Customers Seek Prudential Damages
MIAMI (AP) _ Prudential Insurance Co. cheated policyholders out of more than $15 billion by deceptively churning life insurance sales in the 1980s and 1990s, an attorney for customers told jurors at the close of a fraud trial Thursday.
Prudential acknowledged making deceptive sales years ago but said it should not be punished now because it has spent $4 billion on a national class-action settlement and $200 million on regulatory fines.
John Scarola, attorney for the policyholders, accused Prudential of committing ``the largest fraud ever perpetrated on the American public,″ hurting 650,000 to 1.7 million customers from 1980 to 1998.
The federal trial covers four policyholders who rejected the settlement. They seek at least $101,000 in compensatory damages plus an unspecified amount in punitive damages to punish Prudential for its conduct. The jury went home for the day after deliberating less than four hours.
Nationally, policyholders claimed they were misled in a variety of ways. Many complained they were offered pension plans or life insurance requiring payments for only a few years when they actually were exchanging existing life insurance policies for costlier ones. One plaintiff claimed she was promised nursing home coverage but her policy didn’t cover it.
The people suing ``want to go from court to court and put a big pot together and try to get rich,″ Prudential attorney Reid Ashinoff claimed in closing arguments. ``This is all about whether you’re going to make them rich.″
Scarola’s firm represents the last 24 policyholders with lawsuits pending after the settlement, all in Palm Beach, Broward and Miami-Dade counties.
He argued that Prudential capitalized on the settlement by using a 40-page notice and 20-page claim form to reduce the volume of claims and by cutting its costs after taxes to $1.4 billion. A total of $2.4 billion was paid to customers under the 1997 settlement.
``Keeping stolen proceeds does not equal what is right,″ he said. The corporate philosophy was ``ethics be damned. Profits were king at Prudential, and everybody knew it.″
Ashinoff said profits disappeared from the disputed policies sold by the Prudential Life Insurance Co. of America, based in Newark, N.J.
``Prudential had no profit from this bad business,″ he said. ``One hundred percent of the profits is still less than what we paid out.″
A former Prudential executive testified that he was told he would bring the company down by pursuing the sales issue. But Ashinoff argued questionable sales tactics were stamped out years ago.