Apollo Accused in Lawsuit of Illegal Human Life Wagering Scheme

Apollo Global Management Inc. bet on the longevity of senior citizens by acquiring illegal life insurance policies and funneling the payouts through shell entities, according to a new lawsuit.

The private equity giant allegedly set up a web of sham trusts—using a secretive affiliate called Financial Credit Investment—to hold a portfolio of stranger-originated life insurance policies worth roughly $20 billion. Taking out life insurance on a stranger is “anathema to hundreds of years of public policy” and a violation of the Delaware Constitution, the suit says.

“Apollo has been carrying out a widespread fraudulent human life wagering conspiracy designed to not only hide its involvement, but to create the false appearance that the policies it owns are somehow legitimate,” according to the complaint. “Worse still, when Apollo senses a claim is going to be brought, it attempts to dissolve its shell entities to give itself yet another layer of protection.”

A spokesperson for Apollo didn’t immediately respond to a request for comment Monday.

‘Who Wants Them Dead’

The lawsuit was filed April 26 in Delaware’s Chancery Court by the estate of Martha Barotz, whose policy allegedly paid out $5 million after she died in 2018. The case stems from earlier litigation between the Barotz estate and the Apollo-linked trusts, along with the estate’s subsequent attempts to collect on the nearly $7 million judgment it won, according to the new complaint.

The policy allegedly originated in 2006 when Barotz, then in her 70s, agreed to let an enterprise called Life Accumulation Trust III take out the policy in exchange for a payment equaling 3% of the death benefit. Stranger-originated policies are often securitized in large portfolios that obscure their details from the people they “prey on,” according to the lawsuit.

“In this way, the senior citizens have no idea who owns a policy on their life, and who wants them dead,” the suit says. “This is precisely what happened with the policy here.”

Although LATIII allegedly sold the policy to FCI in 2011, the estate didn’t learn of the transfer until after Barotz died. It also took years to obtain documents showing FCI is controlled by Apollo, according to the complaint, which says the information only came to light about a month ago.

“Apollo was fraudulently and illegally using these shell entities to perpetuate human life wagers not only on the life of Mrs. Barotz, but on the lives of hundreds (if not thousands) of other senior citizens,” the lawsuit says.

Strategic Insolvencies

Over the course of the earlier litigation in New York and Delaware, the trusts allegedly pledged repeatedly to satisfy any court judgment they might lose. In the meantime, Apollo worked to hide its involvement and made fraudulent transfers aimed at engineering strategic insolvencies, according to the new suit.

The asset manager “made a deliberate decision to undercapitalize every cog in the machine” as part of an effort “to starve all potentially liable entities of cash” and evade a judgment, the complaint says. It seeks an order declaring Apollo directly liable for the judgment against the trusts thanks to its alleged misuse of the corporate form.

The lawsuit also targets affiliates of Wells Fargo Bank NA and Wilmington Savings Fund Society FSB over their administrative connections to the FCI trusts. They helped conceal the scheme from the insurers that issued the Barotz policy and from the estate, the suit says.

Wells Fargo and Wilmington Savings didn’t immediately respond to requests for comment Monday.

The estate is represented by Donald L. Gouge Jr. of Wilmington, Del., and Cozen O’Connor. Apollo, Wilmington Savings, and Wells Fargo haven’t yet made court appearances.

The case is Estate of Martha Barotz v. Wilmington Savs. Fund Soc. FSB, Del. Ch., No. 2024-0447, complaint filed 4/26/24.