In April 2010, Dr. Robert Kotler got a call from a fellow investor in a life insurance settlement fund run by Kotler’s friend Robert Zuckerman.
“He said, ‘We got a problem,’” remembered Kotler, a Beverly Hills plastic surgeon. “‘Zuckerman didn’t pay the premiums.’”
Since then, the fund’s business plan has fallen apart, investors lost their money and Kotler and others have sued Zuckerman and his partner, insurance agent Michael Meyer, saying they were scammed. Zuckerman and Meyer have also sued one another – each claiming they were bamboozled by the other.
A life settlement is an investment in another person’s already existing life insurance policy. (It’s illegal in California for strangers to take out policies on each other.)
Investors in these life settlements pay policy holders an amount that’s more than the cash surrender value – exactly what it sounds like – but less than the death benefit. That allows the policy holders to get their hands on cash now. Investors continue paying the premium – failing to do so voids the policy – and either sell the policy to other investors, or wait until the policy holder dies and then collect the death benefit.
Zuckerman pitched Kotler and other investors on the idea of a fund that would invest in life settlements. Making it more enticing, he even had a man on the inside: Meyer, an insurance agent formerly at defunct Beverly Hills firm Gilbert-Krupin, who would select only the best policies for the fund.
Kotler and several others each invested between $50,000 and $100,000 into the fund to purchase the initial policies and pay the premiums. But that didn’t happen, according to the investors.
“The money was stolen,” Kotler said. “There’s no question about it.”
Neither Meyer nor Zuckerman responded to the Business Journal’s request for comment.
Tamar Arminak, a Glendale attorney representing the Kotler group, said Zuckerman tried to sell some of the policies to pay back the money he is accused of embezzling from the fund. But when he realized they were of little or no value – because they were either bad policies to begin with or had lapsed – Zuckerman said he stopped paying the premiums.
Meyer tells it differently, saying the policies were fine until Zuckerman stopped paying premiums, Arminak said.
“You’ve got two con men and they’re both conning each other,” she said.
Zuckerman first approached Kotler to invest in the life settlement fund in early 2009.
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