A Viatical Arrangement

Profiting from death

In those days, the glorious 90’s, I was living in Turkey and enjoying the sojourn amidst a whole lot of lovely people, both in the office and outside. The place was great to live in, the ambience and weather perfect and with a young family in tow, the expatriate life was proving to be satisfying. Mustafa Sandal had made it big with his song ‘Araba’, Hulya Avsar was still omnipresent on entertainment TV and Tarkhan riding the top of the waves after ‘Oynama Sikdam’. Tansu Ciller the PM had slipped out of the limelight, and Erbakan who took over was making merry, while the army generals were sweating. But there was also a dark horse breaking through with a song - that was Murat Kekili with his hit ‘Bu Aksam olurum’ …after years of being sidelined…That was the setting in Istanbul, the Constantinople of old.

On one such calm Saturday, as the story over the burning ship at the mouth of the Bosporus was making headlines, I got a telephone call. The call by itself should not have been worth mentioning in the first place, except that the caller was speaking in perfect clipped English accent, though not quite an Englishman. He announced himself as a financial manager and wished he could get a few minutes of my time to meet and perhaps discuss a matter of mutual interest. As the introduction was going on, alarm bells started to ring in my head stridently warning me to terminate the call. I should have listened. What made me think twice, urged by my keen intellect (or the lack of it) was his mention of a pension account I had planned to associate with. I asked him right over so that I could get the discussion done with and as he was also living on the European side of Istanbul, where most of the Expats lived, it would not mean a delay.

Now readers not quite clear about Turkey and Istanbul should note that Istanbul is one of those huge cities, perhaps the only city that lies on two continents, Europe and Asia, home to some 20 million people in the metropolis. A vast majority of it called Anatolia is the Asian side and a small part, the imperial Constantinople, is Trakya (Old Thrace) or the European side. Obviously the well-heeled expats live on the European side, much to the envy of the hard working but lowly paid Turkish counterpart. But you know how it is, these things are like that, enough said on such matters of inequality for that is not core to this tale. The strait of Bosporous (Oh! how long I could wax on about the days spent sitting on the hill side of Bebek and watching the boats and ships crossing the serene waters of the Bosporus, and of the characteristics and features of the lovely ladies walking on the shores….)separates the two land masses. A number of stories are connected to this geographical formation, in fact it is even said that the black sea was the result of the biblical deluge and that is how Noah’s ark landed up atop the Ararat Mountain near Van.

But I must not digress, for our visitor, that man with the English accent, is here. I hear the bell at the door and opening it, come face to face with a man of African origins and dark complexion, definitely an incongruity in Western Turkey. Of very pleasing manners, he quickly seated himself without being told to, and opened his leather briefcase to take out a sheaf of papers. I am a bit put off, for introductions have still not been made. Not to worry, for our man has soon held out his hand to offer a firm handshake while at the same time announcing his name to be John Walker (why did the bells not peal again??) from Camden, a suburb in London. Had I met him a decade later, I would have been able to detect the lack of what they call cockney accent, for I had by then added a couple of years of working in the UK under my belt, but at that time all I could figure out was that he was an Englishman, though not exactly the Englishman I had pictured in my mind.

He represented a financial company in England and dealt with financial instruments. I had no clue about such matters, my money or the little bits of it saved, went into a simple NRE account in India. As I was wondering what these financial instruments were and as to why this bloke was sitting on my sofa and why I was wasting a perfectly good Saturday on such nonsensical matters, a thought came to my mind. I asked him if he had heard of Krishna Menon. Thrown off course, Walker looked at me like I had let loose a loud fart or something. Feeling some heat on my brows, and a couple of drops of perspiration, I hastened to add that I was talking about an Indian freedom fighter named VK Krishna Menon who used to represent Camden. The blank look on Walker’s face made it clear that he had not the slightest idea of what I was talking about and made me wonder why I made that wisecrack in the first place. I hope I can tell you about Menon and Camden some other day, if you let me.

The handshake was followed by a few minutes of mutual introduction when we talked about our respective backgrounds and worldly travails. Without any further forays into more hospitable terrains such as a cup of tea and so on, Walker launched into his presentation. We went through a couple of pension policies, basically mutual funds administered out of UK, and promising 5-10% returns at best, based on annual deposits. They did not look very appealing, but was something to consider for the long run. As we talked of the long run, Walker asked if I were interested in Insurance policies. When I said that all I had was a paltry policy started long ago by my father in India, he said he had another proposition for me. I was not too sure, but curious and so asked him to explain to me what it was.

