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Model, Stylist Sue Advisors Over Cash-Value Life Advice

By Allison Bell

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What You Need to Know

  • The plaintiffs were friends.
  • They said they emphasized the need for liquidity.
  • They allege that the cost of the policies they bought was too high for their circumstances.

Two clients have joined to sue their financial advisors over what the clients say were sales of unsuitable, illiquid cash-value life insurance arrangements.

Leona Binx Walton, a fashion model, says the advisors sold her six life insurance policies with a total annual carrying cost of $87,506.36, after she had emphasized that she was uncertain about her income and needed liquidity, according to the complaint.

The other client, Andrew Mukamal, is a freelance fashion stylist who had a limited income and an inheritance from his father. He says the defendants sold him four cash-value policies that required him to pay about $188,067.27 in annual premiums, although he emphasized a need for near-term liquidity.

The complaint was filed in New York state court in New York County.

The plaintiffs have sued the two advisors, John Kenyon Lang and Michael Blackwell.

Lang and Blackwell work for Cambium, which is a registered representative of Park Avenue Securities. Park Avenue Securities is a subsidiary of Guardian.

In addition to Lang and Blackwell, the list of defendants includes Cambium, Park Avenue Securities and Strategies for Wealth. Strategies for Wealth is a Guardian general agency.

The plaintiffs have also sued Guardian Life and John Hancock Life, the life insurers that issued the policies involved in the sales, in an effort to have the insurers rescind the policies and return any premiums paid, with interest.

Cambium and Strategies for Wealth did not respond to requests for comment.

Guardian said through a representative that it was aware of the lawsuit but had not yet been served.

John Hancock also was not available to comment.

The sales: Walton began seeking financial advice in 2020, when she was a 23-year-old single model with no mortgages, no debts and no dependents, according to the complaint.

She wanted to retire from the modeling business, and she wanted to have enough liquidity to buy homes for herself and her mother and to start a business.

She says that Lang and Blackwell sold her three policies from Guardian with $5 million in death benefits and $50,000 in annual premiums, then sold her three more policies from Guardian with $3 million in total benefits and $35,000 in annual premiums.

Walton referred Mukamal to Lang in April 2020 via email.

He was a 33-year-old man with no mortgages or other debts and no dependents, and he had earned about $175,000 over four years as a stylist. He told Lang and Blackwell that he wanted to generate liquidity to supplement his relatively modest income and that he had only a limited understanding of financial matters, according to the complaint.

Mukamal bought three policies from Guardian and a fourth policy from John Hancock.

One sign that the policies were unsuitable is that the sole beneficiary of his policies was his mother, a wealthy widow, the plaintiffs assert.

The plaintiffs assert that the advisors used deceptive tactics to present the policy sale recommendations.

“For example, although life insurance policies are accompanied by hundreds of pages in disclosures, the individual defendants would often send plaintiffs just the signature page, effectively concealing this significant information from plaintiffs or otherwise encouraging them not to read it,” according to the complaint.

Credit: Shutterstock

Allison Bell

Think_Allison

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