Life insurance salesman agrees to pay $250,000 fine and have his state license revoked.
A Twin Cities art collector and philanthropist was fined $250,000 and had his license to sell life insurance revoked in a settlement announced Wednesday with the Minnesota Department of Commerce, which accused him of fraudulently obtaining millions of dollars in seniors' life insurance policies to profit from them later.
The department said it was its largest fine against an individual in recent memory.
Michael J. Antonello, 57, of New Brighton did not admit guilt in the consent order. His attorney, Joe Wentzell, said his client's practices were legal and said the settlement indicated the state could not prevail in a courtroom.
In the order, Antonello was accused of misrepresentations on multiple life insurance policies and engaging in "fraudulent, coercive or dishonest practices." State regulators also alleged that he changed a client's beneficiary forms after she died in 2006 by forging her signature.
The settlement is the conclusion of months of negotiations after the department filed civil charges against Antonello last spring. Department spokeswoman Nicole Garrison-Sprenger said Antonello can reapply for his license after two years.
The case revolves around the complicated purchase and sale of seniors' life insurance policies.
Attorney Wentzell said Antonello was involved in what's known as "life settlement," the legitimate practice of a life insurance policyholder selling his or her policy to a third party.
The Commerce Department maintained otherwise, claiming that Antonello was involved in stranger-originated life insurance -- or STOLIs -- in which an outside party initiates the policy and offers cash payouts in exchange for having the speculator named as the beneficiary.
When the Minnesota Legislature this year passed legislation that outlaws STOLIs, lobbyists for the insurance industry argued that cases of predatory STOLIs were rare. In many instances, they said, legitimate life settlement contracts offered a chance for elderly people who can no longer afford to pay their premiums a chance to sell their life insurance policies for financial gain.
But critics say speculators use the complexity of the policies to take advantage of older Americans and deprive relatives of being beneficiaries.
Wentzell said Antonello's clients made money on the transactions, but he acknowledged that it was lucrative for his client. "Unequivocally, he made a lot of money off this deal. I mean a lot of money," Wentzell said. "But every one of his people made money off it, too."
In April, the Commerce Department filed civil charges against Antonello, alleging insurance fraud and forgery. In one case, the department said, Antonello secured dozens of life insurance policies for one man totaling $127 million by allegedly misrepresenting how much coverage the man already had. The department said Antonello received large commissions from the sale of these policies and also profited from selling each of the policies to investors. Several insurance companies sued to rescind the policies and recover the commissions.
According to a Star Tribune article on Feb. 18, Antonello owns almost 100 pieces of art, including works by John Singer Sargent, William Merritt Chase, Childe Hassam and others. Pieces from his or his family's collection were on display at the Minneapolis Institute of Art's "Noble Dreams & Simple Pleasures" exhibit earlier this year.
In addition, the MacPhail Center for Music's Antonello Hall was built with money donated by Antonello and his wife, Jean.
Suzanne Ziegler • 612-673-1707