Wayne County woman to appear on CNBC's 'American Greed'
A Wayne County woman who says she unwittingly invested in a life insurance scam is slated to be featured on CNBC's American Greed on Friday at 10 p.m., according to the network.
Carol Tonzi, 58, of Palmyra, says she's paid close to $100,000 and counting into what amounts to a Ponzi scheme that involved the buying and selling of artificially inflated life insurance policies through the now-defunct Mutual Benefits Corp. of Fort Lauderdale, Florida.
Authorities allege Mutual Benefits sold investors like Tonzi $1.2 billion worth of so-called "life settlements" before the Securities and Exchange Commission shut down the firm in 2004. Thirteen people, including the company's founder, have been convicted.
Dozens of investors were from Wayne County.
A "life settlement," also known as a "viatical," works like this: Someone with a life insurance policy on themselves cashes out early, receiving a settlement that's less than the value of the policy. The policy is then bought by an investor, who pays the premiums until the person dies and pockets the benefit paid by the insurance company.
It's a risky game that was made riskier when Mutual Benefits hired a crooked doctor to write letters downgrading the life expectancy of policyholders to entice investors. That doctor is serving a 10-year-prison term.
In Tonzi's case, she said her accountant sank $51,700 in 2003 into partial ownership of a $5 million policy for an elderly woman without Tonzi's knowledge. When Tonzi learned of the investment, she said, she was told that she would see a return of $82,720 in five years.
Today, that elderly woman is thought to be 95 years old and Tonzi is still paying premiums.
"They tell me that when it matures I will get $102,000," Tonzi said. "Right now I'm about even. Any future premiums and I'll just be going backwards."
Tonzi has joined dozens of Wayne County residents in suing their accountant, Richard Nichols, in state court, alleging negligent advice. Nichols has denied any wrongdoing and the case is pending.
James Foley, the lawyer representing Tonzi and the other plaintiffs, said many investors lost their money because they were unable to afford to keep paying premiums.
"There is the potentiality of a payoff for those who continue to pay," Foley said. "But I have absolutely no confidence at all on the information indicating the age of these policyholders. My guess is a lot of people are much younger than they were projected."