LOS ANGELES – Before introducing prospective clients to an investment fund promising a 12-percent return, Scott Brandt always started by pitching insurance. Dating back to a meeting for insurance agents in his office in 2004, he made an association between Diversified Lending Group’s premium financing program and MetLife insurance products.
But whether Brandt was responsible for wrongfully passing on that associative train of thought to prospective clients is at issue in a lawsuit brought by a DLG investor against MetLife and its subsidiary, which employed Brandt. The plaintiff in the lawsuit over her lost life savings isn’t suing Brandt, who directly introduced her to the investment fund that turned out to be a Ponzi scheme. Rather, MetLife brought him into the suit.
Also at issue was whether Brandt’s role as a representative for DLG was appropriate outside activity considering his role as an insurance agent for the MetLife subsidiary.
Brandt started working for New England Life Insurance Co. in 1983 until he was fired in May 2009 for violating MetLife policies by peddling an unapproved premium financing program. That program was presented to Brandt and other insurance agents in 2004 as a way to sell more insurance, he and others testified.
Brandt said Bruce Friedman, who owned DLG, indicated he owned a number of real estate properties that were entirely paid for and produced substantial income that would back investments in the fund. Agents were told they could refer clients to Friedman for premium financing but they couldn’t personally sell the notes.
A few days later, Brandt said he was invited to a private meeting about DLG by Tony Russon, the head of the insurance company who had a prior business relationship with Friedman. There, the three of them talked about premium financing.
He said the meeting was to “make sure I understood the value of what the premium financing program would mean to me and my clients.”
He said Russon “encouraged” him to bring Friedman along to meetings with his clients. As a result of the time he spent with Friedman, he believed he started to get a better understanding of DLG and the information seemed good, but he brought it back to Russon to see if it matched what he knew about DLG. Russon affirmed his growing trust in Friedman. Eventually, Brand approached Friedman about a job.
“I really hit it off with him,” Brandt said. “I liked him. He was a very likable guy.”
In 2005, he resigned his securities license with Russon’s New England Securities and went to work for Friedman. He still worked as an insurance agent, though, requiring him to fill out certain paperwork disclosing any outside business activity he was engaged in. He included DLG on those forms, which his supervisors, including Russon, signed, leading him to believe he wasn’t doing anything unusual or inappropriate. He was still subject to compliance reviews after he time linked himself with Friedman’s business. Those reports didn’t appear to raise any alarms about the connection.
In 2008, he was invited to discuss insurance with Paul Walker and his girlfriend Christine Ramirez — the plaintiff in the suit. Though Brandt pitched it to her several times, Ramirez wasn’t interested in insurance. But she eventually invested nearly $280,000 with DLG.
Because of the many hats he wore, MetLife attorney Sidney Kanazawa focused on whether MetLife insurance was actually part of the investment funds involved in this case. He also referred to letters sent to MetLife by Brandt and two of his children who lost money to DLG — investments that weren’t at all associated with insurance purchases.
The letters blamed MetLife for the family’s losses because they wouldn’t have heard of DLG or the investment opportunity if Russon hadn’t introduced Friedman to agents at the company in 2004.
However, in his deposition and in testimony at the trial, Brandt affirmed that he never told Ramirez that MetLife guaranteed her investment, even if DLG went “belly up.”
The case is being heard in Los Angeles County Superior Court and began July 20. Webcast coverage is being provided by Courtroom View Network.