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Betting on death is a risky business. Dudley T. Baker of Daytona Beach, Fla., found that out the hard way. In 1997, the retired advertising executive invested $50,000 in discounted life policies, on four men terminally ill with AIDS, through Maynard P. Weinberg of Boynton Beach, Fla. Baker was one of about 40 Florida seniors who invested a total of about $1 million in such policies through Weinberg. The investments are called viaticals. Weinberg, who operated an investment counseling firm called the Weinberg Organization in West Palm Beach, Fla., from 1983 until he closed shop last September, promised investors huge returns. “Double Your Money! Every 4 Years! Absolutely No Risk!!!” he advertised in a 1997 print ad in the Palm Beach Post. Typically, viaticals salesmen like Weinberg receive a commission of 2 percent to 10 percent of the total amount invested. In the viaticals industry, death is the date when the investment matures. But the promised events still haven’t occurred; the four men are still alive. Weinberg sharply understated the life expectancy of insured people with AIDS, given the highly effective new drug cocktails used to treat the disease — a development with widespread repercussions for the viaticals industry. As a result, Baker, along with the Florida attorney general’s office, has sued Weinberg for fraudulent inducement, based on the financial adviser’s seemingly ironclad advertising promise of large and rapid investment profits. Baker says he decided to make the investment only after receiving written assurances from a Rochester, N.Y., physician named Lon Baratz that the four insured men would each die within two to three years. “While we are glad that there have been great advances in AIDS research, my client was given bad information,” says Baker’s attorney, Douglas E. Thompson of West Palm Beach, who has sued Weinberg on Baker’s behalf. Baratz did not return phone calls for this story. The Florida attorney general’s office in Fort Lauderdale also filed suit against Weinberg and his company last May in Palm Beach Circuit Court, alleging that Weinberg made a fraudulent inducement to investors. “Sometimes Weinberg represented he would triple an investor’s money,” says assistant attorney general Jody Collins. Baker says he first realized something was wrong last March when he started receiving bills for premium payments on the four men’s life insurance policies. These premiums were supposed to be paid by Weinberg out of funds set aside from Baker’s original investment. If the policies expired, Baker would lose any chance of recouping his money. Last August, Weinberg promised to pay the premiums but later reneged, says Baker. Unaware of the state’s lawsuit, Baker hired Thompson, who filed suit against Weinberg in November. Baker is demanding the return of his $50,000, repayment of the premiums he has paid to keep the four ailing men’s insurance policies in effect, punitive damages and legal fees. The suit is pending in Palm Beach Circuit Court. Weinberg denies any wrongdoing. “I don’t play games,” he says. “I can’t handle risk of any kind and there wasn’t any.” He accuses the complainants of “just looking for any excuse because an investment didn’t work out the way it’s supposed to work out.” But Collins expects Weinberg, who she says is financially “well-situated,” to settle with the state in the next few months. While she says there’s no way to fully recoup the original investments, the state is seeking a settlement that gives the investors enough money to keep up the premium payments. To make sure she’s identified all of Weinberg’s viaticals investors and accurately calculated the total damages, Collins recently subpoenaed records from Dedicated Resources Inc. of Delray Beach, Fla., which bought the term life insurance policies from Weinberg. Weinberg claims he’s never heard of Dedicated Resources. But Michael Zadoff, who owns Dedicated Resources and a sister company, Dedicated Trustees Inc., which administers viaticals investments, says he knows Weinberg. Zadoff insists, however, that he’s no longer in the viaticals business: “I’m retired, not in business at all.” That’s not supported by the Florida secretary of state’s records, which show that both of Zadoff’s companies are still active. Phone calls to Zadoff’s office are answered by people who respond by saying, “Dedicated.” Baker’s attorney says he plans to add Dedicated Resources as a defendant in the suit. The company previously has been sued over similar issues. In 1998, Boca Raton, Fla., lawyer Mitchell Perlstein of Investor’s Law Center sued Dedicated Resources and Orlando, Fla.-based Accelerated Benefits Corp. on behalf of viaticals investors, alleging fraud. Perlstein says Zadoff and Dedicated Resources quickly settled. Baker laments that he had no idea viaticals investments were so uncertain, and wouldn’t have invested if he’d known. “There were no disclaimers in the ad,” he says. “I was counting on the money.”

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