Profiting from the Grave: Private Equity’s Morbid Money-Making Scheme

In a jaw-dropping turn of events, an equity firm by the name of Apollo Global Management Inc. finds itself embroiled in a scandalous lawsuit recently filed in Delaware. The allegations are nothing short of shocking – the firm stands accused of orchestrating a widespread fraudulent scheme centered around what can only be described as a diabolical form of human life wagering. To put it plainly, the lawsuit contends that Apollo was essentially placing bets on the lives of elderly individuals by taking out life insurance policies with the hope of cashing in big upon their demise. The estate of one of the alleged victims, Martha Barotz, paints a disturbing picture of a company going to great lengths to conceal its nefarious activities, all while presenting a facade of legitimacy.

The intricate web of deception allegedly woven by Apollo, as detailed in the lawsuit, traces back to 2006 when Martha Barotz, then in her seventies, unwittingly became entangled in a convoluted scheme. A company known as Life Accumulation Trust III enticed her with a sum of $150,000, a mere fraction of the multimillion-dollar benefit promised by the policy. What Martha was purportedly unaware of, according to her son Nathan’s legal battle, was that she had essentially signed away the bulk of the policy to unknown individuals.

This dubious practice, known within the insurance industry as “Stranger-originated life insurance” (STOLI), hinges on investors taking out policies in the name of unsuspecting individuals, often elderly, to inflate potential payouts due to the lack of substantial assets owned by the insured party. Marketing these exploitative schemes under benign-sounding labels like “Zero premium life insurance” or “Estate maximization plans,” unscrupulous entities prey on vulnerable individuals who may not fully comprehend the implications of signing on the dotted line without scrutinizing the fine print.

Despite the illegality surrounding STOLI policies, their popularity surged during the mid-to-late 2000s, with companies finding loopholes to bypass regulations by orchestrating intricate trust structures. However, any policy linked to an unrelated party of the deceased is deemed null and void, a fact that the Barotz family has been fervently advocating for in their pursuit of justice. Martha’s policy, initially instigated with Life Accumulation Trust III, eventually found its way into the hands of a fund alleged to be under Apollo’s control following her passing in 2018.

The implications of this lawsuit extend far beyond the confines of a mere legal dispute, shining a glaring spotlight on the darker underbelly of the financial world where the vulnerable are exploited for monetary gain. As the wheels of justice turn, it remains to be seen how this sordid tale of greed and deception will unfold, underscoring the imperative need for stringent oversight and ethical conduct within the realm of financial management.