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Marvin Schwab "gave" Charles Sutter the premium by arranging what
was described as "nonrecourse premium financing" through Stable
Reserve, Inc. (Stable), a Utah corporation. Marvin Schwab,
Daniel Schwab, and Devon Nish owned and controlled Stable.
Charles Sutter received a check from Stable, payable to him in
the amount of the first-year premium. The check was drawn on
Stable's account, signed by Marvin Schwab. In turn, a check in
the same amount was drawn on petitioners' personal checking
account, payable to the Royal Maccabees Life Insurance Co.
(Royal). As part of the transaction, Charles Sutter signed a
"Promissory Note (Interest)" to Stable in the amount of the
first-year premium, payable with interest, but, at the option of
the maker, only from the death benefit proceeds of the Royal
policy. He was not required to, and did not, submit a financial
statement to Stable before receiving the funds from Stable.
In addition to the note, Charles Sutter signed an assignment
of the Royal policy in favor of Stable, but the assignment
document was never forwarded to Royal. Royal allowed such life
insurance policies to be assigned only with its consent. Royal
was not aware of, and did not consent to, the above-referenced
assignment.
Stable offered the type of service provided to Charles
Sutter only to clients or customers of the Daniel Schwab Agency.
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Last modified: May 25, 2011