in the united states district court for the northern...
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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION
OHIO NATIONAL LIFE ASSURANCE ) CORPORATION, ) ) Plaintiff, ) ) No. 10-cv-2386 v. ) ) DOUGLAS W. DAVIS, individually and as Trustee ) of the SHIRLEE DAVIS IRREVOCABLE LIFE ) INSURANCE TRUST, THEODORE R. FLOYD ) IRREVOCABLE LIFE INSURANCE TRUST, ) ROBERT S. HARRIS IRREVOCABLE LIFE ) INSURANCE TRUST, MARY ANN HARRIS ) IRREVOCABLE LIFE INSURANCE TRUST, and ) CHARLES M. BONAPARTE, SR. IRREVOCABLE ) LIFE INSURANCE TRUST; MAVASH MORADY; ) CHRISTIANA BANK & TRUST COMPANY, as ) Successor Trustee of the SHIRLEE DAVIS ) IRREVOCABLE LIFE INSURANCE TRUST; ) STEVEN EGBERT, as Successor Trustee of the ) CHARLES M. BONAPARTE, SR. IRREVOCABLE ) LIFE INSURANCE TRUST; and SHIRLEE DAVIS. ) ) Defendants. )
COMPLAINT FOR DECLARATORY JUDGMENT, DAMAGES AND EQUITABLE RELIEF
Plaintiff, OHIO NATIONAL LIFE ASSURANCE CORPORATION (“Ohio National”),
by its attorneys, Michael J. Smith and Warren von Schleicher of Smith, von Schleicher &
Associates, hereby submits its Complaint for Declaratory Judgment, Damages and Equitable
Relief, and in support hereof states as follows:
THE PARTIES
1. Plaintiff, Ohio National, is a corporation duly organized and existing under the
laws of the State of Ohio with its principal place of business in Cincinnati, Ohio. Ohio National,
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therefore, is a citizen of the State of Ohio. Ohio National is duly authorized to issue life
insurance policies in the State of Illinois.
2. Defendant, Douglas W. Davis (“Davis”), individually and as Trustee, is an
attorney practicing law in Malibu, California and is a citizen of the State of California. Davis is
and was the named “Insurance Trustee” of the Shirlee Davis Irrevocable Trust, was the named
Trustee of the Shirlee Davis Irrevocable Trust, was the named Trustee of the Charles M.
Bonaparte, Sr. Irrevocable Trust, and is and was the named Trustee of the Theodore R. Floyd
Irrevocable Trust, the Mary Ann Harris Irrevocable Trust, and the Robert S. Harris Irrevocable
Trust.
3. Defendant, Mavash Morady (“Morady”), is an independent insurance broker with
American Pacific General Agency Inc. and APG Insurance Services in Westlake Village,
California, and is a citizen of the State of California.
4. Defendant, Shirlee Davis (“Shirlee Davis”), resides in Chicago, Illinois and is a
citizen of the State of Illinois. Shirlee Davis is the named insured under a Flexible Premium
Universal Life Insurance Policy, Policy No. C6824925 (“Shirlee Davis Policy”) issued on May
24, 2007 by Ohio National in the amount of $1,000,000.
5. Defendant, Christiana Bank & Trust Company (“Christiana Bank”), as Successor
Trustee of the Shirlee Davis Irrevocable Life Insurance Trust, is a Delaware corporation with its
principal place of business in Wilmington, Delaware. Christiana Bank, therefore, is a citizen of
the State of Delaware.
6. Defendant, Steven Egbert (“Steven Egbert”), as Successor Trustee of the Charles
M. Bonaparte, Sr. Irrevocable Life Insurance Trust, resides in San Clemente, California and is a
citizen of the State of California.
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JURISDICTION AND VENUE
7. The Court has subject matter jurisdiction pursuant to 28 U.S.C. §1332 based on
diversity of citizenship. The amount in controversy exceeds $75,000 exclusive of interest and
costs. Venue is proper in the Northern District of Illinois pursuant to 28 U.S.C. §1391.
NATURE OF THE ACTION
8. Ohio National brings this action for declaratory judgment, equitable relief and
damages as a result of a life insurance scheme perpetrated by Defendants Davis and Morady,
with the knowledge and assistance of Shirlee Davis. Davis and Morady procured from Ohio
National, through fraud and misrepresentation and solely for their own financial benefit, life
insurance policies insuring the lives of certain citizens of Illinois.
9. In 2007, Davis, an attorney who resides in California, traveled to church meetings
in and around Chicago, Illinois and, through deceptive statements and manipulative conduct
including the payment of money, solicited and induced certain elderly citizens of Illinois (i) to
sign insurance applications applying for life insurance policies from Ohio National with values
ranging from $400,000 to $1,000,000 and (ii) to sign irrevocable Trust documents naming Davis
as Trustee and naming the Trusts as owners and beneficiaries of the life insurance policies.
Davis is not a licensed insurance agent, is not authorized to market or sell Ohio National life
insurance policies, and is not authorized by Ohio National to prepare or accept applications for
life insurance coverage.
10. Morady, who also resides in California, signed the insurance applications and
intentionally misrepresented that the proposed insureds were “well-known” to her, that she
personally saw the proposed insureds and examined their financial records, and that each
proposed insured had a net worth of approximately one million dollars or greater. Through false
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and deceptive statements and omissions, Morady fraudulently obtained commissions from Ohio
National for the sale of five life insurance policies totaling $191,975.60.
11. Davis and Morady used the insurance applications to procure, through fraud,
deception and misrepresentation, the issuance of five life insurance policies from Ohio National,
with a combined face value of $2,800,000, and to exercise control over the life insurance
policies, solely for Davis’s and Morady’s financial benefit. Davis and Morady utilized the Trusts
to deceive and induce Ohio National to issue the life insurance policies by making it appear that
the Trusts had an insurable interest in the lives of the insureds.
12. Davis created the Trusts to fraudulently obtain a financial interest in the lives of
the insureds. Davis used this financial interest in the lives of the insureds as collateral to obtain
loans and/or he sold this financial interest to stranger-investors, solely for Davis’s and Morady’s
financial gain. Davis and the Trusts, however, never had an insurable interest in the lives of the
insureds.
13. Ohio National never would have issued the policies if it had known that (i) the
insureds were induced and deceived into applying for the policies, (ii) the information in the
insurance applications was intentionally and knowingly falsified by Davis and/or Morady with
the intent to fraudulently induce Ohio National to issue the policies, (iii) the polices were
procured primarily, if not solely, for the financial benefit of Davis and Morady, (iv) Davis used
the Trusts to acquire and control a financial interest in the lives of the insureds, and to conceal
Davis’s and Morady’s fraudulent insurance scheme, and (v) Davis and the Trusts never had an
insurable interest in the lives of the insureds.
14. Ohio National, therefore, seeks a declaration that Davis, Morady and the Trusts
do not have an insurable interest in the lives of the insureds, an order declaring the policies void,
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or, alternatively, rescinding the policies based on intentional material misrepresentations in the
Application on which Ohio National reasonably relied to its detriment, and damages sustained by
Ohio National, including punitive damages, against Davis, Shirlee Davis, and Morady as a result
of their fraudulent insurance scheme and conspiracy.
