Policyholders Sue Penn Mutual Life Insurance Over Alleged Misleading Sales Practices
A group of 29 policyholders has filed a lawsuit against Penn Mutual Life Insurance Co., claiming they were misled into purchasing high-premium life insurance policies based on false promises of tax advantages. The plaintiffs are seeking $13.5 million in actual damages and more than $10 million in consequential damages, according to a report from AM Best.
The lawsuit, filed in the US District Court for the Central District of California, alleges that Penn Mutual agents promoted “tax-advantage strategies” tied to life insurance products. These strategies, the suit claims, were ultimately “shams” with benefits described as “illusory and/or illegal.” Policyholders allegedly suffered financial losses through premium payments, loan interest, and other costs, while agents profited from commissions, bonuses, and fees.
At the center of the allegations is Randall Scott Boll, a Penn Mutual-appointed agent, who the lawsuit describes as the scheme’s “mastermind.” Boll was previously indicted on federal money laundering and other charges in 2021. He later pleaded guilty to conspiracy to cause a financial institution to fail to file currency transaction reports, admitting to structuring financial transactions to avoid reporting requirements.
The complaint alleges that Boll was falsely presented as a qualified tax adviser 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 that high-premium life insurance policies can generate substantial commissions for agents. The complaint states that these commissions can range from 75% to 125% of the first-year premium, which created an incentive for agents to aggressively promote these products. Some policyholders reportedly took out loans to pay for their policies, believing they would see tax advantages that never materialized.
If the claims hold up in court, the case could bring broader scrutiny to sales practices in the life insurance industry, particularly the marketing of complex financial products with tax incentives. Penn Mutual did not respond to requests for comment, according to AM Best.
Although the insurer’s operating entities hold an A+ (Excellent) financial strength rating, suggesting a strong ability to meet obligations, this lawsuit could lead to regulatory scrutiny and reputational damage for the company.
