Insurance agents may lose licenses

A Lebanon insurance agency owner and his agents face citations of misrepresentation, fraud and forgery from state officials who are trying to take the agents' licenses and are pursuing hefty civil fines.
In addition, Tennessee Department of Commerce and Insurance Spokesperson Paula Wade said the case against American Insurance Agency has been referred to the local district attorney's office and the State Attorney General.
After a 14-month-long investigation, the department's insurance division filed an order to suspend the insurance licenses of three agents at American Insurance Agency located at 112 E. High St. in Lebanon, according to a suspension order provided to The Lebanon Democrat by the department Thursday.
The agents facing suspension include Michael E. Beckman, Timothy Earl Bennett and Jeffrey Wayne Hess. Beckman owns the company.
Another former agent, Johnny R. Jackson, is also included in the petition against the company. But his insurance license was revoked in October 1999 by the insurance division, according to the order.
The men are accused of not telling their clients about surrender charges – monetary penalties – related to transferring annuities from one life insurance provider to another. The men would then allegedly sell new annuities to the same customers and collect a commission, a practice commonly referred to as "churning" in the insurance and securities industry.
For example, according to state documents Beckman and Jackson are accused of persuading an 83-year-old Franklin woman in July 2003 to transfer her annuities from Midland National Life Insurance Company to National Western Life Insurance Company. The surrender charge was about $100,000, but the Franklin woman was not told about the charge by the two men, according to the suspension order.
Based on this fraud, Beckman along with Bennett and Hess are charged with "intentionally" misrepresenting the terms of an insurance contract or application, using "fraudulent, coercive or dishonest practices" and/or demonstrating "incompetence, untrustworthiness or financial irresponsibility" to conduct business and violating a law from the insurance commissioner's office, according to a petition filed against the men.
Jackson, however, is accused of selling, soliciting and negotiating insurance in Tennessee without a license and committing and conspiring with Beckman, Bennett and Hess to falsely represent himself to insurers about insurance policies, the petition said.
The suspension and citations against Beckman originally stem from him "knowingly" hiring Jackson – who allegedly impersonated other American Insurance Agency agents – to sell life and/or health insurance. Money generated from Jackson's sales were then split among himself, Beckman and the licensed insurance agents he impersonated.
Beckman is also charged with failing to leave copies of insurance documents with his clients, intentionally misrepresenting insurance contracts for at least six clients, forging at least two client's signatures and accepting sales generated by Jackson on several occasions.
Citations against Bennett and Hess evolved from the two accepting sales from Jackson a few times and splitting the revenue as well as intentionally misrepresenting insurance contracts and using fraudulent, coercive and dishonest practices on their clients.
If the men are found guilty of the citations, the state will seek to suspend and later revoke their licenses. The state also wants to fine each man.
The state is asking Beckman pay civil fines of up to $85,000. Bennett may have to pay a $4,000 administrative fee and Hess a $3,000 administrative fee.
The men have a right to appeal the citations against them. An informal conference is planned but not yet scheduled, Wade said, to decide if the order should be immediately enforced. Wade added the hearing would be 10 a.m. August 24 in Nashville.
Managing Editor Clint Brewer contributed to this story.