FACTUAL ALLEGATIONS
The Charles Bonaparte Policy
15. Charles M. Bonaparte, Sr. (“Charles Bonaparte”) resides in Calumet City, Illinois
and is a citizen of the State of Illinois. Charles Bonaparte is the named insured under a Flexible
Premium Universal Life Insurance Policy, Policy No. C6824986 (“Charles Bonaparte Policy”)
issued on June 26, 2007 by Ohio National in the amount of $400,000.
16. On or about April 26, 2007, Charles Bonaparte, then age 74 years, attended a
dinner meeting at his church, Prayer Tower Church of God and Christ in Chicago, Illinois. The
meeting included an insurance sales pitch given by Davis. Davis told Mr. Bonaparte that if he
signed an Ohio National Application for life insurance and an insurance policy was issued, Davis
would pay Mr. Bonaparte $40,000. Davis told Mr. Bonaparte that the life insurance policy
would be free, that Mr. Bonaparte would not have to pay any premiums, and that the life
insurance policy would be sold to investors.
17. Davis used the lure of a $40,000 payment to induce Charles Bonaparte to sign the
Application, in order for Davis and Morady to fraudulently obtain and exercise control over a life
insurance policy from Ohio National insuring the life of Mr. Bonaparte, for Davis’s and
Morady’s personal financial gain.
18. On April 26, 2007, Charles Bonaparte signed a life insurance Application
applying for $400,000 in life insurance coverage from Ohio National, and designating the owner
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of the policy and beneficiary as “Charles M. Bonaparte Sr. Irrevocable Life Insurance Trust
Douglas W. Davis – Trustee.”
19. On April 27, 2007, Charles Bonaparte signed a document titled “Charles M.
Bonaparte Sr. Irrevocable Life Insurance Trust” (“Bonaparte Trust”). On May 1, 2007, Davis
signed the Bonaparte Trust as Trustee. The Bonaparte Trust recited that one of its purposes was
“to financially provide for my [Mr. Bonaparte’s] descendants, to the extent provided for under
the terms of the agreement;….”
20. Davis and Morady, however, prepared or caused the Bonaparte Trust to be
prepared (i) in order to acquire and/or control, through fraud and misrepresentation, a $400,000
interest in the life of Mr. Bonaparte, and (ii) to conceal their fraudulent activities by making it
appear that the Bonaparte Trust had an insurable interest in the life of Charles Bonaparte, and
(iii) to obtain Trustee fees and commissions for the sale of the Charles Bonaparte Policy. In fact,
Davis and the Bonaparte Trust never had an insurable interest in the life of Charles Bonaparte.
21. The Bonaparte Trust names “Douglas W. Davis” as Trustee and names the Trust’s
beneficiary as “Charles M. Bonaparte Sr. Living Trust.” The Bonaparte Trust states, in Article I:
I [Charles Bonaparte] have been fully advised and understand and declare that this trust is and shall be irrevocable and I hereby expressly acknowledge that I shall have no right, title or interest in or power, privilege or incident of ownership in regard to any of the property in this trust and no right or power, whether alone or in conjunction with others, in whatever capacity, to alter, amend, modify revoke [sic] or terminate this trust, or any of the terms of this agreement, in whole in part, or to designate the persons who shall possess or enjoy the trust property, or the income therefrom. By this instrument I intend to and do hereby relinquish absolutely and forever all possession or enjoyment of, or right to the income from, the trust property, whether directly, indirectly, or constructively, and every interest of any nature, present or future, in the trust property.
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22. The Bonaparte Trust states that the Trustee, Davis, has “the right and power, in
his sole and absolute discretion” to “enter into and perform agreements between the trust and
Security Pacific Premium Financing, Inc., an Illinois licensed premium finance company …
related to the funding of premium payments with respect to any insurance policies on my [Mr.
Bonaparte’s] life owned by the trust and the pledge and assignment of such policies and other
assets of the Trust as collateral for such funding ….”
23. The Bonaparte Trust states that the Trustee, Davis, has “in the exercise of his sole
and absolute discretion all rights, powers and authority over and with respect to any life
insurance policy held hereunder and with respect to any life insurance proceed held hereunder.”
The Bonaparte Trust states that the Trustee has the powers and authority to “pay premiums,” to
“make payments of proceeds of any life insurance policies directly to the Lender or its assigns
for payment of all amounts due or obligations owing under the Agreements,” and “to exercise
with respect to said insurance policies held hereunder from time to time all options, rights,
elections and privileges exercisable with respect to said policies, including but not limited to the
right to demand and collect from the company or companies issuing said policies all such
proceeds as shall be payable to this trust, the Trustee;….”
24. On or about May 1, 2007, Davis submitted Charles Bonaparte’s insurance
Application to Morady, an independent insurance broker in California, with the intent that
Morady sign and certify the information on the Application and submit the Application to Ohio
National. Morady signed the certification section of the Application, stating “I hereby certify I
have truly and accurately recorded on this application the information supplied by the Applicant
and/or Proposed Insured.”
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25. On the Application, Morady knowingly and intentionally misrepresented to Ohio
National that (i) Charles Bonaparte was “well-known” to her, (ii) Morady personally saw Charles
Bonaparte, (iii) Charles Bonaparte’s net worth was $1,200,000, and (iv) the source of Morady’s
knowledge of this financial information was Charles Bonaparte’s financial records. Each of
these misrepresentations was false and was known by Morady to be false. Charles Bonaparte
was not well known to Morady. Morady never personally saw or met Charles Bonaparte.
Morady knew that Charles Bonaparte did not have a net worth of $1,200,000. Morady did not
review any financial records of Charles Bonaparte indicating a net worth of $1,200,000. Morady
fabricated $1,200,000 as Charles Bonaparte’s net worth. Morady made these false statements
and misrepresentations knowingly, with the knowledge and assistance of Davis, with the intent
to deceive and induce Ohio National to issue a life insurance policy insuring the life of Charles
Bonaparte in the amount of $400,000, in furtherance of Davis’s and Morady’s life insurance
scheme.
26. On the Application, Morady misrepresented to Ohio National that the primary
purpose of the sale of the Charles Bonaparte Policy was “Personal,” “Estate Protection,”
“Life/DI,” “Mortgage,” and “Other Personal.” On the Application, in response to the question
“Are you aware of any information not disclosed in the Application which might affect the
underwriting of the risk? If ‘Yes,’ explain in Remarks section,” Morady answered “No.”
Morady’s misrepresentations on the Application were false and were known by Morady to be
false. Morady knew, but intentionally failed to disclose to Ohio National, that (i) Davis and
Morady induced Charles Bonaparte, through the promise of money, to apply for $400,000 in life
insurance from Ohio National, (ii) Davis and Morady prepared or caused to be prepared the
Bonaparte Trust in order to acquire and/or control, through fraud and misrepresentation, a
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$400,000 financial interest in the life of Mr. Bonaparte, and (iii) Davis and Morady prepared or
caused to be prepared the Bonaparte Trust to conceal their fraudulent activities by making it
appear that the Bonaparte Trust had an insurable interest in the life of Charles Bonaparte, when
in fact Davis and the Bonaparte Trust never had an insurable interest in the life of Charles
Bonaparte.
