TDI Orders Annuity Company to Cease & Desist Fraudulent Practices

AUSTIN – The Texas Department of Insurance (TDI) issued a cease and desist order on May 18, 2007 to the National Foundation of America (NFOA) for engaging in the business of insurance without a license.

NFOA, based in Tennessee, claims to be a tax exempt charity that assists individuals with their charitable planning goals. It has solicited at least 26 licensed insurance agents in Texas to sell its purportedly tax-deductible annuities.  In essence, individuals transfer ownership of their existing annuity to NFOA through a change of ownership form and receive an “Installment Purchase Plan” that promises to provide payments over a fixed period of time as well as providing a substantial charitable tax deduction.  NFOA also promises long term payout and/or substantial payment to heirs and beneficiaries. However, information received by TDI shows that NFOA does not have charitable tax exempt status.  NFOA does not hold a certificate of authority to act as an insurer or “charitable organization” in Texas and has not filed a notice of exemption.

To date, TDI has discovered 39 Texas citizens who have transferred existing annuities to NFOA. Most of these individuals are elderly.  These elderly Texans appear to have surrendered in excess of $11 million in insurance products, cash, and securities.

The Texas State Securities Board also entered a cease and desist order against NFOA after concluding that the organization was fraudulently soliciting Texas investors to participate in an unregistered investment program. In addition, insurance departments in the States of Florida, Iowa and Washington have issued cease and desist orders in the recent past.  At least nine other states have ongoing investigations regarding the unauthorized business of insurance by NFOA.

For more information contact: PIO@tdi.state.tx.us

Last updated: 05/29/2007