Fifty-one year old James Robert Milligen, an eight-year veteran in the financial services industry as a life insurance agent, has had his license suspended by the Insurance Council of British Columbia for five years.
The Council’s Hearing Committee said that Milligen, contracted to sell life insurance products on behalf of a fraternal society, struck up an online relationship with Britney Johnson, a former resident of Cape Coast, Ghana who then lived in United States. While Milligen and Johnson never met, she told him that she needed help getting access to gold in Ghana that her father had willed to her.
Milligen created a blank contract called “Inheritance/Investment Opportunity 2010” and sought investments from clients to pay for the fees associated to get the Ghanaian gold out of storage and to Canada. In December 2010, Milligen entered into a contract with two members of the fraternal society to invest $5,000 each. He also approached a former fraternal society member’s widow and another woman for the purpose of investing in the import plan, though neither women agreed.
In response to concerns raised by the fraternal society, Milligen sent the following in an email on December 27, 2010:
“I have a fiancé named Britney Johnson, who I have known well for the past 8 months, she moved back to Ghana from Arizona to live with her ailing father who needed to have bypass surgery which was performed in August of this year, however shortly after the surgery about 5 days he passed away from complications, leaving his only heir to fend for herself, so I had been helping her financially and also with the funeral and living costs. Upon reading the will, she realized her dad had left her a sizeable inheritance in gold bars in a security company in Ghana, he initially paid for the shortage of these by depositing a lump sum for the storage, and she and the lawyer involved found out that they were over storage fees involved in order to gain access to them. So we mutually decided to present an opportunity for investors to friends and families so that they could benefit from this and we agreed to give them back 30% of their short-term investment. This was a personal investment between me and the investor and had nothing to do with [the Fraternal Society] and that was made apparent right from the outset. There was no money coming from [Fraternal Society] accounts, no transfers or re-directed premium payments and as I said it has nothing to do with the [Fraternal Society]. This is not a scam, ponzee (sic) scheme or a misleading event. With the inheritance arriving very soon I have been dealing with a lawyer regarding export permits, insurance and shipping etc. Once in Canada part of the Inheritance will be cashed in to pay off the investors with their deposit plus 30% bonus interest for there (sic) short term assistance with this. My name is on the contract as the Guarantor to the terms set out in this contract, and there is no mention of the [Fraternal Society] anywhere so I accept all liability with regards to the investment as it is between me and them solely.”
In his email, Milligen also tendered his resignation.
In January 2011, Council spoke to Milligen who referred to the investments from the fraternal society’s clients as “personal loans.” Milligen said he was going through a separation and was in the process of selling his house, the profits of which would reimburse clients. Milligen told Council he would not solicit the Inheritance Contract to any more clients.
In February, Milligen told Council that the gold was to arrive but Johnson could not travel as she was ill. He confirmed that the two investors had yet to be paid back. In April, Council was contacted by the fraternal society who advised that Milligen has solicited another fraternal society member to invest between $5,000 and $10,000 as he “needed a total of $47,000 to transport the gold.” Council determined that the newest member solicited was an 82 year old who had purchased an annuity through Milligen in January 2011.
In the hearing, David McKnight, Counsel for the Council said: “The Licensee attempted to get clients to invest in the questionable investment regarding the shipping of gold bars to Canada. While the “investment” was not related to the sale of insurance products, the Licensee relied upon his prior relationship with the clients to facilitate the potential investment; in essence, leveraging his position as a licensed insurance agent to persuade clients to engage in more financial business with him.”
Milligen’s Life and Accident and Sickness license is cancelled effective from April 12, 2011. He must also pay, by March 13 , 2012, Council’s investigative costs of $1,075.
The full Hearing Committee report can be read online. (PDF)