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Conspiracy to Defraud
A Tampa business owner accuses a Temple Terrace lawyer of secretly sharing in $1.2 million
in life insurance commissions.
By David R. Corder
Associate Editor
The principals of a health care consulting group claim a Temple Terrace lawyer and a capital management consultant wrongly induced them to acquire $85 million in life insurance and then secretly split $1.2 million in commissions.
If that accusation is proven, the actions of lawyer Temple Drummond may have violated conflict of interest guidelines in the state's rules of professional conduct for attorneys. A Florida Bar spokesperson acknowledged last week that a grievance committee opened an inquiry in June last year to determine whether probable cause exists to investigate Drummond. Until then, the bar complaint remains confidential.
On June 25, the principals of Bredel Corp., a Tampa health care consulting group, filed a lawsuit in Hillsborough County Circuit Court against Drummond; his former employer, Orlando-based Akerman Senterfitt & Eidson PA; the firm's Tampa managing partner, Joseph Rugg; IFL Capital Group Inc., a Scottsdale, Ariz.-based capital management firm; and Lex J. Byers, an IFL senior vice president and consultant.
In addition to Bredel Corp., the plaintiffs include Bobby L. Coates, the consulting group's president; Deborah R. Coates, his wife and the group's chief operating officer; Bredel Management Co. Inc., an affiliated company; and the trust under the Bredel Management Co. deferred compensation plan, an entity that Drummond formed and where he once served as trustee. To plead their cause, the plaintiffs retained David Weinstein and Geoffrey Parmer of Tampa's Bales & Weinstein PA.
The plaintiffs allege fraudulent misrepresentation in the inducement, negligent misrepresentation, conspiracy to defraud, breach of fiduciary duty, breach of contract, legal malpractice and negligent supervision. The plaintiffs seek unspecified damages.
In addition to allegations of fraud and deceit, the plaintiffs accuse the defendants of contributing to a decline in Bredel Corp.'s economic growth, which resulted in employee layoffs.
Founded as a small consulting firm in the early '90s in Tennessee, Bredel Corp. provides the institutional health industry with services such as management, regulatory compliance, administration, behavioral clinical auditing and organization development.
In 1999, according to the complaint, Bobby Coates retained Akerman Senterfitt to advise him on a variety of business and personal legal matters. About two years later, Rugg introduced Coates to Drummond to discuss business, tax and estate planning issues. With Rugg acting as a supervisor, Drummond proposed a tax savings plan to Coates.
"After reviewing Coates' personal and business information, Drummond advised and recommended that Coates undertake extensive restructuring of his existing corporations, including the formation of Bredel Management Co. Inc., the creation of the trust, as well as execution of other revocable trusts and living wills," the lawsuit states.
Not long after, Drummond introduced Coates to Byers, the lawsuit states. Byers pitched a purported confidential and proprietary tax savings plan through IFL Capital, which involved the formation of affiliate business entities, trusts and the purchase of two life insurance policies.
"According to Drummond and Byers, the plan would lawfully eliminate the tax liability of plaintiffs," the lawsuit states. "To support the legitimacy of the plan, Drummond and Byers provided Coates with, among other things, a legal opinion letter prepared by a national law firm purporting to confirm that the plan was legitimate and would minimize plaintiffs' tax liability."
To execute the plan, Drummond and Byers purportedly required Coates and his wife to purchase two, multifunded flexible premium adjustable life insurance policies through Metropolitan Life Insurance Co., the lawsuit states. Exhibits attached to the lawsuit show Coates purchased a policy in January 2002, with a face value of $25 million. The wife's policy had a face value of $60 million. The couple paid $1.5 million in initial policy premiums.
In April 2002, Drummond and Byers purportedly persuaded Coates to form a business venture to offer medical doctors the IFL Capital confidential and proprietary tax savings plan, the lawsuit states. The ELC Joint Venture would rely on a national life insurance company to assist with marketing of the tax savings plan. Coates claims they promised him $7 million to finance the joint venture.
Just two months later, however, Coates claims he learned he would not receive the $7 million in financing.
Although the lawsuit doesn't state when, Coates purportedly discovered that Drummond and Byers entered into a secret agreement to share $1.2 million in commissions on the two insurance policies. He claims they used confidential personal and business information to estimate that Coates and his wife could afford $1.5 million in life insurance premiums, "which closely represented Coates' 2001 annual income from business operations." He claims Drummond and Byers selected $85 million as a threshold high enough for Coates as part of their plan to guarantee the agent commissions.
Rule 4-1.8 of the Florida Bar's rules of professional regulation for attorneys prohibits them from third-party compensation unless a client approves it.
"Coates and Bredel were completely unaware that the policies would pay the exorbitant commission of $1.2 million," the lawsuit states. "In fact, Drummond affirmatively represented to Coates that the commission had been capped at approximately $400,000. However, prior to the implementation of the plan and purchase of the policies, Drummond and Byers knew that they would receive significant sums from the sale of the policies."
Although the lawsuit does not say how much, Coates purportedly invested significant dollars into the confidential tax savings plan and the ELC Joint Venture.
"After learning of the secret agreement, Coates was informed that the plan was fundamentally flawed, that the issuance of the policies was completely inappropriate and that the purported tax benefits did not exist," the lawsuit states.
Drummond eventually left Akerman Senterfitt. In August 2002, he opened a Temple Terrace solo practice as Drummond & Associates. He referred all questions to his counsel, Ronald Christaldi, a shareholder at de la Parte & Gilbert PA. Christaldi was unavailable for comment.
Akerman Senterfitt officials referred all comments to Orlando attorney Robert B. Nadeau, the firm's in-house legal counsel. Nadeau says he could not comment since he has not been served with a copy of the complaint.
Efforts to reach Byers for comment were unsuccessful. And Weinstein did not respond to a request for information.
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