He started out by announcing that he had a superlative offer to make, something that would make me very rich. From the corner of my eyes, I could see that my wife who was sitting on her sofa with an air of total disinterest, now looking quizzically at me. But soon seeing that smile on my face, which so irritates many a person who knows me (they say it is ‘that’ sarcastic smile), she was satisfied I was not yet taken in by the glib talker across me. Little was she to know that things could take a wild swing to the realms of the unknown, and very soon, at that!

Walker was by now hitting his stride; he got to the specifics and explained that what he had to offer concerned investment in an insurance scheme of sorts. I was a bit alarmed hearing that, wondering what kind of a scheme this was going to be , a pyramid scheme or something and how I could get rid of the chap quickly, if I had to. Well, he quickly administered a second shock; it involved life insurance and terminally ill people. I was definitely perturbed hearing this and seeing my nervous demeanor, he passed on the perfect antidote in such situations, the reward aspect. He quickly added that he will be glad to provide as much detail I wanted and that it was all kosher and above board, not to mention that the individual takings could be to the tune of $100,000 or more. Well! Well! That figure got my attention, not necessarily due to avarice, but the sheer magnitude mentioned.  You must agree that at the very least I was being curious enough to find out what this was all about and see where the discussion went.

The scheme as explained sounded thus: There in the West existed a place called America where a number of people lived loose and fashionable lives with what little money they had, like there was no tomorrow. They lived life to the full. Soon, these lives, much like long gone the Roman days, spiraled into difficulties, especially with the onset of new sicknesses. But fortunately many of these large hearted people had taken very large (Walker paused here to lower his voice and substantiate the size) insurance policies. As time went by some of the unfortunate souls found that they were facing imminent death with the onset of a new and incurable disease they had acquired, called AIDS. It was an irreversible situation, but some bright financial whiz kid found a winning business enterprise firmly entrenched on this terminal malady.

That the person was going to die was as clear as day and night, that he had a year or two at best was also clear, since the doctors had certified so based on their very expensive tests and hospital procedures. That upon their death the large amounts of insurance monies had to be paid to their worthless offspring or other equally fortunate nominees was also definite. In the balance of economics, we had on one side the losers being the insurance company (what is not mentioned of course is the fact in the large picture the insurance companies never lost money!) and the ill person and on the other side, the gainers being the medical industry and the nominees, especially the latter who did nothing to earn those monies. It was on this economic bedrock that this viatical scheme was born. Some newly formed financial companies (like the one that deals with such instruments, and now represented by Walker) took over the policy from the terminally ill person for about a third of its value, to thence present a winning solution to new parties.

The insurance policy is signed off and given to the new controllers, being the financial company in return for an immediate sum amounting to a third of the policy face value (Let’s assume $300,000 in this case). But the intention of the company is not to wait till the man dies, it has to book and revenue the amount quickly. So it has to find other takers and walk off the case. The instrument is now sold to a number of new investors who go on to buy a share of the policy.   What they did not tell me, but what my erudite mind (ha!) worked out was the math - As the financial company has to cover their 100K investment plus earn say 100K margins per policy, the policy document has to be sold off for a minimum of 200K. So they find 5 people who fork in 40K each to total 200 K who then play the waiting game to get their share of the $300,000 when the man dies. The policy now has five new nominees, people the original holder has never seen or heard of. In fact the person may be continents away like in this case. The financial company has walked off the case, and Walker has made his commission of 10% per sale.

The terminally ill person walks off with the moolah to Florida or some islands or Thailand so that he can get on with his good life such as sailing boats and doing even more things in his bucket list till he died - all now financed by a sudden injection of financial resources. After some days he dies, and is of course decried by his descendants who suddenly understand that they have nothing to gain from the geezer’s death.What the new policy nominees get in return is 60K each, a 20K profit in one year! Walker makes 20K. All of them are thus winners right? The insurance company makes a debit in the appropriate column of their ledgers and closes the books.

This discussion took an hour and the figures were dizzying. I was impressed with Walker, but you know me, I am a tight fisted lad from Kerala and not one to get easily taken in by such hair brained schemes. My snigger (in Malayalam they have a word for it – Smona!) remained on my face right through, even as I was industriously calculating the figures in my mind.

