redacted_380170_7.pdf

Just to refresh your memory--

LANSING – (March 26, 2012) State insurance regulators are looking for anyone who may have done business with a Traverse City insurance agent accused of taking $500,000 out of an elderly woman’s account and using it to buy gifts for his wife and pay his personal expenses.

William E. Lowder befriended an elderly woman in the Traverse City area and made more than a dozen unauthorized financial transactions totaling nearly $500,000 from her annuity and money market accounts, according to the Office of Financial and Insurance Regulation (OFIR).

“There may be other victims out there,” said OFIR spokesman Jason Moon. Anyone who believes they have been victimized by Lowder should call the agency’s toll-free hotline at 877-999-6442, he said.

“OFIR found that Lowder comingled these funds with his own bank accounts and used the money for cash gifts to his wife, to fund his personal trust account, and to pay his personal and business expenses,” OFIR said in a news release.

The complaint against Lowder began in 2011, when the elderly woman’s son complained about Lowder’s activities as his mother’s financial advisor and insurance agent.

An OFIR investigation revealed that Lowder had been withdrawing money from her accounts between November, 2006 and February, 2008 and spending it or putting it into his personal accounts.
Last week, OFIR suspended Lowder’s insurance license and referred the information it gathered to law enforcement agencies, Moon said.

“OFIR will continue to aggressively fight to protect Michigan seniors from financial abuse,” said Commissioner Kevin Clinton. “Any consumer who had a financial relationship with Lowder should contact us immediately.”

Attempts to reach Lowder for comment were unsuccessful. Telephone listings for his Traverse City office were disconnected.