IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN ...files.courthousenews.com/2010/04/20/AttorneyInsure.pdf · 4/20/2010 · National for the sale of five life insurance policies

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,

Case 1:10-cv-02386 Document 2 Filed 04/16/10 Page 1 of 33

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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







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.


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







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.


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.”


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.


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


21

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





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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.


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


24

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.


25


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


26

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


27

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



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


28

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



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


29

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.


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


30

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



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



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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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]