Walker was now ready for the sucker-punch. Realizing that this was a tough nut who did not quite believe the whole thing and that the fishy odor was quite evident (but not from the nearby Bosporus straits), he changed tack, and took his briefcase. I could not but help admire its fine leather craftsmanship and the solid brass buckles. The Italians certainly knew how to work with leather.  The guy opens the clasps with that solid click and pulls out a copy of a policy issued by Aventura insurance Inc, Delaware favoring one John Doe.

John Doe’s story is interesting. He was not more than 38 years old at that time and carried a good insurance

policy paid out of debits from his meaty monthly salary. He worked for a Silicon Valley company that was minting money so to say, in those days. Unfortunately for him, a number of members in his gay community, including himself got afflicted with the dreaded HIV virus and in his case it had become full blown AIDS. Doe decided to live his last years in Key West Florida and that is how he decided to seek a viatical settlement, very legal and a done thing in the USA since decades.

The papers looked quite authentic. Walker suggested that if I were interested, I should check through my own contacts about the legitimacy of the policy, perhaps by employing a lawyer. He then pulled put John Doe’s medical certificates certifying that he was now in an unfortunate terminal phase of life and pronounced his days in this world limited, but not listing how many. Walker, taking a deep breath suggested that I use the same lawyer or other methods to check that this certificate was genuine and that Doe was indeed close to the bucket and with uplifted legs….. to kick it (Walker meant so - though not using these words, I must admit that I exaggerate at times for effect). Walker also provided BBB certificates for his company implying that it was above board, honorable and a pleasure to deal with. All he needed was my check for 40K and I would be one of the nominees. It would also be notarized immediately so as to be legally binding.

The arguments were quite fine, and at that time it looked legit and appealing, but I was still not convinced. For one, I did not have a 40K to give to Walker, and then again, even if I begged or borrowed the sum, it did not sound right to invest money on somebody’s impending death. Why should I spend every night, fighting sleep, wondering if and when Doe was going to die? What if by miracle Doe survived for another 10 years? All that hard earned money would be lost for ages. What if some of the deceased’s survivors sued?  I chickened out, much to the disgust of Walker. I did not become a nominee of Doe’s policy and so continued to be an employee drawing a meagre salary and nothing more, nothing less.

But a story is not a story if it ends here, right?

After a couple of years we left Turkey and moved to the US. The last days were a little chaotic, we had a massive earthquake in Istanbul, Mesut Yilmaz did not do too well as PM and a singer we had met named Baris Manco died. Bulent Ecevit rose again from the ashes to take over the mantle of the Turkish government, he was a man I greatly admired after Mustafa Ataturk. Tansu Ciller had retired, never to make a comeback. Our closest friends had left Turkey and moved elsewhere, and so it was a signal for us too to move. We moved to Florida and got into new circles, new neighborhoods and met new people. The Bosporous and our Istanbul days were consigned to a corner in the deep recesses of the brain, but always there for delivery of a quick anecdote at parties. We attended the Turkish annual days in the area with great fervor and Walker was totally erased from my memory.

I heard the next part of the story entirely by chance, many a year later, while lunching at a restaurant in London. No, do not let your mind go on an overdrive, for I did not meet Walker in London. In fact I met a person I had known very briefly in Istanbul and he had strayed in to the same restaurant in London, purely by chance. His name was Hanumant Saxena a.k.a. Hanuman, he used to be a mild mannered nerdy accounts executive in a Middle Eastern firm doing business in Istanbul. Hanuman was not the happiest actually meeting me, it was like I had revived some bad memory in his mind. Anyway we got talking and soon the cat was out of the bag. We now go back to the day Walker came to my house.

After he left my house, Walker the financial instrument salesman, who incidentally hailed from Zimbabwe, but became a naturalized Brit, meandered into the house of another expat who wisely or unwisely suggested that he go to yet another’s house and thus it was that he landed up at Saxena’s house.

Hanuman fell for the pitch and when the mathematical calculations fell into place and as the paperwork looked solid, his accounting mind simply took over. The problem with Hanuman was that in his naivety, while he saw relatively complex figures with great clarity, he could make out little of the devious ways of the world outside his accounting statements. The Arab owner who employed him was not paying him a great salary and the cost of living in Istanbul pretty high, so when he saw the godsend opportunity, he put in all his earnings plus more into the deal. In fact some of it was quietly siphoned off, albeit temporarily from the company books which he had access to, out of opportunistic avarice. He got a lawyer friend to help him out with the paperwork for a decent fee. He paid the money, got his nomination done and waited for John Doe to die. Walker got his commission. Not wanting to share his good fortune with anybody else, Hanuman kept mum about the matter.

