In the latest legal judgment of the continuing Prudential Insurance Co. settlement saga, Judge Alfred M. Wolin of the United States District Court in New Jersey filed an order on Dec. 1 allowing Renwick T. Nelson II, the former Prudential vice president of policyholder relations and counsel to the company, to offer testimony in a California case in which two elderly policyholders seek justice for Prudential's alleged life insurance sales scam. (Prudential did not respond to invitations from INN to comment on the case.)
Plaintiffs Samuel Jacobson and Jerry Kayle bought policies in 1985 and "both claimed the Prudential agent misrepresented the facts about the sale," says Ken Chiate, attorney for the two elderly men and a partner with the Los Angeles office of Pillsbury, Madison, and Sutro. "One was churned and the length of time the payment would have to be made was misrepresented. The amount of premiums due on the other policy was also misrepresented, based on an unrealistically high rate of return, in violation of NASD [National Association of Securities Dealers] guidelines," Chiate says.
Prudential agents deprived many people of their nest eggs and their insurance benefits when they told customers they could get a bigger policy without paying more, then secretly used the cash value of current policies to pay the first few years of premiums on new policies that customers (many of whom were elderly) couldn't afford to continue paying once the cash value from the old policy was sucked dry. This deceptive practice is known as "churning."
| One of the plaintiffs in the Jacobson case has died.
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One of the plaintiffs in the Jacobson case had a stroke a few weeks ago, and the other suffered from severe Alzheimer's disease.
Editor's note: Mr. Jacobson, who suffered from Alzheimer's, died on Dec. 19, 1998, at age 75, nine days short of his 76th birthday. Nonetheless, his estate and Mr. Kayle will move ahead. The trial is set to begin the week of Jan. 11, 1999.
The health of the plaintiffs was so frail that their case was moved ahead of another representing about 90 more alleged Prudential victims in California, yet Prudential has thrown legal roadblocks in the two plaintiffs' way, such as forcing them to conduct their discovery process in Florida and to fight Prudential in New Jersey. Thus, there are Jacobson vs. Prudential cases running concurrently in California and Florida. Such legal maneuverings could mean that the plaintiffs die before seeing the case end. The extended litigation has already cost them thousands of dollars.
According to Chiate, Ren Nelson left Prudential's legal department in early 1995 and was appointed marketing practices officer. He ceased to function as a lawyer for Prudential from there on. Nelson was known as the "right-hand man" to Prudential Insurance Co. president Art Ryan when Nelson quietly gave authorities information about widespread fraud at Prudential.
| Nelson could have "waited a couple of years for his pension and kept his mouth shut." |
The insurance giant sought to silence Nelson, first by offering him a quarter of a million dollars and a job in Jacksonville, Fla., "where he would have little to do but wait a couple of years for his pension and keep his mouth shut," a government source told INN. But Nelson came forward because, Nelson told our source (before a court order not to talk about the case), Prudential wasn't being forthright and people's finances were not being taken care of as Prudential had said they would.
INN has learned of at least two vital pieces of information that Nelson could give in court:
| People couldn't understand the documents; Prudential mailed them anyway. |
1. That Prudential held focus groups on the information packets it sent out to policyholders explaining (in complicated terms) their options for relief and discovered that people could not understand the documents. The company mailed them anyway.
2. That, behind the scenes, Prudential helped craft the multi-state task force meant to investigate it, and wrote much of the investigative plan used by participating states that looked into Prudential's sales tactics.
More: The silencing of Ren Nelson
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