§431C-42 Fraudulent life settlement acts prohibited. It is a violation of this chapter for any person, provider, broker, or any other party related to the business of life settlements, to commit a fraudulent life settlement act.
For the purposes of this part, "fraudulent life settlement act" includes:
(1) Acts or omissions committed by any person who, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits or permits its employees or agents to engage in acts, including but not limited to:
(A) Presenting, causing to be presented, or preparing with knowledge and belief that it will be presented to or by a provider, premium finance lender, broker, insurer, insurance producer, or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one or more of the following:
(i) An application for the issuance of a policy or life settlement contract;
(ii) The underwriting of a policy or life settlement contract;
(iii) A claim for payment or benefit pursuant to a policy or life settlement contract;
(iv) Premiums paid on a policy;
(v) Payments and changes in ownership or beneficiary made in accordance with the terms of a policy or life settlement contract;
(vi) The reinstatement or conversion of a policy;
(vii) The solicitation, offer to enter into, or effectuation of a policy or life settlement contract;
(viii) The issuance of written evidence of a policy or life settlement contract;
(ix) Any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a policy; or
(x) Entering into any practice or plan that involves stranger-originated life insurance;
(B) Failing to disclose to the insurer, where the insurer requests such disclosure, that the prospective insured has undergone a life expectancy evaluation by any person or entity other than the insurer or its authorized representatives in connection with the issuance of the policy;
(C) Employing any device, scheme, or artifice to defraud in the business of life settlements; or
(D) In the solicitation, application, or issuance of a policy, employing any device, scheme, or artifice in violation of state insurable interest laws;
(2) Acts or omissions committed by any person who, in the furtherance of a fraud or to prevent the detection of a fraud, commits or permits its employees or its agents to engage in to:
(A) Remove, conceal, alter, destroy, or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements;
(B) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person;
(C) Transact the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements;
(D) File with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner;
(E) Engage in embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits, or other property of a provider, insurer, insured, owner, insurance, policy owner, or any other person engaged in the business of life settlements or insurance;
(F) Knowingly and with intent to defraud, enter into, broker, or otherwise deal in a life settlement contract, the subject of which is a policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer;
(G) Attempt to commit, assist, aid, or abet in the commission of, or conspire to commit the acts or omissions specified in this section; or
(H) Misrepresent the state of residence of an owner to be a state or jurisdiction that does not have a law substantially similar to this chapter for the purpose of evading or avoiding the provisions of this chapter. [L 2012, c 256, pt of §1]