Cash In, Check Out

As competition intensifies and regulation looms, viatical industry pioneer Steve Simon reconsiders the future

In fact, Silverman was convicted in November 1987 and was released from prison in April 1989. Several months afterward he went to work for Simon. "I was basically in charge of administration," reports Silverman, who says he met Simon before his incarceration. "I set up the company's computer system, selected our corporate counsel, and helped put together the paperwork and forms we sent to clients." While Silverman never invested in the company, Simon says Silverman introduced him to a number of investors who did help fund the venture.

Leaving CAPX after Simon decided to take the company public in 1992, Silverman has since launched his own viatical company, Findco Inc., based in North Miami Beach. While the proposed legislation in Florida does not bar a convicted felon from running a viatical company, it does allow regulators to suspend or revoke the license of any viatical provider who "has been found guilty of any felony or misdemeanor involving fraud or moral turpitude." The Division of Insurer Services's Carol Ostapchuk says such situations would have to be evaluated on a case-by-case basis.

CAPX was recently named in a federal suit filed in Philadelphia, accusing company officials of buying the $152,000 insurance policy of a man suffering from AIDS dementia. The suit, filed on behalf of the man's widow, alleges that the company "exerted undue influence" over her husband because it "had reason to know that [he] was suffering from HIV-related mental disorders" when it purchased the policy for $102,000.

Simon vehemently denies the allegation. He says the suit is a crass attempt to "go after us as a deep pocket. Every aspect of the settlement was handled responsibly and ethically. This suit is beyond frivolous."

He adds that while he intends to wind down operations domestically, "we are dramatically expanding our operations overseas." He says the company is looking to establish branch offices in Europe, Australia, and Asia.

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