27. On or about May 1, 2007, Morady submitted the Application, signed by Morady
and Charles Bonaparte, to Ohio National. In reasonable reliance on the representations made in
the Application, on June 26, 2007, Ohio National issued the Charles Bonaparte Policy in the
amount of $400,000, with an annual premium of $16,040, naming as the Policy’s Owner and
Beneficiary the Bonaparte Trust, Douglas W. Davis Trustee. On July 5, 2007, Davis and
Morady acknowledged in writing that they received the Charles Bonaparte Policy.
28. After the Charles Bonaparte Policy was issued, Davis, Morady or someone acting
under their direction electronically transferred $14,000.00 into Charles Bonaparte’s personal
bank account, as Mr. Bonaparte’s payment for being induced to apply for the Policy.
29. In furtherance of the fraudulent insurance scheme, Davis offered to sell and/or
sold financial interests in or control over the Charles Bonaparte Policy to stranger-investors, for
Davis’s and Morady’s financial gain. On December 13, 2007, Davis appointed Egbert of
Newport Beach, California as Successor Trustee of the Bonaparte Trust, and on December 20,
2007, Davis resigned as Trustee. On or about December 8, 2008, Egbert requested that Ohio
National change its records to reflect that Egbert, as Successor Trustee, is the new Owner and
Beneficiary of the Charles Bonaparte Policy.
30. Charles Bonaparte has not paid, and never agreed to pay, any premiums for the
Charles Bonaparte Policy. Davis and Morady, or unknown-investors, have been paying the
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premiums for the Charles Bonaparte Policy, without Charles Bonaparte’s knowledge and
consent.
The Theodore Floyd Policy
31. Theodore R. Floyd (“Theodore Floyd”) resides in Chicago, Illinois and is a citizen
of the State of Illinois. Theodore Floyd was the named insured under a Flexible Premium
Universal Life Insurance Policy, Policy No. C6824720 (“Theodore Floyd Policy”) issued on
June 20, 2007 by Ohio National in the amount of $400,000. The Theodore Floyd Policy has
lapsed for failure to pay premiums.
32. On or about April 18, 2007, Theodore Floyd, then age 72 years, attended a dinner
meeting at his church in Chicago, Illinois. The meeting included an insurance sales pitch given
by Davis. Davis told Mr. Floyd that if he signed an Ohio National Application for life insurance
and an insurance policy was issued, Davis would pay Mr. Floyd $50,000. Davis told Mr. Floyd
that the life insurance policy would be free, that Mr. Floyd would not have to pay any premiums,
and that premiums would be paid by investors.
33. Davis used the lure of a $50,000 payment to induce Theodore Floyd to sign the
Application, in order for Davis and Morady to fraudulently obtain and exercise control over a life
insurance policy from Ohio National insuring the life of Mr. Floyd, for Davis’s and Morady’s
personal financial gain.
34. On April 18, 2007, Theodore Floyd signed a life insurance Application applying
for $400,000 in life insurance coverage from Ohio National, and designating the owner of the
policy and beneficiary as “Theodore R. Floyd Irrevocable Life Insurance Trust dated
04/18/2007; Douglas W. Davis Trustee.” Davis knowingly and falsely told Mr. Floyd, however,
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that the beneficiary of the Floyd Policy, for a period of two years, would be his former wife,
Ruth Rapier, with the intent to fraudulently induce Mr. Floyd to sign the Application.
35. On or about April 18, 2007, a document titled “Theodore R. Floyd Irrevocable
Life Insurance Trust” (“Floyd Trust”) was created by Davis naming “Douglas W. Davis” as
Trustee. Ohio National does not have a copy of the Floyd Trust, which is believed to be in
Davis’s possession and control.
36. Davis and Morady prepared or caused the Floyd Trust to be prepared (i) in order
to acquire and/or control, through fraud and misrepresentation, a $400,000 interest in the life of
Mr. Floyd, and (ii) to conceal their fraudulent activities by making it appear that the Floyd Trust
had an insurable interest in the life of Theodore Floyd, and (iii) to obtain Trustee fees and
commissions for the sale of the Theodore Floyd Policy. In fact, Davis and the Floyd Trust never
had an insurable interest in the life of Theodore Floyd.
37. On or about April 18, 2007, Davis submitted Theodore Floyd’s insurance
Application to Morady, an independent insurance broker in California, with the intent that
Morady sign and certify the information on the Application and submit the Application to Ohio
National. Morady signed the certification section of the Application, stating “I hereby certify I
have truly and accurately recorded on this application the information supplied by the Applicant
and/or Proposed Insured.”
38. On the Application, Morady knowingly and intentionally misrepresented to Ohio
National that (i) Theodore Floyd was “known casually” to her, (ii) Morady personally saw
Theodore Floyd, (iii) Theodore Floyd’s net worth was $1,400,000 and his net annual income was
$81,000, and (iv) the source of Morady’s knowledge of this financial information was Theodore
Floyd’s financial records. Each of these misrepresentations was false and was known by Morady
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to be false at the time they were made. Theodore Floyd was not casually known to Morady.
Morady never personally saw or met Theodore Floyd. Morady knew that Theodore Floyd did
not have a net worth of $1,400,000 and a net annual income of $81,000. Morady did not review
any financial records of Theodore Floyd indicating a net worth of $1,400,000 and a net annual
income of $81,000. Morady fabricated $1,400,000 as Theodore Floyd’s net worth and fabricated
$81,000 as Theodore Floyd’s net annual income. Morady made these false statements and
misrepresentations knowingly, with the knowledge and assistance of Davis, and with the intent
to deceive and induce Ohio National to issue a life insurance policy insuring the life of Theodore
Floyd in the amount of $400,000, in furtherance of Davis’s and Morady’s insurance scheme.
39. On the Application, Morady represented to Ohio National that the primary
purpose of the sale of the Floyd Policy was “Personal,” “Estate Protection,” “Family Income
Protection,” Mortgage,” and “Other Personal.” In addition, in response to the question “Are you
aware of any information not disclosed in the Application which might affect the underwriting of
the risk? If ‘Yes,’ explain in Remarks section,” Morady answered “No.” Morady’s
representations on the Application were false and were known by Morady to be false. Morady
knew, but intentionally failed to disclose to Ohio National, that (i) Davis and Morady induced
Theodore Floyd, through the promise of money, to apply for $400,000 in life insurance from
Ohio National, (ii) Davis and Morady prepared or caused to be prepared the Floyd Trust in order
to acquire and/or control, through fraud and misrepresentation, a $400,000 financial interest in
the life of Mr. Floyd, and (iii) Davis and Morady prepared or caused to be prepared the Floyd
Trust to conceal their fraudulent activities by making it appear that the Floyd Trust had an
insurable interest in the life of Theodore Floyd, when in fact Davis and the Floyd Trust never had
an insurable interest in the life of Theodore Floyd.
