Lawsuit Alleges Penn Mutual Misled Policyholders with False Tax Benefit Claims
A group of 29 policyholders has launched a lawsuit against Penn Mutual Life Insurance Co., alleging they were defrauded into purchasing high-premium life insurance policies based on deceptive promises of tax advantages. The plaintiffs are seeking $13.5 million in actual damages and over $10 million in consequential damages, according to reports from AM Best and the complaint.
The lawsuit, filed in the US District Court for the Central District of California, contends that Penn Mutual agents promoted “tax-advantage strategies” tied to life insurance products. These strategies, the suit claims, were ultimately “shams,” with the purported benefits described as “illusory and/or illegal.”
Policyholders reportedly suffered financial losses through premium payments, loan interest, and other related costs, while agents allegedly profited significantly from commissions, bonuses, and fees associated with the high-premium policies. The complaint highlights the central role of Randall Scott Boll, a Penn Mutual-appointed agent, described as the “mastermind” behind the alleged scheme.
Boll’s history includes a 2021 indictment on federal money laundering and other charges. A year later, he pleaded guilty to conspiracy to cause a financial institution to fail to file currency transaction reports, and admitted to structuring financial transactions to avoid reporting requirements.
The complaint states that Boll was falsely presented as a qualified tax advisor in order to lend credibility to the sales strategy. He and other agents are accused of preparing and filing tax returns with sham deductions, inflating clients’ net worth on applications, and designing policies to lapse before the insureds’ expected lifespans.
The lawsuit highlights the financial incentives for agents to sell these high-premium policies, noting that commissions can range from 75% to 125% of the first-year premium. Some policyholders are said to have taken out loans to cover the policy costs, believing they would see tax advantages that never materialized.
If the allegations prove true in court, the case could spark broader concerns about sales practices in the life insurance industry, especially regarding the marketing of complex financial products with promised tax benefits.
Penn Mutual Life Insurance did not respond to requests for comment, AM Best reports. The insurance company holds a financial strength rating of A+ (Excellent), indicating a strong ability to pay claims, though the lawsuit could invite regulatory scrutiny and reputational risks.
