Agent should lose claim to client’s annuity, judge says
Insurance agent was beneficiary, held POA
Saying she netted an illegal $1 million profit, former insurance agent Blanche Berenzweig should return the money she collected from a now deceased client’s estate, according to a decision by an administrative law judge now heading to the state Insurance Commissioner for action.
Meanwhile, Milwaukee County Circuit Judge Marshall Murray ordered Tuesday that a trial be held this fall to determine who should collect the entire $1.6 million estate of LeRoy Ern, a north side Milwaukee man who lived the life
of a hermit. He died of advanced dementia in 2016 at the age of 92.
When he died, Ern left everything to Berenzweig, a now-retired insurance agent who lives in Mequon and the Las Vegas area. Eleven of Ern’s 12 nieces and nephews objected to the will that was drafted in 2009, arguing that Berenzweig improperly pressured their reclusive uncle. The will was drafted by a lawyer who shared an office with Berenzweig.
In his final years, Ern also gave Berenzweig power of attorney over his financial and health affairs if he became incapacitated.
“In 2009 and 2010, (Berenzweig) took advantage of an isolated, elderly customer,” Rachel Pings, the administrative law judge, wrote in the proposed order that was filed last week in the Circuit Court probate case. “By becoming Ern’s POA, she put herself in a position to entirely manage his money . ... She further exploited Ern’s trust and isolation by knowingly being named as the beneficiary of his annuities when she had no insurable interest in his life.”
“She profited illegally by more than $1 million,” Pings wrote.
Pings’ order now goes to state Insurance Commissioner Ted Nickel, who will decide whether to uphold Pings’ recommendations that Berenzweig return the annuity proceeds, permanently revoke her insurance license and fine her $3,000.
The commissioner can accept or reject the recommendation, and he could also fine Berenzweig up to$1 million — though Berenzweig’s lawyer and Pings say a fine that large cannot be imposed.
State insurance regulators filed charges against Berenzweig last year asking that her insurance license be revoked, she return the proceeds from the annuities and pay a $1 million fine. Those charges led to a two-day hearing in October before Pings.
The annuity proceeds are currently frozen.
Pings’ 15-page decision says that Berenzweig serving as Ern’s agent, beneficiary and power of attorney posed obvious conflicts.
“She would therefore have been motivated as his POA to spend as little of his money as possible (for his care or otherwise) because every penny she spent was one less penny she would receive upon his death,” Pings wrote, adding that it is irrelevant whether Erns understood the transactions when he approved them.
“It was a prohibited transaction in the first place,” Pings wrote.
Looking at Ern’s modest home in the 4600 block of North Parkway Avenue, one would never have guessed that the retired factory worker was a millionaire. Neighbors said they seldom saw him out of the house, except to care for and occasionally drive his 1981 Buick LeSabre.
In fact, Ern didn’t even own the house. It was owned by the family of Lillian Anderson, his longtime girlfriend. When she died in the mid-1990s, her family allowed Ern to live in the house rent-free.
The house was a dump, according to Berenzweig and others who saw the inside in 2013, when he was forced out and went to live in an assisted living center and ultimately moved to a nursing home, according to court records and testimony.
Perishable food, stacks of newspapers and junk he was was hoarding could be found throughout the house. There was no operating furnace, pipes — including the one leading from the bathroom sink to the wall — were missing and the refrigerator was not usable, witnesses said at the October hearing before Pings.
Ern was never close to his nieces and nephews, and the relationship grew more distant as his siblings died, according to records and interviews.
He initially met Berenzweig in 1993 when she helped him purchase an annuity. They became reacquainted in 2008 when Ern was having a problem with that policy.
A friendship developed, Berenzweig testified during the October hearings, that led to frequent visits to her Mequon office where they discussed history, current events and other topics.
Berenzweig said she vehemently objected to Ern making her the beneficiary of the annuities and the estate but that her client was insistent.
“LeRoy Ern was not vulnerable; he was eccentric,” Berenzweig’s attorney, Michael Ganzer, wrote in a response to Pings’ decision. “However, the overwhelming evidence is that he was in charge of his own affairs, trusted Blanche Berenzweig and was alienated from his family.”
Pings noted in her opinion that insurance regulators consider Berenzweig “an unethical insurance agent who took advantage of her position of trust with a lonely old man so she could benefit from his sizable estate when he died.”
Ganzer also objected to Pings’ suggestion that the insurance commissioner void the annuities, saying that question should be decided in the probate case. Ern’s nieces and nephews in that case are challenging their uncle’s entire will, which made Berenzweig the sole beneficiary.
“We don’t think the commissioner of insurance should substitute his judgment for LeRoy Ern,” Ganzer said.
Though Ganzer argues that Berenzweig did not violate any laws or rules, he did acknowledge that many of the problems his client faces today could have been avoided.