In most cases, life insurance is a great financial instrument to help protect your loved ones in the event of death.

When a shady equity firm is involved, however, it can become a multi-million dollar scheme that preys on the elderly.

According to a recent lawsuit filed in Delaware, Apollo Global Management, Inc. is accused of engaging in illegal practices that focus on defrauding the elderly and their loved ones through deception using life insurance policies.

The lawsuit sums up their activity, calling it:

“Carrying out a widespread fraudulent human life wagering conspiracy.”

While this lawsuit was filed recently, it has its roots beginning back in 2006. This is when the estate of Martha Barotz accused a firm that was then known as Life Accumulation Trust III of taking out a large life insurance policy on Mrs. Barotz in exchange for $150,000.

The elderly Barotz agreed to this policy, likely thinking that it was a simple way to get money that she needed.

The problem is that the payment that she received was worth just 3% of the policy’s value, making it a very lucrative investment for the firm.

This type of activity is known as a “Stranger-Originated Life Insurance” policy, or STOLI for short, and is generally illegal in most cases.

A STOLI is often marketed as a zero-premium life insurance policy since the victim does not have to pay for the policy themselves. Of course, neither they nor their loved ones get the large benefit of the policy.

Zero-premium life insurance policies have been illegal in most areas for years because they are quite deceptive and typically prey on the elderly and others who may not be able to understand what they are signing up for fully.

The Barotz suit points this out, saying:

“In this way, the senior citizens have no idea who owns a policy on their life, and who wants them dead.”

What makes these types of policies even worse is that once they are taken out, the policy itself is often sold to a third-party fund.

This makes it difficult for the victims, or their loved ones, to track down information about the policy and hold the people involved responsible.

In the Barotz case, the policy that was initially taken out was then sold to Apollo Global Management, Inc. When she passed away in 2018, they received the $5 million benefit.

The initial lawsuit against Apollo Global Management resulted in them having to pay out $6.9 million for damages. Unfortunately, they are attempting to liquidate shell firms that they control in order to avoid making the payment.

This case will undoubtedly continue to work through the courts for some time.

Make sure to keep an eye on your loved one’s finances to ensure they do not fall victim to this type of scheme.