Aviva Life and Annuity Co. late last month filed suit in federal court against a handful of life insurance agents, claiming they fraudulently sold coverage to 119 church members, Investment News reported.

The suit, which was filed for the U.S. District Court in the Central District of California, alleges that six agents sold life insurance to a group of parishioners in 2009 and 2010 under false pretenses. Aviva claims that those insured were not told that their death benefits would be split between their beneficiaries, the church and a third party.

The alleged scheme came to Aviva’s attention last fall when the company discovered that the insured individuals who bought policies from the six agents had transferred ownership of their policies to Wilshire Coast Consultants Inc. Wilshire Coast is the trustee for 119 irrevocable life insurance trusts, each of which owns an Aviva policy over the parishioners, according to the suit.

Aviva claims the parishioners were solicited at church to attend a seminar for an “endowment program,” which involved taking out a life insurance policy on a church member and splitting the death benefits between that person’s beneficies, the church and an unknown third party. Aviva claims that some parishioners who contacted the carrier said they either never paid premiums on the policy or they paid only the initial premium, and another party made the subsequent payments.

Aviva is suing to rescind coverage on all 119 policies. Though Aviva doesn’t wish to provide coverage for the parishioners, it asserts that it’s entitled to hold on to the premiums paid on the questionable polices as payments for the carrier’s expenses related to underwriting and issuing the insurance.

Aviva spokesman Kevin Waetke, based in Des Moines, told Insurance News: “Multiple misrepresentations were made to Aviva as part of these transactions. It’s an unfortunate situation.”

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