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40. On or about April 27 and 30, 2007, Morady submitted the Application, signed by
Morady and Theodore Floyd, to Ohio National. In reasonable reliance on the representations
made in the Application, on June 20, 2007, Ohio National issued the Theodore Floyd Policy in
the amount of $400,000, with an annual premium of $30,535.20, naming as the Policy’s Owner
and Beneficiary the Floyd Trust, Douglas W. Davis Trustee. On June 26, 2007, Davis and
Morady acknowledged in writing that they received the Theodore Floyd Policy.
41. After the Theodore Floyd Policy was issued, Davis, Morady or someone acting
under their direction electronically transferred $18,000 into Theodore Floyd’s personal bank
account, as Mr. Floyd’s payment for being induced to apply for the Policy.
42. In furtherance of the fraudulent insurance scheme, Davis offered to sell and/or
sold financial interests in the Theodore Floyd Policy to stranger-investors, for Davis’s and
Morady’s financial gain. On December 14, 2009, Ohio National received a request from an
entity called NAF Funding in New York, NY claiming, “We represent the owner and insured of
this policy [the Theodore Floyd Policy] and we are requesting a policy illustration to the below
specifications: Current illustration running to maturity with a level premium to maturity and a
level death benefit to maturity with a cash surrender value at maturity between $1 — $1,000 or
as close as possible.”
43. Theodore Floyd has not paid, and never agreed to pay, any premiums for the
Theodore Floyd Policy. Davis and Morady, or unknown-investors, have paid the premiums for
the Theodore Floyd Policy for a period of time, without Theodore Floyd’s knowledge and
consent. Thereafter, the Theodore Floyd Policy lapsed for non-payment of premiums and is no
longer in force.
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The Robert Harris Policy
44. Robert S. Harris (“Robert Harris”) resides in Country Club Hills, Illinois and is a
citizen of the State of Illinois. Robert Harris is the named insured under a Flexible Premium
Universal Life Insurance Policy, Policy No. C6843154 (“Robert Harris Policy”) issued on
February 12, 2008 by Ohio National in the amount of $500,000.
45. In or about October 2007, Robert Harris, then age 70 years, attended a dinner
meeting at his church in Chicago Heights, Illinois. The meeting included an insurance sales
pitch given by Davis. Davis told Mr. Harris that the life insurance policy was an investment for
seniors and would be free, that Mr. Harris would not have to pay any premiums, and that the life
insurance policy would be sold to investors.
46. On information and belief, on October 17, 2007, Davis created a document titled
“Robert Harris Irrevocable Trust” naming “Douglas W. Davis” as Trustee (hereafter, “Robert
Harris Trust”). Ohio National does not have a copy of the Robert Harris Trust, which is believed
to be in Davis’s possession and control. Mr. Harris does not recall ever signing the Robert
Harris Trust, and does not know that the Robert Harris Trust even exists.
47. On October 18, 2007, Davis caused Robert Harris to sign a blank Ohio National
life insurance Application. Without Mr. Harris’s knowledge and consent, Davis, Morady, or
someone acting at their direction, completed the Application to apply for $500,000 in life
insurance coverage from Ohio National in Mr. Harris’s name, and designating the Owner and
Beneficiary of the Policy as “Robert Harris Irrevocable Trust,” “Douglas W. Davis” as Trustee.
48. Davis and Morady prepared or caused the Robert Harris Trust to be prepared (i) in
order to acquire and/or control, through fraud and misrepresentation, a $500,000 interest in the
life of Robert Harris, (ii) to conceal their fraudulent activities by making it appear that the Robert
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Harris Trust had an insurable interest in the life of Mr. Harris, and (iii) to obtain Trustee fees and
commissions for the sale of the Robert Harris Policy. Davis and the Robert Harris Trust never
had an insurable interest in the life of Robert Harris.
49. On or about October 18, 2007, Davis submitted Robert Harris’s insurance
Application to Morady, an independent insurance broker in California, with the intent that
Morady sign and certify the information on the Application and submit the Application to Ohio
National. Morady signed the certification section of the Application, stating “I hereby certify I
have truly and accurately recorded on this application the information supplied by the Applicant
and/or Proposed Insured.”
50. On the Application, Morady knowingly and intentionally misrepresented to Ohio
National that (i) Robert Harris was “well-known” to her, (ii) Morady personally saw Robert
Harris, and (iii) Robert Harris’s net worth was $1,100,000 and net annual income was $64,000.
Each of these misrepresentations was false and was known by Morady to be false at the time
they were made. Robert Harris was not well-known to Morady. Morady never personally saw
or met Robert Harris. Morady knew that Robert Harris did not have a net worth of $1,100,000
and a net annual income of $64,000. Morady fabricated $1,100,000 as Robert Harris’s net worth
and fabricated $64,000 as his annual income. Morady made these false statements and
misrepresentations knowingly, with the knowledge and assistance of Davis, and with the intent
to deceive and induce Ohio National to issue a life insurance policy insuring the life of Robert
Harris in the amount of $500,000.
51. On the Application, Morady represented to Ohio National that the primary
purpose of the sale of the Robert Harris Policy was “Personal,” “Estate Protection,” “Family
Income Protection,” “General Financial Needs,” and “Other Personal.” On the Application, in
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response to the question “Are you aware of any information not disclosed in the Application
which might affect the underwriting of the risk? If ‘Yes,’ explain in Remarks section,” Morady
answered “No.” Morady’s representations on the Application were false and were known by
Morady to be false. Morady knew, but intentionally failed to disclose to Ohio National, that (i)
Davis and Morady induced Robert Harris to sign a blank Application which they used to apply
for $500,000 in life insurance in Mr. Harris’s name from Ohio National, (ii) Davis and Morady
prepared or caused to be prepared the Robert Harris Trust in order to acquire and/or control,
through fraud and misrepresentation and without the knowledge and consent of Robert Harris, a
$500,000 financial interest in the life of Mr. Harris, and (iii) Davis and Morady prepared or
caused to be prepared the Robert Harris Trust to conceal their fraudulent activities by making it
appear that the Robert Harris Trust had an insurable interest in the life of Robert Harris, when in
fact Davis and the Robert Harris Trust did not have an insurable interest in the life of Robert
Harris.
52. On or about October 23, 2007, Morady submitted the Application to Ohio
National. In reasonable reliance on the representations made in the Application, on February 12,
2008, Ohio National issued the Robert Harris Policy in the amount of $500,000, with an annual
premium of $14,928.00, naming as the Policy’s Owner and Beneficiary the Robert Harris Trust,
Douglas W. Davis Trustee.
53. Robert Harris never knew of or agreed to the issuance of the Robert Harris Policy,
never knew of or agreed to the creation of the Robert Harris Trust, and has not paid, and never
agreed to pay, any premiums for the Robert Harris Policy. Davis or unknown-investors have
been paying the premiums for the Robert Harris Policy.
