The Department of Financial Institutions (DFI) has settled with a Veradale, Washington firm and three of the firm’s officers over allegations relating to sales of viatical settlement investments in the late 1990s in Eastern Washington. Those allegations included unlawful sale of unregistered securities and misrepresentations in the sale of securities. The firm, Great Northern Financial Services, Inc., is now the parent company of a Veradale, Washington broker-dealer, Great Northern Financial Securities, Inc.
As part of the settlement agreed to by DFI Securities Director Deborah Bortner, Anthony Horpel, president of Great Northern Financial Services, Inc. agreed to pay a fine of $50,000, of which half was suspended if no further violations occur. Timothy Burke and Douglas Fry agreed to pay fines of $5,000, with $2,500 suspended if there are no further violations.
Great Northern Financial Services, Inc. and the officers named also agreed to pay $5,000 to the Investor Protections Trust, a nonprofit organization headquartered in Arlington, Virginia. The money will be used to promote investor education in the state of Washington.
Great Northern Financial Services, Inc. and its officers also agreed to make improvements to the compliance system of its broker-dealer subsidiary, Great Northern Financial Securities, Inc. These improvements include hiring a compliance officer who is to be given broad supervisory powers, as well as an agreement to allow the Securities Division to conduct annual compliance examinations for the next three years. As part of the settlement, the Securities Division is being reimbursed for $12,500 in investigative costs as well as for the expenses it will incur in conducting the additional compliance examinations.
The Securities Division is continuing to negotiate with other firms and persons involved in the sale of the viatical settlement investments named in the Securities Division’s September 8, 2003 statement of charges. Some of those firms or persons have requested hearings on the allegations.
Viatical settlement investments are investments in the life insurance policies of others. Investors are supposed to receive proportionate shares of the life insurance proceeds when the insured person dies.
Before putting money into any investment, consumers are encouraged to check with DFI to see if the product is registered and whether the person selling it is properly licensed and has a good record. The Department may be contacted by calling 1-877-RING DFI (1-877-746-4334) or on the Web at www.dfi.wa.gov.