He waited, and waited and waited. Walker had gone a walkabout, not to be seen in the expat circles anymore (rumor has it that he went to Singapore next for the next milking run) and the investment company asked Hanuman not to trouble them for they had done their part, which was to get his nomination entered into the policy. They were not very forthcoming or helpful. Of course they continued to bill an annual maintenance fee. So Hanuman went to UK and visited the investment company, not getting any information there either.  However a kindred soul in the office informed him that while most cases had been straightforward and executed as planned, John Doe just did not die.

One year turned to two and the exasperated Hanuman who had a horribly negative cash flow ran afoul with his employer who had discovered that his trusted employee had siphoned off some money from his books. But the man being an intrinsically nice person had the good mind to forgive Saxena and in the end just threw him out, after he had heard the full story and castigated him for playing with the will of Allah. Saxena now tried to get a job in the USA so that he could track John Doe. It was the Y2K period and so not too difficult to get one and that was how Hanuman landed a job with a credit card company with an administration office in Miami. Hanuman flew across the oceans, not on his own as his namesake did while going to Lanka in search of Sita, but in an Air Lanka plane, in search of John Doe. Look at the irony of the situation!

Saxena took a long swig from the Kingfisher bottle in front of him, and the food at the Rasa restaurant was really good. Sridharan had done a good job with this Rasa chain, and I was happy that a person from Tellichery had made a good name in the blighty (Krishna Menon was another from Tellichery who also went on to become a big wig). The thali was not too much or too mildly spiced and the crowd perking up. As we started to munch the Badusha (an Indian dessert), the last item left on the steel thali, which had otherwise been cleaned up with gusto, Saxena after a long pause narrated the last part of the story.

GRID or gay related immunity disease got renamed AIDS and soon as we all know, the disease acquired a stigma of its own. So John Doe left California and fled to Key West. He got on to an AZT treatment regime and eventually joined a club which provided him smuggled in antiviral mixtures and peptides to survive, and lived well under the radar. The insurance company was happy, but the people who had become shareholders to the potential proceeds were not, Saxena included.

But what happened to the viatical arrangement? Herein lies the crux of the story and the unfortunate luck of Saxena. When the whole scheme started, it was based purely on chance and no fraud was planned. As news of AIDS cures started to come in, the alarmed viatical company started fraudulent activity, something they called clean sheeting (cleverly hiding facts). In addition they took to other lucrative areas like laundering drug money with the proceeds so as to pay the more insistent investors. As far as lay investors like Saxena were concerned, they were fobbed off with various excuses. Soon the billion dollar industry came under the scrutiny of the authorities and one fine day the culprits were nabbed. The entire scheme collapsed and the viatical company was shuttered. Saxena being out of the country could not sue the company as the affected investor; he extricated himself, cursed his bad luck and forgot the matter. The money he made as an IT consultant keeps him comfortable. John Doe died many years later, living a calm life in Florida after a full remission of his symptoms and problems, but the policy itself lapsed due to nonpayment of premiums in those years after the company was shut down.

Sadly, while the fact of the matter is that many people made money off this scheme, Hanuman did not and I thank my stars that I never did get involved. Viaticals continues to be big business in USA but is well regulated these days, though a certain amount of speculation still exists. In fact they have different names like life settlements, Accelerated death benefits etc siding with the holder more and the speculator, less.

Note: There is no Hanuman Saxena, no Walker or John Doe. All these people are strictly imaginary persons and have nothing to do with any person dead or living or yet to be born. Any resemblance is purely coincidental and this is nothing but a story loosely formed around events happening in the expat community. The story and just that, is not based on exact facts or correct math but is loosely woven around such schemes of the 90’s. A lot of fictional license has been applied to make it readable. In fact, friends of mine happened to attend a seminar in Singapore where a somewhat similar enterprise was hawked and I was appalled at the guile and magnitude of these things. I thank Shankar and Usha for giving me details of the scheme they heard while living in Singapore. What I heard found its way into this story, which I hope you enjoyed.