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The Mary Harris Policy
54. Mary Ann Harris (“Mary Harris”) resides in Country Club Hills, Illinois and is a
citizen of the State of Illinois. Mary Harris is the named insured under a Flexible Premium
Universal Life Insurance Policy, Policy No. C6842991 (“Mary Harris Policy”) issued on
December 17, 2007 by Ohio National in the amount of $500,000.
55. In or about October 2007, Mary Harris, then age 70 years, attended a dinner
meeting at her church in Chicago Heights, Illinois. The meeting included an insurance sales
pitch given by Davis. Davis told Mrs. Harris that the life insurance policy was an investment for
seniors and would be free, and that Mrs. Harris would not have to pay any premiums.
56. On October 17, 2007, Davis caused Mrs. Harris to sign a document titled “Mary
Ann Harris Irrevocable Trust” naming “Douglas W. Davis” as Trustee and “Robert S. Harris,
Settlor’s husband” as Beneficiary (hereafter, “Mary Harris Trust”). The Mary Harris Trust
recites that its purposes are, inter alia, “to apply for and own one or more life insurance policies
insuring the life of the Settlor” and “to enter into such financial arrangements and agreements as
shall be directed in writing by the Beneficiary for the purpose of obtaining the funds needed to
acquire or maintain the Policy in effect and to perform the Trust’s obligations under such
arrangements and agreements or the Policy,….”
57. The Mary Harris Trust states, “Douglas W. Davis, or any successor Trustee, shall
receive as compensation for its services as Trustee such fees as are agreed between Settlor and
the Trustee, without prejudice to any separate and indemnification agreement.” The Mary Harris
Trust further states:
The Settlor [Mary Harris] has been fully advised and understand and declares that the Trust created by this trust instrument (this “Agreement”) is and shall be irrevocable, and the Settlor shall have no right, title or interest in, or power, privilege or incidents of ownership in or with regard
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to any of the property in this Trust and no right to alter, amend, modify, revoke or terminate this Trust or any of its provisions.
58. On October 18, 2007, Davis caused Mary Harris to sign a blank Ohio National
life insurance Application. Without Mrs. Harris’s knowledge and consent, Davis, Morady, or
someone acting at their direction, completed the Application to apply for $500,000 in life
insurance coverage from Ohio National in Mrs. Harris’s name, and designating the Owner and
Beneficiary of the Policy as “Mary Ann Harris Irrevocable Trust,” “Douglas W. Davis” as
Trustee.
59. Mary Harris, at the time she signed the Mary Harris Trust, did not consent to or
know that she was signing a document for creation of a trust designating Davis as Trustee. Mary
Harris, at the time she signed the blank Application, did not consent to or know that she was
applying for a $500,000 life insurance policy from Ohio National or designating the Mary Harris
Trust as the policy’s Owner and Beneficiary.
60. Davis and Morady prepared or caused the Mary Harris Trust to be prepared, and
induced Mary Harris to sign the Trust and blank insurance Application (i) in order to acquire
and/or control, through fraud and misrepresentation, a $500,000 interest in the life of Mary
Harris, (ii) to conceal their fraudulent activities by making it appear that the Mary Harris Trust
had an insurable interest in the life of Mrs. Harris, and (iii) to obtain Trustee fees and
commissions for the sale of the Mary Harris Policy. In fact, Davis and the Mary Harris Trust
never had an insurable interest in the life of Mary Harris.
61. On or about May 1, 2007, Davis submitted Mary Harris’s insurance Application
to Morady, an independent insurance broker in California, with the intent that Morady sign and
certify the information on the Application and submit the Application to Ohio National. Morady
signed the certification section of the Application, stating “I hereby certify I have truly and
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accurately recorded on this application the information supplied by the Applicant and/or
Proposed Insured.”
62. On the Application, Morady knowingly and intentionally misrepresented to Ohio
National that (i) Mary Harris was “well-known” to her, (ii) Morady personally saw Mary Harris,
and (iii) Mary Harris’s net worth was $900,000 and net annual income was $53,000. Each of
these misrepresentations was false and was known by Morady to be false at the time they were
made. Mary Harris was not well-known to Morady. Morady never personally saw or met Mary
Harris. Morady knew that Mary Harris did not have a net worth of $900,000 and a net annual
income of $53,000. Morady fabricated $900,000 as Mary Harris’s net worth and fabricated
$53,000 as her net annual income. Morady made these false statements and misrepresentations
knowingly, with the knowledge and assistance of Davis, and with the intent to deceive and
induce Ohio National to issue a life insurance policy insuring the life of Mary Harris in the
amount of $500,000.
63. On the Application, Morady represented to Ohio National that the primary
purpose of the sale of the Mary Harris Policy was “Personal,” “Family Income Protection,”
“General Financial Needs,” and “Other Personal.” On the Application, in response to the
question “Are you aware of any information not disclosed in the Application which might affect
the underwriting of the risk? If ‘Yes,’ explain in Remarks section,” Morady answered “No.”
Morady’s representations on the Application were false and were known by Morady to be false.
Morady knew, but intentionally failed to disclose to Ohio National, that (i) Davis and Morady
induced Mary Harris to sign a blank Application which they used to apply for $500,000 in life
insurance in Mrs. Harris’s name from Ohio National, (ii) Davis and Morady prepared or caused
to be prepared the Mary Harris Trust in order to acquire and/or control, through fraud and
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misrepresentation, a $500,000 financial interest in the life of Mrs. Harris, and (iii) Davis and
Morady prepared or caused to be prepared the Mary Harris Trust to conceal their fraudulent
activities by making it appear that the Mary Harris Trust had an insurable interest in the life of
Mary Harris, when in fact Davis and the Mary Harris Trust did not have an insurable interest in
the life of Mary Harris.
64. On or about October 24, 2007, Morady submitted the Application to Ohio
National. In reasonable reliance on the representations made in the Application, on December
17, 2007, Ohio National issued the Mary Harris Policy in the amount of $500,000, with an
annual premium of $14,388.00, naming as the Policy’s Owner and Beneficiary the Mary Harris
Trust, Douglas W. Davis Trustee. On March 28, 2008, Davis and Morady acknowledged in
writing that they received the Mary Harris Policy.
65. Mary Harris never knew of or agreed to the issuance of the Mary Harris Policy,
never knew of or agreed to the creation of the Mary Harris Trust, and has not paid, and never
agreed to pay, any premiums for the Mary Harris Policy. Davis and Morady, or unknown-
investors, have been paying the premiums for the Mary Harris Policy, without Mary Harris’s
knowledge and consent.
The Shirlee Davis Policy
66. In January 2007, Davis utilized his mother, Shirlee Davis, to sign trust documents
and thereafter procure, through fraud, a life insurance policy from Ohio National insuring the life
of Shirlee Davis in the amount of $1,000,000, with the intent of borrowing money from and/or
selling a financial interest in the Shirlee Davis Policy to stranger-investors.
67. On January 12, 2007, Davis induced Shirlee Davis to sign a document titled
“Shirlee Davis Irrevocable Life Insurance Trust” (“Shirlee Davis Trust”) designating Davis as
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both “Insurance Trustee” and “Trustee.” On January 19, 2007, Davis signed the Shirlee Davis
Trust as Insurance Trustee and Trustee.
