A bank and a Berkshire Hathaway unit could be forced to repay $12.5 million, an estate argues, simply because they touched the proceeds of a policy it says was void from day one.
The estate of Jack Herbert Pechter sued four companies in Manhattan federal court on June 8, 2026, in a case that tests a question every carrier and intermediary should care about: when a policy was never valid, who has to give the money back? Named in the suit are Financial Credit Investment III SPV-B (Cayman), L.P.; U.S. Bank, N.A.; Financial Credit Investment III Manager, LLC; and Berkshire Hathaway Life Insurance Company of Nebraska.
The estate alleges the $12.5 million policy on Pechter's life was a "stranger-originated life insurance" policy - "STOLI" for short - meaning investors with no "insurable interest" in his life set it up so they could collect when he died. According to the complaint, a group of Delaware entities known as Coventry created the policy, and because no one behind it had a genuine stake in keeping Pechter alive, the policy broke Delaware law.
Here's why it should land for anyone in the claims-and-liability business, not just life carriers. The estate is using a Delaware statute, 18 Del. C. § 2704(b), that lets a dead person's estate claw back a death benefit from whoever received it when the policy lacked an insurable interest. And the estate is going after the whole chain "jointly and severally" - the legal term for everyone being on the hook for the full amount, not just their slice. That reaches the bank named on the paperwork, the investment manager that managed and operated the deal, and the end investor.
The complaint spells out the chain. It says Coventry applied to Hartford Life and Annuity Insurance Company in late 2005 or early 2006 through the Jack Pechter 2005 Insurance Trust, a Delaware trust the filing alleges was set up to make Hartford think the policy served a legitimate family purpose. As the complaint puts it, "The Trust was not created for a legitimate purpose." Neither Pechter nor his family ever paid the premiums, the estate alleges - investors did.
Hartford issued the policy, number VL9349279, with $12.5 million in coverage. The estate says it "lacked an insurable interest at its inception."
From there the policy changed hands repeatedly. The complaint alleges Coventry bought it from the trust in July 2008 and engaged U.S. Bank as the policy's legal owner and beneficiary - the name on the carrier's books with the right to claim the payout. The bank appeared as "U.S. Bank, N.A., as Securities Intermediary," which the filing says is not a real legal entity. The beneficial interest then moved from Coventry to AIG, to an Irish company called FCI Ireland in 2017, and finally to FCI SPV-B, which Berkshire Hathaway and FCI Ireland jointly formed and funded.
Pechter died on August 24, 2024. The complaint alleges that around September 6, 2024, U.S. Bank filed a claim calling itself the "Policy Owner" and "Beneficiary - Person named to receive funds from the policy," without naming FCI SPV-B or Berkshire Hathaway. Hartford paid $12,516,438.36 - the $12.5 million face amount plus $16,438.36 in interest. The estate says U.S. Bank received the money around September 17, 2024, then passed it to FCI SPV-B. The filing alleges Berkshire Hathaway received a portion of the proceeds, an allegation it says discovery is likely to support.
The exposure question is the real story. The estate's theory is that being the entity named on the policy, or managing the deal, or sitting at the end of the money trail is enough to be liable - regardless of who actually pocketed the cash first. To make the point, the complaint leans on a 2022 ruling it says held both Wells Fargo and Berkshire Hathaway liable under the same Delaware provision: one because it received the benefit "in the first instance," the other because it received it "thereafter." It also cites a 2025 Delaware decision the estate says rejected U.S. Bank's argument that acting only as an agent or securities intermediary shielded it from liability.
The estate also brings conspiracy and aiding-and-abetting claims, calling the arrangement an "illegal wager" on Pechter's life and pointing to the Delaware Supreme Court's description of similar deals, in a case the complaint calls Malkin, as a "fraud upon the court."
For carriers, settlement-market players, and anyone who acts as trustee, securities intermediary, or paying agent on a policy, the takeaway is the breadth of the net the estate is casting. The complaint argues that routine custodial and administrative roles - titling trustee, fiscal agent, securities intermediary - shouldn't shield a party when the underlying policy was void from the start.
These are allegations only. They have not been tested in court, none of the defendants has filed a response, and no court has ruled.
