“Life settlement” policies helped Michael Antonello buy a Stradivarius, but now they are drawing scrutiny
Michael Antonello has used a lucrative career as an independent New Brighton life insurance agent as a way to finance his passions: American impressionist artwork and classical music.
He amassed millions of dollars in commissions by becoming a top seller of tax shelters and by selling scores of policies to rich, elderly clients. He was among the pioneers of an aggressive practice in which policyholders resold their future “death benefits” to investors.
Commissions from insurers enabled Antonello, 58, to spend lavishly on his love of the arts. He bought a 1720 Stradivarius violin, valued at $3 million, and returned to playing seriously. He gave the MacPhail Center for Music in Minneapolis “more than $1 million” in 2008, which got his name emblazoned on a concert hall. And in just three years his tax-exempt Antonello Family Foundation, formed in 2006 to buy art for public display, amassed nearly $17 million in assets from Antonello and his namesake insurance agency.
He also attracted the attention of the insurance industry and both state and federal regulators, who see the “life settlement” arrangements that Antonello facilitated as an abuse of 1980s innovations originally meant to let AIDS patients squeeze some cash from their policies before they died.
Instead, Antonello hawked the policies specifically so they could be resold, generating big commissions along with potentially large payoffs for the investors — including himself — who bought them up.
The Minnesota Department of Commerce revoked Antonello’s insurance license in December for two years over allegations of misrepresentation and fraud, and federal regulators recommended in July that Congress give the U.S. Securities and Exchange Commission authority to oversee life settlements.
Meanwhile, Antonello has been defending himself against civil lawsuits alleging a litany of misdeeds, including fraud, conspiracy, unjust enrichment, forgery, misrepresentation and breaches of his fiduciary duties.
He declined to comment for this story: “I can’t think of anyone who will be helped by a story about me at this time. Even a positive profile, which I believe is more than I could hope for, would not serve the people that I care about,” he wrote in a recent e-mail.
Antonello has made his side of the story clear in court filings, though. He denies wrongdoing, and claims he was “wined and dined” and given the “VIP treatment” by insurers whose policies he sold.
He said this changed only when the insurers realized that Antonello’s investors would make certain that the policies they purchased wouldn’t lapse, ensuring that the companies eventually would have to pay out on them. Elderly people often let policies they no longer need lapse, substantially increasing an insurer’s profitability as it collects premiums on the policy but pays only modest surrender charges when they’re abandoned.
Antonello argues that sales to investors set the “true market price” for the policies. He alleges that insurers went on a “witch hunt” to retaliate against agents like him and his former partner, Thomas Petracek, who has retired to Florida and could not be reached for comment.