Alex Belfort was an insurance agent for AFLAC and Colonial Penn Life Insurance in Pennsylvania.
From February of 2013 through December of 2016, Mr. Belfort submitted two hundred and twenty-five fraudulent insurance applications to these two insurers to receive advance commissions for the policies he had purportedly placed. In perpetrating his fraud, Mr. Belfort fabricated Social Security numbers, phone numbers, and other information to generate the fictitious documents
On May 11, 2018, the Insurance Department of the Commonwealth of Pennsylvania revoked all his insurance licenses after Mr. Belfort admitted what he had done and signed a consent order agreeing to the revocation of his resident producer licenses.
Although the Pennsylvania Commissioner had the authority to fine him $5,000.00 for each fraudulent application, the Commissioner elected to only revoke his licenses and put restrictions on his ever obtaining a Pennsylvania insurance license in the future.
Other states act based on Pennsylvania consent order entered into the NAIC database
In the ordinary course of reporting administrative actions against insurance licensees, the Pennsylvania Insurance Department entered the information on Mr. Belfort’s consent order in the producer database maintained by the National Association of Insurance Commissioners.
As a result of this report filed in the NAIC producer database, other states began their own administrative actions.
- On June 14, 2018, the Arkansas Insurance Department suspended Belfort’s non-resident producer license under a state statute that allowed an immediate suspension of a nonresident producer license when that licensee’s resident producer license is suspended, revoked, or otherwise terminated. Under its terms, this order allowed the termination of the suspension if Mr. Belfort’s resident license became active and in good standing.
- On June 26, 2018, the State of Washington’s Insurance Commissioner, having received a notification that Pennsylvania had revoked his resident license for “generating fictitious insurance policies,” immediately revoked Mr. Belfort’s nonresident producer license effective July 11, 2018, subject to Mr. Belfort’s right to demand a hearing. Mr. Belfort did not make any request for a hearing.
- On November 2, 2018, the Indiana Commissioner of Insurance suspended Mr. Belfort’s Indiana producer license under a state law like Arkansas’ law.
- On November 26, 2018, the State of Missouri’s Department of Insurance formally accepted Mr. Belfort’s nonresident producer license in that state under a voluntary license surrender order.
- On January 17, 2019, the Mississippi Insurance Department revoked Belfort’s Mississippi producer license using a state statute like Washington’s law.
- On March 28, 2019, the South Carolina Director of Insurance revoked Mr. Belfort’s nonresident producer license in that state because of Mr. Belfort’s loss of his resident producer license in Pennsylvania, his failure to report administrative action his license, and his failure to respond to the Director’s Notice of Investigation.
Massachusetts files Order to Show Cause for Mr. Belfort not reporting administrative actions against him
On April 2, 2019, the Massachusetts Division of Insurance filed an Order to Show Cause against Mr. Belfort, who had held a non-resident insurance producer between March 17, 2016, and October 19, 2018.
The Order to Show Cause sought the revocation of Mr. Belfort’s nonresident producer license in Massachusetts, orders requiring him to dispose of any insurance-related interests in Massachusetts, prohibiting him from conducting any insurance business in the state, and fining him for his violation M.G.L. c. 175, § 162V(a).
This statute, § 162V(a) requires that any insurance producer licensed in the commonwealth to sell, solicit or negotiate insurance must report to the commissioner of insurance within thirty days of the final disposition of any administrative action:
- taken against that producer in another jurisdiction or
- taken by another governmental agency in the commonwealth
In Mr. Belfort’s case, the Division sought discipline against him for his failure to report to the Commissioner the administrative actions by his home state, Pennsylvania, and by Arkansas, Washington, Indiana, and Mississippi. The administrative actions in South Carolina and Missouri against Mr. Belfort were not part of the Divisions Order to Show Cause.
Mr. Belfort fails to answer the Division’s complaint, and the hearing officer defaults him
Although the Division served Mr. Belfort by mail at his address of record with the Division in Sinking Springs, Pennsylvania, he did not appear, nor did any attorney appear for him. Accordingly, on May 24, 2019, the division moved for the entry of the default and a summary decision. At the hearing scheduled for June 25, 2019, only the attorney for the Division, Matthew Burke, Esq. appeared. Attorney Burke reported that he had not had any contact from Mr. Belfort or any person purporting to represent him.
