Catch Up: Arizona IMO Seeks Bankruptcy Protection From IUL Fraud Fight

An Arizona independent marketing organization faces additional scrutiny over how much it knew about a fraudulent scheme to pump up indexed universal life sales.

Shurwest filed for Chapter 11 bankruptcy Aug. 31 in a bid to settle scores of lawsuits, all while steadfastly maintaining that company executives knew nothing about a pension fraud scheme adapted to hundreds of IUL sales.

“We had a rogue employee who set up a business we didn’t know anything about,” said Michael McGrath of Mesch Clark Rothschild, a Tuscon, Ariz., law firm handling Shurwest’s bankruptcy filing.

New court documents filed last week in two states will challenge those denials.

In Arizona, a team of attorneys representing 142 plaintiffs filed a lengthy “statement of facts” in federal bankruptcy court.

“Our clients have suffered significant losses and if we don’t speak for them nobody will,” said Robert Rikard of Rikard & Protopapas, a Columbia, S.C., law firm. “As lawyers, we have to follow the rules and live by the rules. In these cases, it seems Shurwest has decided they have a different set of rules they want to play by.”

The attorneys filed 28 exhibits totaling about 1,200 pages, with some pages redacted or filed under seal. The package includes depositions, emails, itineraries, and other internal documents depicting a high-risk sales strategy that, at times, made Shurwest executives and their producer…

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