N.Y. ISC Law § 411 — New York Code / Act ISC / Article 4 / Section 411
Life settlements fraud prevention plans
Status: in_force

§ 411. Life settlements fraud prevention plans. (a) Every life\nsettlement provider shall file with the superintendent a plan for the\ndetection, investigation and prevention of fraudulent life settlement\nacts in this state and those fraudulent life settlement acts affecting\nlife settlement contracts in this state.\n  (1) The plan shall provide the time and manner in which such plan\nshall be implemented, including provisions for a special investigations\nunit and staffing levels within such unit. Such investigators shall be\nresponsible for investigating information on or cases of suspected\nfraudulent activity and for effectively implementing fraud prevention\nand reduction activities pursuant to the plan filed with the\nsuperintendent. A life settlement provider shall include in such plan\nstaffing levels and allocations of resources of such special\ninvestigations unit that shall be sufficient and appropriate for the\nproper implementation of the plan and approval of such plan pursuant to\nsubsection (c) of this section.\n  (2) In lieu of a special investigations unit, a life settlement\nprovider may contract with a provider of services related to the\ninvestigation of information on or cases of suspected fraudulent\nactivities; provided, however, that a life settlement provider that opts\nfor contracting with a separate provider of services, shall provide to\nthe superintendent a detailed plan therefor, pursuant to requirements\nset forth in regulation by the superintendent.\n  (3) A person employed by a special investigations unit or an\nindependent provider of investigative services under contract with a\nlife settlement provider shall be qualified by education or experience\nto act in such capacity, subject to requirements established by the\nsuperintendent in a regulation.\n  (b) The plan shall provide for the following:\n  (1) interface of special investigations unit personnel with law\nenforcement and prosecutorial agencies, including the financial frauds\nand consumer protection unit in the department;\n  (2) reporting of fraud data to a central organization approved by the\nsuperintendent;\n  (3) in-service education and training for personnel in identifying and\nevaluating instances of suspected fraudulent activity;\n  (4) coordination with other units of a life settlement provider for\nthe investigation and initiation of civil actions based upon information\nreceived by or through the special investigation unit;\n  (5) public awareness of the cost and frequency of fraudulent\nactivities, and the methods of preventing fraud;\n  (6) development and use of a fraud detection and procedures manual to\nassist in the detection and elimination of fraudulent activity; and\n  (7) the time and manner in which such plan shall be implemented and a\ndemonstration that the fraud prevention and reduction measures outlined\nin the plan will be fully implemented.\n  (c)(1) A fraud detection and prevention plan filed by a life\nsettlement provider with the superintendent pursuant to this section\nshall be deemed approved by the superintendent if not returned by the\nsuperintendent for revision within one hundred twenty days of the date\nof filing. If the superintendent returns a plan for revision, the\nsuperintendent shall state the points of objection with such plan, and\nany amendments as the superintendent may require consistent with the\nprovisions of this section, including staffing levels, resource\nallocation, or other policy or operational considerations. An amended\nplan reflecting the changes shall be filed with the superintendent\nwithin forty-five days from the date of return.\n  (2) If the superintendent has returned a plan for revision more than\none time, then the life settlement provider shall be entitled to a\nhearing pursuant to the provisions of article three of this chapter and\nregulations promulgated thereunder.\n  (3) If a life settlement provider fails to submit a final plan within\nthirty days after a determination of the superintendent after the\nhearing held pursuant to paragraph two of this subsection, or otherwise\nfails to submit a plan, or fails to implement the provisions of a plan\nin a time and manner provided for in such plan, or otherwise refuses to\ncomply with the provisions of this section, the superintendent may\nimpose:\n  (A) a fine of not more than two thousand dollars per day for such\nfailure by a life settlement provider until the superintendent deems the\nlife settlement provider to be in compliance;\n  (B) upon the life settlement provider a fraud detection and prevention\nplan deemed to be appropriate by the superintendent, which shall be\nimplemented by the life settlement provider; or\n  (C) both a fine and a fraud detection and prevention plan pursuant to\nsubparagraphs (A) and (B) of this paragraph.\n  (d) Any plan, the information contained therein, or correspondence\nrelated thereto, or any other information furnished pursuant to this\nsection shall be deemed to be a confidential communication and shall not\nbe open for review or be subject to a subpoena except by a court order\nor by request from any law enforcement agency or authority.\n  (e) Every life settlement provider required to file a fraud prevention\nplan shall report to the superintendent on an annual basis, no later\nthan March fifteenth, describing the provider's experience, performance\nand cost effectiveness in implementing the plan, utilizing such forms as\nthe superintendent may prescribe. Upon consideration of such reports,\nthe superintendent may require amendments to the provider's fraud\ndetection and prevention plan as deemed necessary.\n