Civil litigation is pending in Florida where Brian Grodin, Hugo Tomasio, and Michael Book are accused of violating a myriad of state and Federal laws.  They are accused of unfair trade practice, fraud, misrepresentation, negligence, breach of fiduciary duty, and breach of warranty of fit for a particular purpose.

The CRN was filed by Florida-based attorney on behalf of The Jefferson Family 2021 Dynasty Trust dated 08/17/2021. And the trustee is Jack Carlisle.

In Florida, any potential litigant has to file a Civil Remedy Notice of Insurer Violations (CRN) at least 60 days before bringing legal action against an insurer. And this CRN was filed the last day of May.

Life Insurance

The dispute is connected to the Trust's purchase of three life insurance policies. Policy number 22776886 was purchased on September 8, 2021. On December 31, 2021, additional policies 22816830, and 22820593, were added insuring the life of one of the Jeffersons.

Each of these Policies was issued in the state of Nevada by the New York Life Insurance Company through Massachusetts Mutual Life Insurance Company aka MassMutual.  

The policies are all Whole Life Legacy 12 Pay policies. According to the insurance company, these are “traditional whole life insurance products that can build cash value over the 12-year period during which premium is due, and in the event, annual dividend payments are made.”

The dividend and dividend interest rate is determined annually, subject to changes, and are not guaranteed. The Trust entered into a premium financing arrangement with lender JP Morgan to fund the premiums for the policies. 

The Complaint tied to Brian Grodin and Hugo Tomasio

The complaint relates to a sales process and pitch conducted by insurers Brian Grodin and Hugo Tomasio. During this process, the insured requested a policy or policies that would not require additional funding apart from the collateral amount of $13 million. 

The Trustee emphasized that the insured had already reached maximum gifting limits under the Internal Revenue Code and did not want to exceed them.  The principal in the trust received the same assurances as the Trustee. 

The insurers were informed of this requirement on every call, with the understanding that only the proceeds from the $13 million collateral pool would be used to pay $300,000 per year on the policies. However, it is alleged that the insurers and their agents did not adequately test the models presented to the insured and provided inaccurate numbers.

It took approximately one year for the insurers to provide updated modeling. And the insured agreed to pledge two additional life insurance policies as collateral.

Still, Mass Mutual, New York Life, Brian Grodin, and Hugo Tomasio did not include these for the new policies. This information was allegedly not disclosed to the insured until the first quarter of 2023. Additionally, when analyzing the collateral, Mr. Tomasio applied interest rates that did not reflect current market rates.

The principle contacted the brokers named in this CRN due to his concern the policies were underwater. And his fear that the risk was never analyzed or disclosed.  Mr. Tomasio reportedly told him, “You have nothing to worry about because if the interest rates rise then the dividend on the policy will increase, it has to.” 

It is claimed that Mr. Tomasio made overly aggressive assumptions about the collateral, and when concerns were raised about potential risks, he assured the insured that rising interest rates would increase the dividends on the policy. 

Brian Grodin, Hugo Tomasio, Michael Book allegations

These representations about rates and dividends are said to have violated Florida law.

The complaint also mentions undisclosed bonuses and referral fees that were being paid out. It was not disclosed to the purchaser or owner of the policies that individuals other than licensed life insurance agents would receive bonuses from the purchase of the insurance policies.

According to the complaint, “It was never disclosed to the purchaser or owner of the policies that individuals other than licensed life insurance agents would be receiving bonuses from the purchase of the insurance policies at issue.”

“Indeed, the individual who received the undisclosed bonus agreed to send the undisclosed bonus back to Mr. Jefferson and the Trust after he learned what Mass Mutual, New York Life, Brian Grodin, and Hugo Tomasio did.”

Finally, it is stated that the insurers have failed to provide the complete binder for each policy at issue even after closing.

The overall complaint suggests multiple alleged violations and concerns related to the sales process, misrepresentations, negligence, and failure to provide necessary information and documentation.

MassMutual Response

According to MassMutual the financing arrangements were proposed and organized by independent insurance producers.

The Trust made an agreement with JP Morgan, a lender, to finance the premiums for the policies. MassMutual, the insurance company, is not involved in this financing agreement.

Mass Mutual claims there are no specific facts that implicate the company. And that the dispute focuses more on exchanges between a third party and the insurance producers regarding the financing arrangement. 

It points out that the trustee of the Trust signed forms acknowledging that MassMutual is not responsible for the financing arrangement and will only provide an illustration of how it would affect the Policy values. MassMutual was not supposed to handle the administration of the financing, such as interest payments or collateral. 

According to MassMutual, its role is limited to issuing the Policies, and it did not make any promises or representations regarding the financing arrangement. They also point out that no one claims the Policies did not function, as intended. 

It is also noted the policies were issued in Nevada. And question why Florida law is being applied.

According to the insurance company Hugo Tomasio's comments regarding interest rates and dividends on the policy do not affect MassMutual.

“Mr. Tomasio is an independent broker affiliated with Southport Compass, LLC as a principal. As an independent broker, Mr. Tomasio represents the interests of his clients and exercises independent judgment in how he conducts his business.”

“ Furthermore, it is well understood that an agent cannot hold an insurer bound by the acts, contracts, or representations of an agent, which are beyond the agent’s authority, as known either actually or circumstantially to him. Hughes v. Pierce, 141 So. 2d 280 (1st DCA 1961).”

Buyer’s Remorse

MassMutual recounts that they “expressly provided, and the Trust acknowledged, that potential dividends reflected in the illustrations were non-guaranteed values.” And that regardless of what Mr. Tomasio told the principle about guarantees and dividends it does not bind MassMutual.

They also contend that Hugo Tomasio and Brian Grodin are all registered insurance brokers, and they were the only parties that received bonuses on the deal.

According to the company, Brian Grodin, Hugo Tomasio, Michael Book, New York Life, and Mass Mutual haven’t done anything wrong.

Florida law is also cited about the issuance and administration of the Policies. And the insurance company alleges that Florida law does not even apply in this case. 

MassMutual says it has fulfilled its obligations. And the “complainant apparently has had buyer’s remorse.”