Accordingly, the hearing officer found that there had been valid service at his both home and business address declared that he was in default, and proceeded to hear the evidence presented by the division.
The hearing officer finds Mr. Belfort did not have to report the Indiana and Mississippi license actions against him
The Division presented evidence at the hearing of the license actions taken against Mr. Belfort in Pennsylvania, Arkansas, Washington, Indiana, and Mississippi. As to each of these administrative actions, the Division contended that Mr. Belfort had failed to report them within 30 days after their final disposition as required by M.G.L. c. 175, § 162V(a).
More generally, the Division also asserted that Mr. Belfort had violated §162R (a)(2) and (a)(9) of Chapter 175. Subsection (a)(2), the Division argued allowed disciplinary action for violating any insurance laws, or violating any regulations, subpoena or order of the commissioner; while (a)(9) permitted disciplinary action if another jurisdiction has suspended or revoked an insurance producer’s license, as had happened to Mr. Belfort.
The hearing officer, however, noted that According to Division records, as noted in the OTSC, Belfort did not renew his Massachusetts license in 2018. Per the records of the Division, Mr. Belfort’s license had terminated as a matter of law on October 19, 2018.
The hearing officer also noted that while the Commissioner may under the law retain authority over a former licensee, under certain circumstances, even if that person’s license has lapsed, that authority did not apply to Mr. Belfort. In his case, two of the administrative actions, those of Mississippi and Indiana, occurred after Mr. Belfort’s Massachusetts nonresident producer license had lapsed.
The hearing officer, therefore, ruled that as to the Division’s charges based on Mr. Belfort’s failure to report the Indiana and Mississippi administrative actions, were moot. Since he held no Massachusetts license at the time those administrative actions occurred, he had no duty to report them to the Commissioner.
Hearing officer also finds no duty to report Arkansas license action
As to the Division’s charges involving Mr. Belfort’s failure to report his license suspension in Arkansas, the hearing officer pointed out that Section 162V(a) only requires reports of the final disposition of an administrative matter. On the record before her, she found that the evidence presented did not indicate any “final disposition” of that Arkansas action. This action had imposed a suspension contingent upon Mr. Belfort’s compliance with certain conditions. As a result, the hearing officer found Mr. Belfort also had had no duty to report this administrative action while it was in limbo.
Two violations found and orders entered
Based on her analysis and findings, the hearing officer found that Mr. Belfort, while licensed as a Massachusetts producer, failed to report two final decisions in administrative proceedings against him and thereby violated §162V (a).
Since § 162V(a) does not carry a specific penalty for its violation, the hearing officer looked to the general penalty statute for violations of the insurance laws, M.G.L. c. 175, § 194. Under this statute, the maximum fine is $500.
As a matter of her discretion, the hearing officer fined Mr. Belfort $500 for his failure to report the revocation of his Pennsylvania license and $250 for his failure to report the loss of his Washington license and entered the following final orders:
- ORDERED: That any and all insurance producer licenses issued to Alex Belfort by the Division are hereby revoked; and it is
- FURTHER ORDERED: that Alex Belfort shall return to the Division any licenses in his possession, custody or control; and it is
- FURTHER ORDERED: that Alex Belfort shall cease and desist from the conduct that gave rise to this Order to Show Cause; and it is
- FURTHER ORDERED: that Alex Belfort, from the date of this order, is prohibited from directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in the Commonwealth of Massachusetts; and it is
- FURTHER ORDERED: that Alex Belfort shall comply with the provisions of G. L. c. 175, §166B and dispose of any and all interests in Massachusetts as a proprietor, partner, stockholder, officer or employee of any licensed insurance producer; and it is
- FURTHER ORDERED: that Alex Belfort shall pay a fine of Seven Hundred Fifty Dollars ($750.00) to the Division within 30 days of the entry of this order.
