What happened: a Delaware court dismissed all claims in a STOLI death-benefit recovery suit
Who’s involved: Wells Fargo Bank, Jade Mountain Partners, and Perlino FL as defendants; a Florida estate as plaintiff
What’s at stake: the death benefit on a life insurance policy allegedly procured as an illegal wager on a stranger’s life
Why it matters: the ruling holds that Delaware’s clawback statute does not reach parties who never received the proceeds
Where it stands: decided - two defendants dismissed without prejudice, one with prejudice
A life insurance policy changed hands for nearly 15 years before its subject died - and the fight over the payout just hit a wall.
The Superior Court of Delaware has dismissed all claims by a Florida estate against the investment fund, bank, and advisor that held a life insurance policy on a man’s life.
The estate argued the policy was a stranger-originated life insurance arrangement - a STOLI - where outside investors wagered on the man’s death through a scheme disguised as estate planning. It wanted the death benefit back under Delaware’s insurable interest statute, which lets an estate claw back proceeds on a policy that should never have existed.
The court found it had no authority to hear claims against Perlino FL, the fund that bought the policy in 2020, or Wells Fargo Bank, the custodian holding it on Perlino’s behalf. The only thing Wells Fargo did in Delaware was sign a change-of-beneficiary form - not what gave rise to the claim. The death benefit was collected in Minnesota.
The estate argued all defendants knowingly joined an illegal wagering scheme. Neither Perlino nor Wells Fargo was involved when the policy was set up in 2007, and the complaint’s claims that they knew it was illegal were “conclusory rather than based on specific factual evidence.”
That left Jade Mountain Partners, a New York-based investment advisor managing the policy for Perlino. The estate accused Jade Mountain of conspiring to wager on human life. But Jade Mountain never received a cent of the death benefit.
That gap proved fatal. The statute spells out who an estate can sue: the “beneficiary, assignee or other payee” who actually received the money. It says nothing about parties who helped manage the policy but never pocketed the proceeds.
The estate warned this would let STOLI investors dodge lawsuits by funneling payouts through shell entities. The court was unmoved - the statute already reaches anyone who received the benefit.
Perlino and Wells Fargo were dismissed without prejudice, meaning the estate can refile elsewhere. Jade Mountain was dismissed with prejudice - those claims are finished.
For life-settlement investors, custodian banks, and advisors managing STOLI-linked portfolios, the ruling draws a bright line: Delaware’s clawback statute follows the money, and only the money.
The allegations have not been tested on the merits. No court has found the policy was in fact a STOLI. The ruling addressed only jurisdiction and whether the estate’s legal theories exist under the statute.
