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Idaho Jury Orders Pacific Life Insurance Company and Insurance Agent to Pay $1.5 Million in Indexed Universal Life Insurance Retirement Loss Case

Canyon County, Idaho, May 15, 2024 — An Idaho state court jury ordered Pacific Life Insurance Company and an insurance agent to pay a retiree $1,526,156.54 for the economic losses she suffered relating to a failed retirement strategy involving a Pacific Life Indexed Universal Life (“IUL”) policy where the funding mechanism was ultimately revealed to be a Ponzi scheme known as Future Income Payments, LLC.

“This represented years of litigation and determination by Karen Shelstad to hold Pacific Life accountable,” said Robert Rikard, attorney for Shelstad. “Where else but a trial by jury can the Karen Shelstads of the world find justice when taking on a giant insurance company like Pacific Life,” said Rikard. “The jury delivered a loud and clear message that what Pacific Life did to Karen was wrong,” he added.

Shelstad sued Ronald R. Hill and Pacific Life Insurance company relating to a retirement strategy recommended by Mr. Hill involving a Pacific Life IUL policy known as the Pacific Discovery Xelerator IUL.

Shelstad alleged that Hill held himself out as a financial and investment advisor, even though he was not. Shelstad owned an apartment complex that she was selling for $1.4 million dollars. She was planning to use the proceeds from the sale to fund her retirement. This represented her entire life savings. At a presentation by Hill in October 2017, he recommended that Shelstad invest the proceeds into a “structured settlement” investment product that would give her a yearly return of 8% for a total return of $1.8 million dollars over seven years.

Hill recommended that Shelstad purchase a Pacific Life IUL policy, and represented it would provide a reliable and steady stream of retirement income for the remainder of Shelstad’s life. Hill recommended Shelstad make seven annual premium payments of $258,068.00 to Pacific Life which would be funded by the returns from the structured settlement investment. Over that seven years, the plan called for her to pay $1.8 million dollars in IUL premium payments to Pacific Life. He advised that the policy would allow her to take out policy loans which would not require payment of income taxes because those loans would not be considered income. This would function as her retirement income for the remainder of her life according to the Pacific Life illustration presented to her.

On Nov. 16, 2017, Hill submitted an application on behalf of Shelstad to Pacific Life Insurance Company.  Hill was not officially appointed as an agent with Pacific Life until Dec. 7, 2017. The application did not have any information regarding Shelstad’s income, net worth, or policy beneficiary.  At the time, Shelstad was 69 years old, retired, not married, and had no children or dependents. On Dec. 13, 2017, Pacific Life accepted $125,000 from Shelstad even though the application had not been approved.

Pacific Life’s underwriters flagged the size of the death benefit applied for (more than $3.3 million) as exceeding its guidelines. The underwriters also cited affordability as an issue and requested more information about Shelstad and how she planned to pay the premiums because the application for insurance identified her as “retired.”  A firm working with Hill  told Pacific Life on Dec. 14, 2017, that premiums would be paid from “cash flows from purchased structured settlements.” The Pacific Life underwriters never contacted Shelstad and never investigated the source of the “cash flows from purchased structured settlements.” Despite these concerns, Pacific Life approved the application on Dec. 18, 2017, and the policy was issued two days later.

Shelstad presented evidence at trial that Pacific Life ignored its own guidelines and procedures because it was in a competition with Minnesota Life Insurance Company for the sale of the IUL product. “Instead of protecting the needs of its own customer, Pacific Life chose to ignore its guidelines and issue this policy because it was in a race against the competition. This represented Ms. Shelstad’s life savings that she had worked over 50 years to accumulate, and they ignored their responsibilities to their customer in order to make a sale,” said Rikard. “The facts available to Pacific Life’s underwriters begged for an intervention and for more information surrounding the product that was going to be the funding source for the IUL. Instead, they put their own financial needs above the interest of their customer and failed to investigate the funding source of $1.8 million dollars in premiums that were expected to be paid,” said Rikard.

“Structured settlements” referred to a product offered by Future Income Payments (“FIP”). Shelstad received monthly payments from FIP in Jan., Feb., and March 2018.  In April 2018 FIP ceased operations and was subsequently revealed to be a nationwide multi-million-dollar Ponzi scheme.  The owner of FIP, LLC, Scott Kohn, was indicted by the United States of America and eventually pled guilty to various federal financial crimes. After FIP failed, Shelstad asked Pacific Life to cancel the policy and refund the premiums paid. Pacific Life denied that request. Ms. Shelstad retained Rikard + Protopapas LLC, and a Pacific life IUL lawsuit was filed in April of 2020.

The trial began on May 6, 2024, and the jury returned its verdict on May 10, 2024. At trial, Ms. Shelstad presented evidence that Pacific Life was liable for her losses, both for the premiums she paid, and for her investment in the FIP product. The jury agreed and returned a verdict for the full amount of her economic damages. “We filed this IUL lawsuit on behalf of Ms. Shelstad in April of 2020. Throughout the last four years, Pacific Life failed to offer Ms. Shelstad a penny. The verdict vindicated her years of hard work to hold Pacific Life accountable for its failures,” said Rikard.

The jury also found that Mr. Hill was negligent and that he was acting as Pacific Life’s agent, exercising apparent authority in the sale of this IUL strategy involving FIP. Pacific Life claimed that its underwriters did nothing wrong, and that it was not responsible for Ms. Shelstad’s bad investment in the FIP product. The jury disagreed.

Shelstad was represented by Robert G. Rikard and Jeremy C. Hodges of Rikard + Protopapas LLC. Mr. Rikard handles a variety of litigation matters throughout the United States with a particular emphasis on Indexed Universal Life litigation and investor loss cases. He has litigated hundreds of IUL cases across the United States against multiple insurance companies and has recovered over $70,000,000.00 for victims of IUL and investment loss cases.

To find out more about our IUL litigation practice, visit us here.

Media Contact: 

Robert G. Rikard

Rikard & Protopapas, LLC

2110 N Beltline Blvd Columbia, SC 29204


Rikard & Protopapas, LLC

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