Vemma was a pyramid scheme: Insurer refuses to cover FTC lawsuit

Since August 2011 Vemma has held a Private Company Management Liability Insurance Policy with Hanover Insurance Company. The policy has a liability limit of $5 million dollars, yet to date Vemma have been unsuccessful in getting Hanover to fund their FTC lawsuit defense. Should BK Boreyko have read Vemma’s insurance policy closer, or is he [Continue reading…] Source: Vemma’s insurer refuses to cover FTC lawsuit

An actual controversy exists between Defendants and Hanover regarding Hanover’s purported obligation to provide them with a defense and indemnity for the FTC Lawsuit, which cannot be resolved without a declaration of the rights and responsibilities of the parties by this Court.

The liability coverage parts are written on a claims-made basis.

Subject to its terms, this policy applies only to claims first made against the insureds during the policty period.

And because the FTC Lawsuit is a “related” Claim, Vemma’s failure to provide notice of the original Claims similarly means there is no coverage under the Policy for the FTC Lawsuit.

With respect to the liability coverage parts, all related claims will be considered as a single claim made in the policy period … in which the earliest of such related claims was first made.

At the time the 2015-16 Policy Application was submitted, Vemma and Boreyko were “aware of any fact, circumstance, situation that might reasonably be expected to result in a Claim that would within the scope of the proposed Liability Coverage Parts,” but Vemma and Boreyko failed to disclose the same to Hanover.

Specifically, (Vemma and Boreyko) knew that Vemma was a pyramid scheme, knew of the Arizona Pyramid Arbitration, more than 100 Consumer Complaints (including an Oregon DOJ Claim), and the Italian Proceeding, and also knew that the failure to disclose the same constituted a misrepresentation “which materially affect the acceptance of the risk or the hazard assumed by the Insurer under this Policy.”

Read the full article and join in the discussion over at BehindMLM.