A group of 29 policyholders has filed a lawsuit against Penn Mutual Life Insurance Co., alleging they were misled into purchasing high-premium life insurance policies based on false promises of tax benefits, according to a report from AM Best.
The plaintiffs are seeking $13.5 million in actual damages and more than $10 million in consequential damages, according to the complaint filed in the US District Court for the Central District of California.
The lawsuit claims Penn Mutual agents promoted “tax-advantage strategies” tied to life insurance and related products, which 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 indicted on federal money laundering and other charges in 2021. 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 alleged 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.
High-premium life insurance policies can generate commissions ranging from 75% to 125% of the first-year premium, the lawsuit says, creating an incentive for agents to push these products. Some policyholders reportedly took out loans to pay for their policies, believing they would see tax advantages that never materialized.
If the allegations hold up in court, the case could raise broader concerns about sales practices in the life insurance industry, particularly the marketing of complex financial products with tax benefits.
Penn Mutual did not respond to requests for comment, according to AM Best. The insurer’s operating entities hold an A+ (Excellent) financial strength rating, indicating a strong ability to pay claims, though the lawsuit could invite regulatory scrutiny and reputational risks.
