April 1994 – This case involved a fraudulent scheme by an insurance company. It dealt with vanishing premium insurance policies sold by Prudential Insurance Company. The policyholders in the Gallant case, a husband and wife, were told if they made their payments on their life insurance policies for a certain amount of time, the policies would be paid up and would be in force until they died. The couple was told that there would be no more premium payments due on the policy. This turned out not to be a false statement.
Testimony at trial showed this was in fact a false statement and that the insurance company had made similar statements to many other policyholders. The company had actual notice that Prudential’s agent was defrauding people, but it did nothing about it because he was one of their better-producing agents. After hearing the evidence, the jury returned a verdict for $25,430,000. After the trial, the insurance company contacted every policyholder in the county where the policies were sold and corrected their policies. This was a great victory for all consumers in the area. It changed the way Prudential did business.
