Ameritas: FINRA settlement precludes new lawsuit over annuity sales

A retired Navy veteran and his wife are suing Ameritas over the alleged fraudulent sale of unsuitable equity-indexed annuities.

Andrew and Jennifer Johnson initially sued Ameritas Mutual Holding Co., Ameritas Life Insurance Co., and broker Allison Terlip in North Carolina state court. In December, Terlip petitioned to move the case to the District Court for the Eastern District of North Carolina.

Ameritas claims the plaintiffs agreed to a mediation settlement in August and is asking the judge to enforce that agreement. On Monday, the Johnsons filed for a stay of that decision until their own petition to return the case to state court can be heard.

Andrew Johnson is a retired U.S. Navy captain and Iraq combat veteran, while his wife is a pharmacist, court documents say.

Felony assault charge

In its lawsuit filed Aug. 27 in Warren County state court, the Johnsons claim that Ameritas is liable for a “sophisticated scheme … to defraud” them via the sale of unsuitable equity-linked annuities. In addition, the insurer allegedly withheld information about Terlip, whom the Johnsons describe as “a felonious financial advisor who targeted retired military families with her husband.”

The Johnsons liquidated about $926,000 in “diversified treasury securities and mutual funds held in their Thrift Savings Plan and Vanguard accounts, the lawsuit states. They used those proceeds to purchase three “concentrated, illiquid, and unsuitable proprietary” equity-linked annuities from Ameritas.

The Johnsons allege that Ameritas deliberately concealed Terlip’s felony aggravated assault with a deadly weapon charge and her subsequent no-contest plea in July 2023, calling it “material information that Defendants knew would have prevented Plaintiffs and other customers from ever doing business with Terlip or the Ameritas enterprise.”

According to court documents and BrokerCheck, Ameritas fired Terlip in October 2023.

“Defendants concealed this fact from Plaintiffs and allowed Terlip to remain an active insurance agent for ALIC and complete the sale of EIAs to Plaintiffs after she had been terminated by AIC,” the lawsuit claims.

As for the three annuities, the Johnsons describe them as “complex products with lengthy surrender periods, substantial penalties for early withdrawal, opaque fee structures, and risks entirely unsuitable for the Johnsons’ stated need for liquidity and conservative investment approach.”

A spokesman for Ameritas said the company does not comment on pending litigation.

Deal or no deal?

On Jan. 5, Ameritas filed a motion to enforce a settlement agreement, stating that the Johnsons’ attorney agreed to it in early August. According to the insurer, the Johnsons sued Terlip and Ameritas Investment Co., and the two parties engaged in mediation talks as part of the Financial Industry Regulatory Authority‘s dispute resolution process.

Those talks took place Aug. 8-9, the motion said, and resulted in an agreement on a payment from Ameritas in satisfaction of all claims. The Johnsons were to surrender the three annuities as part of the resolution, Ameritas noted.

Counsel for the Johnsons accepted the mediator’s settlement agreement in an Aug. 9 email that read: “Agreed. Thanks gents[sic]. Enjoy your weekend.”

On Aug. 13, the Johnsons rejected a formal settlement agreement, the Ameritas motion said. The couple insisted on the waiver of surrender charges associated with the indexed annuities, the motion noted.

The Aug. 9 email “listed the necessary payments and allocation of costs (most of which fell to AIC or Terlip),” Ameritas said, “the actions that the Johnsons needed to take to ‘surrender’ their annuities, and the agreement to execute a ‘standard settlement agreement’ with ‘customary terms.'”

Ameritas is asking the court to treat the initial email response from the Johnsons’ counsel as a “binding settlement agreement between the parties.”

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