68. Davis and Morady prepared or caused the Shirlee Davis Trust to be prepared (i) in
order to acquire and/or control, through fraud and misrepresentation, a $1,000,000 interest in the
life of Shirlee Davis, and (ii) to conceal their fraudulent activities by making it appear that the
Shirlee Davis Trust had an insurable interest in the life of Shirlee Davis and (iii) to obtain
Trustee fees and commissions for the sale of the Shirlee Davis Policy. In fact, Davis, with the
knowledge and assistance of Shirlee Davis, created the Shirlee Davis Trust for purposes of
selling the Shirlee Davis Policy to stranger-investors, for the financial benefit of Davis, Shirlee
Davis, and Morady.
69. The Shirlee Davis Trust states, in Article I:
I [Shirlee Davis] have been fully advised and understand and declare that this trust is and shall be irrevocable and I hereby expressly acknowledge that I shall have no right, title or interest in or power, privilege or incident of ownership in regard to any of the property in this trust and no right or power, whether alone or in conjunction with others, in whatever capacity, to alter, amend, modify revoke [sic] or terminate this trust, or any of the terms of this agreement, in whole in part, or to designate the persons who shall possess or enjoy the trust property, or the income therefrom. By this instrument I intend to and do hereby relinquish absolutely and forever all possession or enjoyment of, or right to the income from, the trust property, whether directly, indirectly, or constructively, and every interest of any nature, present or future, in the trust property.
70. The Shirlee Davis Trust states that the Trustee, Davis, has “the right and power, in
his sole and absolute discretion” to “enter into and perform agreements between the trust and
Security Pacific Premium Financing, Inc., an Illinois licensed premium finance company …
related to the funding of premium payments with respect to any insurance policies on my
[Shirlee Davis’s] life owned by the trust and the pledge and assignment of such policies and
other assets of the Trust as collateral for such funding ….”
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71. The Shirlee Davis Trust states that the Insurance Trustee, Davis, “shall have the
sole and absolute authority on behalf of the trust … to purchase life insurance payable to the trust
on my life, to execute the Insurance Application Documents and to take such other actions in
connection therewith as may be necessary to acquire and/or own such insurance.”
72. The Shirlee Davis Trust names “George Davis” as Beneficiary “until the Trustee
or Trustees hereinafter named shall exercise a Limited Power of Appointment … naming a
different beneficiary or beneficiaries ….” The Shirlee Davis Trust further states that the
Insurance Trustee, Davis, “in the exercise of his sole and absolute discretion … shall have all
rights and authority with respect to any insurance policy and/or the proceeds of any such
insurance policy held hereunder….” The Shirlee Davis Trust states that the Insurance Trustee,
Davis, has “all rights, powers and authority over and with respect to any life insurance policy
held hereunder and with respect to any life insurance proceeds held hereunder,” including the
power, right and authority to exercise “all options, rights, elections and privileges exercisable
with respect to said policies.”
73. On or about April 23, 2007, a life insurance Application was signed in the name
of Shirlee Davis applying for $1,000,000 in life insurance coverage from Ohio National, and
designating the policy owner and beneficiary as “Shirlee Davis Irrevocable Life Insurance Trust;
Douglas W. Davis – Trustee.”
74. On or about April 23, 2007, Davis submitted Shirlee Davis’s insurance
Application to Morady, an independent insurance broker in California, with the intent that
Morady sign and certify the information on the Application and submit the Application to Ohio
National. Morady signed the certification section of the Application, stating “I hereby certify I
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have truly and accurately recorded on this application the information supplied by the Applicant
and/or Proposed Insured.”
75. On the Application, Morady knowingly and intentionally misrepresented to Ohio
National that (i) Shirlee Davis was “well-known” to her, (ii) Morady personally saw Shirlee
Davis, (iii) Shirlee Davis’s net worth was $1,210,000 and her net annual income was $140,100,
and (iv) the source of Morady’s knowledge of this financial information was Shirlee Davis’s
financial records. Each of these misrepresentations was false and was known by Morady to be
false at the time they were made. Shirlee Davis was not well known to Morady. Morady never
personally saw or met Shirlee Davis. On information and belief, Morady knew that Shirlee
Davis did not have a net worth of $1,210,000 and a net annual income of $140,100. Morady
made these false statements and misrepresentations knowingly, with the knowledge and
assistance of Davis and Shirlee Davis, with the intent to deceive and induce Ohio National to
issue a life insurance policy insuring the life of Shirlee Davis in the amount of $1,000,000.
76. On the Application, Morady represented to Ohio National that the primary
purpose of the sale of the Shirlee Davis Policy was “Personal,” “Estate Protection,” “Family
Income Protection,” “Mortgage,” “General Financial Needs,” and “Other Personal.” On the
Application, in response to the question “Are you aware of any information not disclosed in the
Application which might affect the underwriting of the risk? If ‘Yes,’ explain in Remarks
section,” Morady answered “No.” Morady’s representations on the Application were false and
were known by Morady to be false. Morady knew, but failed to disclose to Ohio National, that
(i) Davis and Morady induced Shirlee Davis to apply for $1,000,000 in life insurance from Ohio
National, (ii) Davis and Morady prepared or caused to be prepared the Shirlee Davis Trust in
order to acquire and/or control a $1,000,000 financial interest in the life of Shirlee Davis for
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purposes of selling the Shirlee Davis Policy to stranger-investors. On information and belief, the
Shirlee Davis Trust never had an insurable interest in the life of Shirlee Davis.
77. On or about April 23, 2007, Morady submitted the Application to Ohio National.
Morady also submitted to Ohio National a letter from Davis on letterhead bearing the name “The
Davis Law Group,” in which Davis intentionally misrepresented that Shirlee Davis has real
estate in the amount of $2,300,000.00, jewelry in the amount of $300,000.00, stocks in the
amount of $150,000.00, and cash in the amount of $50,000.00, with the knowledge and
assistance of Shirlee Davis, and with the intent that Ohio National rely thereon in issuing the
Shirlee Davis Policy.
78. In reasonable reliance on the representations made in the Application, on June 26,
2007, Ohio National issued the Shirlee Davis Policy in the amount of $1,000,000, with an annual
premium of $36,696, naming as the Policy’s Owner and Beneficiary the Shirlee Davis Trust,
Douglas W. Davis Trustee. On June 2, 2007, Davis and Morady acknowledged in writing that
they received the Shirlee Davis Policy.
79. Shirlee Davis has not paid any premiums for the Shirlee Davis Policy. In fact,
premiums have been paid by strangers-investors, or with money borrowed from strangers-
investors. On April 12, 2010, Shirlee Davis, at her home, intentionally misrepresented to Ohio
National, both verbally and in writing, that her children are paying premiums for the Shirlee
Davis Policy, and that the financial information in the Application stating her net worth and net
annual income were accurate. Shirlee Davis’s statements were false and misleading, and were
known by Shirlee Davis to be false and misleading, with the intent to conceal and further Davis’s
and Morady’s fraudulent insurance scheme.
