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A Pennsylvania insurance company has agreed to pay $160 million to settle a lawsuit brought by the U.S. Attorney’s Office that accused the insurer of using fraudulent tactics and kickbacks to sell life insurance policies to tens of thousands of U.S. soldiers. In the settlement, Academy Life Insurance of Frazer, Pa., did not admit to any wrongdoing but agreed to never sell another policy in the United States. The suit alleged that Academy Life’s salesmen posed as recruiters for the Non Commissioned Officers Association and paid kickbacks to the military fraternity for use of its name. Prosecutors said that in the 1990s, Academy Life had a near monopoly on selling insurance at American military bases. At a press conference Thursday, prosecutors said the firm secretly agreed in 1991 to pay the NCOA $700,000 a year, plus 1 percent of all premiums, in exchange for the group’s endorsement and its help in getting access to the bases — which are off-limits to insurance agents. Academy agents posed as NCOA “membership developers” and visited soldiers, claiming to be recruiting for the fraternity, the nation’s largest military association. In reality, they were salesmen whose sole task was to sell insurance, prosecutors said. “Young service members were exploited,” said U.S. Attorney Patrick Meehan at a news conference in Philadelphia announcing the settlement. “They deserve better. They must be protected from corporate predators.” According to the lawsuit, about 93,000 soldiers and sailors bought the policies between 1991 and 1998, when the military banned Academy Life from Defense Department installations. Although the investigation revealed that NCOA leaders were aware of the fraud, prosecutors said that no action will be taken against the group because there was no evidence that leaders in the fraternity profited personally from the scheme. Assistant U.S. Attorney John Pease said that, in some instances, there was evidence that Academy Life “duped” the association. Pease said the fraud was related to the sales tactics, not the operation of the policies themselves. Academy Life spokeswoman Liz Schmid said the firm settled to avoid a costly legal battle. The firm had been sued over its sales practices in several state courts but had successfully defended itself, she said. “The settlement does not involve any admission (of fraud) or finding of liability against Academy,” Schmid said. Most of the company’s penalty will be paid as additional death benefits when the policies are cashed in. The Justice Department said those additional payments will ultimately total $160 million. The firm also agreed to pay $2.7 million to policyholders who canceled between 1991 and 1998, plus $1.5 million in fines and to cover the cost of the investigation. The Non Commissioned Officers Association was founded in 1960 and later chartered by Congress to advance the interests of service members. In the 1990s it had 150,000 members in 200 chapters on or near military bases, but it has since seen membership decline to around 65,000. “This thing has taken its toll on us. It beat us up pretty good,” said the NCOA President Dave Sommers, the retired 11th Sergeant Major of the Marine Corps. who has led the group since 1999. Sommers said the NCOA has severed ties with Academy Life, but he also defended the company, saying that it had offered good policies to supplement low-cost life insurance offered to soldiers by the government. The NCOA never intended to mislead soldiers into thinking Academy Life’s agents were anything other than insurance salesmen, Sommers said. “The relationship was a good one, and Academy had some very good policies that they put out there,” he said. “I had one. My son had one. I never thought they were bad policies.” Associated Press reports contributed to this article.

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