New Complaint – Abidog v. New York Life Insurance Co.

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Abidog v. New York Life Insurance Co. was filed in the Superior Court of the State of California on June 18, 2021, seeking damages and rescission of unregistered promissory notes sold in a Ponzi scheme that deprived elderly and other unwitting investors of their life savings.  The fifteen-count complaint alleges violations of California statutory and common law, as well as federal securities law.

Defendant Felix Chu is a former agent of Defendants New York Life Insurance Company and NYLIFE Securities LLC (collectively, “New York Life”) who used his role at New York Life to perpetrate the Ponzi scheme.  Plaintiffs are investors in the scheme.

Plaintiffs allege Defendant Chu, as a New York Life agent, lured them into investing life insurance proceeds, retirement funds, and other assets in the purchase of unregistered promissory notes.  Defendant Chu also coaxed some of the Plaintiffs to purchase New York Life insurance policies and to borrow money from these policies to invest further in the notes.  Each of these notes were issued by Defendant Felix Chu, his son Derek Chu, or entities they controlled.  The Chus stopped paying interest and principal on the notes, causing the Plaintiffs to lose their life savings.  One of the Plaintiffs was also forced to surrender her New York Life insurance policy due to her inability to pay the premiums after the default on the notes.

The complaint alleges fraud by intentional misrepresentation, fraud by concealment, constructive fraud, breach of fiduciary duty, negligence, negligent misrepresentation, aiding and abetting, violations of the California Corporations Code and the Business & Professional Code, negligent supervision and control, elder abuse under California law, violations of sections 10(b) and 20(a) of the Securities and Exchange Act, and violations of Rule 10b-5 of the Securities and Exchange Commission Rules against all Defendants.  Plaintiffs also allege breach of third-party beneficiary contract against Defendant NYLIFE Securities for failing to supervise Defendant Chu in accordance with FINRA rules.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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