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80. In furtherance of the fraudulent insurance scheme, Davis offered to sell and/or
sold financial interests in the Shirlee Davis Policy to stranger-investors, for Davis’s and
Morady’s financial gain. On December 12, 2007, Davis signed a Resignation of Trustee
resigning as Trustee of the Shirlee Davis Trust and appointing Christiana Bank as Successor
Trustee. By letter dated February 21, 2008, Christiana Bank requested that Ohio National
change its records to reflect that Christiana Bank has been named Successor Trustee of the
Shirlee Davis Trust.
81. On November 4, 2009, Ohio National received a facsimile from Abacus
Settlements, LLC referencing the Shirlee Davis Policy and stating, “Please find the Life
Insurance Release Form authorizing Abacus Settlements LLC on behalf of Christiana Bank and
Trust to obtain information on the above policy.” The Life Insurance Release Form was signed
by Christiana Bank as Trustee of the Shirlee Davis Trust.
82. On January 8, 2010, Ohio National received a facsimile from Abacus Settlements,
LLC forwarding a Customer Service Request, which requested that Ohio National change the
Owner of the Shirlee Davis Policy to “John Thomas Bridge & Opportunity Fund Trust.”
COUNT I Declaratory Judgment
83. Ohio National incorporates herein by reference the allegations contained in
paragraphs 1 through 82 of its Complaint as if fully set forth in this paragraph.
84. Davis acquired and/or controlled, through fraud and misrepresentation as set forth
above, a $400,000 financial interest in the life of Charles Bonaparte pursuant to the Charles
Bonaparte Policy, a $400,000 financial interest in the life of Theodore Floyd pursuant to the
Theodore Floyd Policy, a $500,000 financial interest in the life of Robert Harris pursuant to the
Robert Harris Policy, a $500,000 financial interest in the life of Mary Harris pursuant to the
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Mary Harris Policy, and a $1,000,000 financial interest in the life of Shirlee Davis pursuant to
the Shirlee Davis Policy (collectively, the “Policies”). Davis used that financial interest to
borrow money or sell each Policy to stranger-investors for Davis’s and Morady’s personal
financial gain, without the knowledge and consent of each insured.
85. Davis, individually and/or as Trustee of the Bonaparte Trust, the Floyd Trust, the
Robert Harris Trust, the Mary Harris Trust, and the Shirlee Davis Trust (collectively, the
“Trusts”), procured the Policies as a pure wager on the lives of Charles Bonaparte, Theodore
Floyd, Robert Harris, Mary Harris and Shirlee Davis, without having an insurable interest in the
continuation of the life of each insured, for Davis’s and Morady’s pecuniary gain.
86. Ohio National, therefore, requests a declaratory judgment finding that the Charles
Bonaparte Policy, Robert Harris Policy, Mary Harris Policy, and Shirlee Davis Policy are void
for want of an insurable interest, and declaring that Davis and the Trusts are not entitled to
recover any premium payments made to Ohio National for the aforesaid Policies. Ohio National
requests leave to submit to the Clerk of the Court, or other Court ordered escrow representative,
the premiums paid to Ohio National for the aforesaid Policies pending the Court’s declaration of
the entitlement to such premium payments. Ohio National continues to issue premium due
notices pending entry of the relief requested herein, and with leave of Court will deposit such
premium payments with the Court or other Court ordered escrow representative until further
Order.
87. Further, Ohio National requests that Davis, individually and as Trustee of each
named Trust, and all Successor Trustees, including Egbert and Christiana Bank, during the
pendency of this litigation, be enjoined from using the aforesaid Policies, and any proceeds from
the sale or loan of the Policies held in the Trust or any account, as collateral for loans, from
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pledging the Policies, from transferring the Policies, and from selling any interest in the Policies,
and that the Policies be placed in a constructive trust.
COUNT II Fraud
88. Ohio National incorporates herein by reference the allegations contained in
paragraphs 1 through 82 of its Complaint as if fully set forth in this paragraph.
89. As set forth above in paragraphs 8 through 82 of the Complaint, Davis knowingly
made false statements and omissions of material fact with the intent to induce Ohio National to
rely on his false statements and omissions of material fact and to issue the Policies. As set forth
above in paragraphs 8 through 82 of the Complaint, Morady knowingly made false statements
and omissions of material fact with the intent to induce Ohio National to rely on her false
statements and omissions of material fact and to issue the Policies.
90. Ohio National, in issuing the Policies, relied upon the false statements and
omissions of material fact made by Davis and Morady. As a result thereof, Ohio National has
been damaged in that (i) Davis damaged Ohio National by marketing, selling, and accepting
applications for Ohio National life insurance policies without authorization from Ohio National
and without a license, (ii) Ohio National would not have issued the Policies if Ohio National had
known that the material statements and omissions in the Application, as set forth in paragraphs 8
through 82 of the Complaint, were false, (iii) Ohio National would not have issued the Policies
if Ohio National had known that the Policies were marketed and sold by Davis, (iv) Ohio
National would not have issued the Policies if Ohio National had known that Davis was inducing
the insureds to apply for the Policies in order for Davis to acquire a financial interest in the lives
of the insureds, as a pure wager on the lives of the insureds, for Davis’s and Morady’s personal
financial gain, (v) Ohio National paid commissions to Morady for the sale of the Policies in the
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total amount of $191,975.60, and (vi) Ohio National has incurred costs, fees and expenses of
investigating Davis’s and Morady’s insurance fraud scheme.
91. Ohio National requests entry of judgment against Davis and Morady for
compensatory damages, punitive damages, a declaration that the Charles Bonaparte Policy,
Robert Harris Policy, Mary Harris Policy, and Shirlee Davis Policy are void due to Davis’s and
Morady’s fraud and for want of an insurable interest, and a declaration that Davis and the Trusts
are not entitled to recover any premium payments made to Ohio National for the aforesaid
Policies. Ohio National requests leave to submit to the Clerk of the Court, or other Court
ordered escrow representative, the premiums paid to Ohio National for the aforesaid Policies
pending the Court’s declaration of the entitlement to such premium payments. Ohio National
continues to issue premium due notices pending entry of the relief requested herein, and with
leave of Court will deposit such premium payments with the Court or other Court ordered
escrow representative until further Order.
COUNT III Illinois Consumer Fraud and Deceptive Business Practices Act
92. Ohio National incorporates herein by reference the allegations contained in
paragraphs 1 through 82 of its Complaint as if fully set forth in this paragraph.
93. As set forth above in paragraphs 8 through 82 of the Complaint, Davis engaged in
deceptive acts and practices by marketing and selling Ohio National Polices without an insurance
license and without Ohio National’s authorization, and by knowingly making false statements
and omissions of material fact with the intent to induce Ohio National to rely on the false
statements and omissions and to issue the Policies. As set forth above in paragraphs 8 through
82 of the Complaint, Morady engaged in deceptive acts and practices by knowingly making false
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statements and omissions of material fact with the intent to induce Ohio National to rely on the
false statements and omissions and to issue the Policies.
