The Maryland Insurance Administration wants to put investment adviser Philip Rousseaux out of business despite the absence of any customer complaints against him or his company, his attorney said in explaining to a hearing examiner Tuesday why MIA’s bid to strip the “Money Guys” infomercial star of his insurance license should be rejected.
But MIA’s attorney countered that Rousseaux and his firm, Everest Wealth Management Inc., have engaged in an unlawful “pattern of deception” in soliciting, serving and winning referrals of customers.
The legal battle centers on MIA’s accusation that Rousseaux and Everest falsified information on forms, used misleading language in infomercials, pre-signed annuity applications on which his signature needed to be dated, used improper tactics to manipulate clients into trusting him and used a special VIP program to encourage existing clients to solicit new business for Everest even though those clients were not licensed insurance producers.
The arguments marked the opening salvos in what the attorneys expect to be about a five-day hearing on MIA’s effort to revoke the licenses of Rousseaux and two Everest associates, John George Anthony and Michael DiPaula. The three men – and another Everest associate, Taylor Seth McCandless — would also face fines totaling about $70,000 in connection with the company’s alleged violations.
MIA’s allegations follow similar claims by the Securities Division of the Maryland attorney general’s office, which also sought revocation of Rousseaux’s license.
The attorney for Everest, Rousseaux and his embattled colleagues cited the back-to-back investigations as evidence the state is out to get Rousseaux and EWM despite no evidence of actual harm to consumers.
“You don’t need to be a detective or a genius to figure out what’s going on here,” Alex J. Brown told the examiner. “They’re strategizing on ‘How do we kill Everest?’”
The MIA has revoked insurance licenses for egregious deceit, such as lying to clients, forging signatures and dishonesty with regulators, which are not alleged against Everest, Rousseaux and his colleagues whose licenses the agency seeks to revoke.
“The punishment doesn’t fit the crime here and most importantly there was no crime here,” said Brown, of Shapiro, Sher, Guinot & Sandler P.A. in Baltimore. “It’s arbitrary and capricious to single these guys out.”
Brown also assailed MIA for what he called its failure to bring its concerns to Rousseaux about the advertising and allegedly improper tactics and give him an opportunity to comply before assessing fines and seeking revocation.
For example, the MIA never told Rousseaux it objected to the infomercial’s reference to the company’s annuity options as a “plan,” which the agency regards as misrepresenting the uncertainty of investments, Brown said.
MIA also alleges that Rousseaux and Everest inappropriately solicited clients by telling them an “investment committee” had suggested they be contacted for potential investments. However, MIA never contacted the company with its concerns about the solicitation prior to seeking revocation, Brown said.
“They [the agency] should assist with compliance, not penalization,” he added. “You don’t just say, ‘Gotcha. You’re revoked.’”
But MIA’s attorney, Brandy J. Gray, derided as “merely a smokescreen” Brown’s argument that the agency is engaging in selective prosecution and piling on to the Securities Division’s investigation.
Gray said the Money Guys ads misrepresented what clients could reasonably expect from the company and assailed the investment committee solicitation as “playing mind games with consumers.”
Gray also said Rousseaux, prior to opening the Everest properties in 2011, improperly used a Medallion stamp in 2006 and 2007 to pre-stamp documents in which clients authorize their funds to be transferred from one investment to another. The stamp, which belonged to Rousseaux’s prior employer, MetLife, is used to verify the client’s signature after the document is signed, not before, she said.
“Mr. Rousseaux is not fit to be an insurance producer in this state,” said Gray, an assistant Maryland attorney general.
Robert D. Morrow Jr., associate MIA commissioner for hearings, said he expects to issue his decision within 30 days of the hearing’s conclusion. Rousseaux and his colleagues would have the right to appeal an adverse ruling to circuit court
The case before the MIA is Maryland Insurance Administration v. Everest Wealth Management et al., Nos. MIA-2015-12-008 through MIA-2015-12-0011.