94. Davis’s and Morady’s deceptive acts and practices occurred in the course of
conduct involving the trade and commerce of insurance sales and substantially affect Illinois
consumers and Illinois consumer protection concerns.
95. Ohio National, in issuing the Policies, relied upon the false statements and
omissions of material fact made by Davis and Morady. Davis’s and Morady’s deceptive acts and
practices proximately caused damages to Ohio National in that (i) Davis damaged Ohio National
by marketing, selling, and accepting applications for Ohio National life insurance policies
without authorization from Ohio National and without a license, (ii) Ohio National would not
have issued the Policies if Ohio National had known that the material statements and omissions
in the Application, as set forth in paragraphs 8 through 82 of the Complaint, were false, (iii) Ohio
National would not have issued the Policies if Ohio National had known that the Policies were
marketed and sold by Davis, (iv) Ohio National would not have issued the Policies if Ohio
National had known that Davis was inducing the insureds to apply for the Policies in order for
Davis to acquire a financial interest in the lives of the insureds, as a pure wager on the lives of
the insureds, for Davis’s and Morady’s personal financial gain, (v) Ohio National paid
commissions to Morady for the sale of the Policies in the total amount of $191,975.60, and (vi)
Ohio National has incurred costs, fees and expenses of investigating Davis’s and Morady’s
insurance fraud scheme.
96. Ohio National requests entry of judgment against Davis and Morady for
compensatory damages, treble damages, punitive damages, costs, attorneys’ fees, a declaration
that the Charles Bonaparte Policy, Robert Harris Policy, Mary Harris Policy, and Shirlee Davis
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Policy are void due to Davis’s and Morady’s fraud and for want of an insurable interest, and a
declaration that Davis and the Trusts are not entitled to recover any premium payments made to
Ohio National for the aforesaid Policies. Ohio National requests leave to submit to the Clerk of
the Court, or other Court ordered escrow representative, the premiums paid to Ohio National for
the aforesaid Policies pending the Court’s declaration of the entitlement to such premium
payments. Ohio National continues to issue premium due notices pending entry of the relief
requested herein, and with leave of Court will deposit such premium payments with the Court or
other Court ordered escrow representative until further Order.
97. Further, Ohio National requests that Davis, individually and as Trustee of each
named Trust, and all Successor Trustees, including Egbert and Christiana Bank, during the
pendency of this litigation, be enjoined from using the aforesaid Policies, and any proceeds from
the sale or loan of the Policies held in the Trust or any account, as collateral for loans, from
pledging the Policies, from transferring the Policies, and from selling any interest in the Policies,
and that the Policies be placed in a constructive trust.
COUNT IV Unjust Enrichment
98. Ohio National incorporates herein by reference the allegations contained in
paragraphs 1 through 82 of its Complaint as if fully set forth in this paragraph.
99. As set forth in paragraphs 8 through 82 of the Complaint, Davis and Morady
wrongfully procured the Charles Bonaparte Policy, Theodore Floyd Policy, Robert Harris Policy,
Mary Harris Policy, and Shirlee Davis Policy, which Davis and Morady wrongfully used, in
conjunction with the Trusts, to procure loans using the Policies as collateral, and to wrongfully
procure monies from the sale of interests in the Policies. Further, Morady used the Policies in
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order to wrongfully procure commissions for the sale of the Policies in the total amount of
$191,975.60.
100. As a consequence of their misrepresentations and omissions, Davis and Morady
have been unjustly enriched.
101. Ohio National requests entry of judgment ordering that (i) Davis provide an
accounting of all financial transactions relating to the Charles Bonaparte Policy, Theodore Floyd
Policy, Robert Harris Policy, Mary Harris Policy, and Shirlee Davis Policy and the Trusts,
including loans, investments, interest, payments made and payments received, and all monies
received by Davis individually and as Trustee on account of the Policies and the Trust, (ii) Davis
surrender to Ohio National all monies received by him, both individually and as Trustee, and all
monies received by the Trusts during any period of time in which Davis served as Trustee, and
(iii) Morady surrender to Ohio National commissions in the amount of $191,975.60, plus
interest, received by Morady as a result of her wrongful acts and omissions in inducing Ohio
National to issue the aforesaid Policies.
COUNT V Civil Conspiracy
102. Ohio National incorporates herein by reference the allegations contained in
paragraphs 1 through 82 of its Complaint as if fully set forth in this paragraph.
103. Davis, Shirlee Davis, and Morady conspired and agreed to induce Ohio National,
through material misrepresentations and omissions, to issue the Policies. In furtherance of the
civil conspiracy and agreement, Davis committed the unlawful acts set forth in paragraphs 8
through 82 of the Complaint, Shirlee Davis committed the unlawful acts set forth in paragraphs
67, 68, 73, 75, 77 and 79 of the Complaint, and Morady committed the unlawful acts set forth in
paragraphs 8 through 82 of the Complaint.
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104. Ohio National, in issuing the Policies, relied upon the false statements and
omissions of material fact made by Davis, Shirlee Davis, and Morady. As a result thereof, Ohio
National has been damaged in that (i) Davis damaged Ohio National by marketing, selling, and
accepting applications for Ohio National life insurance policies without authorization from Ohio
National and without a license, (ii) Ohio National would not have issued the Policies if Ohio
National had known that the material statements and omissions in the Application, as set forth in
paragraphs 8 through 82 of the Complaint, were false, (iii) Ohio National would not have issued
the Policies if Ohio National had known that the Policies were marketed and sold by Davis, (iv)
Ohio National would not have issued the Policies if Ohio National had known that Davis was
inducing the insureds to apply for the Policies in order for Davis to acquire a financial interest in
the lives of the insureds, as a pure wager on the lives of the insureds, for Davis’s and Morady’s
personal financial gain, (v) Ohio National paid commissions to Morady for the sale of the
Policies in the total amount of $191,975.60, and (vi) Ohio National has incurred costs, fees and
expenses of investigating Davis’s and Morady’s insurance fraud scheme.
105. Ohio National requests entry of judgment against Davis, Shirlee Davis, and
Morady for compensatory damages, punitive damages, a declaration that the Charles Bonaparte
Policy, Robert Harris Policy, Mary Harris Policy, and Shirlee Davis Policy are void due to
Davis’s and Morady’s fraud and Shirlee Davis’s complicity in furtherance of the fraud, and for
want of an insurable interest, and a declaration that Davis and the Trusts are not entitled to
recover any premium payments made to Ohio National for the aforesaid Policies.
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WHEREFORE, Plaintiff, OHIO NATIONAL LIFE ASSURANCE CORPORATION,
respectfully requests entry of judgment in its favor.
Respectfully submitted, Michael J. Smith By: /s/ Warren von Schleicher Warren von Schleicher Attorney for Plaintiff, SMITH, VON SCHLEICHER & ASSOCIATES Ohio National Life Assurance Corporation 39 S. LaSalle St., Suite 1005 Chicago, IL 60603 P: (312) 541-0300 F: (312) 541-0933 [email protected] [email protected]
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