On 30th July 2026, the US Court of Appeals for the Eighth Circuit ruled in Wells Fargo Bank, N.A. v. Ameritas Life Insurance Corp., (No. 25-2351), affirming the summary judgment decision of the United States District Court for the District of Nebraska that held that a $4m life insurance policy was void from inception as an illegal stranger-originated life insurance (STOLI) scheme.
The legal dispute centred on whether the policy lacked a lawful insurable interest at the time it was procured under governing state law. Wells Fargo Bank acted as the plaintiff in its capacity as securities intermediary for the policy’s holder, Vida Longevity Fund, while Ameritas Life Insurance Corporation served as the defendant successor to the original issuing insurer.
In 2007, insurance broker Michael Binday began the process to procure a $4m life insurance policy on the life of Jerry Freid, a 72-year-old retiree. On August 14, 2008, Binday’s firm submitted the application for the policy to Union Central Life Insurance, which contained misstatements reporting that Freid possessed millions of dollars in real estate and personal property. The policy was issued on September 8th, 2008, and on the same day, Michael Block (Binday’s cousin, who served as trustee for approximately 25-30 Binday-originated policies, including the Jerry Freid Irrevocable Trust, which owned the policy), entered into a credit agreement with HM Ruby, an external financing firm, on the trust’s behalf, under which HM Ruby agreed to loan the trust funds for, among other things, premium payments.
Two years later, after the contestability period lapsed, the trust holding the policy sold it to HM Ruby. Vida Longevity Fund subsequently acquired the policy with Wells Fargo serving as securities intermediary, and Freid passed away in 2020. Following the death of the insured, Vida Longevity Fund submitted a claim to Ameritas to collect the $4m death benefit. Ameritas denied payment, asserting that the policy lacked a valid insurable interest at inception and was an illegal wager on human life.
Wells Fargo filed suit in the United States District Court for the District of Nebraska, bringing claims against Ameritas for breach of contract and bad faith refusal to pay. Ameritas moved for summary judgment on the grounds that the policy was void as a matter of law. The District Court determined that New Jersey law governed the dispute and granted summary judgment in favour of Ameritas. Wells Fargo then appealed the judgment to the Eighth Circuit Court of Appeals.
The primary legal issues before the appellate panel were determining which state’s law governed under Nebraska’s choice-of-law rules and deciding whether the undisputed facts established an illegal stranger-originated policy. The evidentiary record included financial disclosures demonstrating that Freid lacked the financial capacity to pay the premiums, false asset statements on the application, and records showing the entire policy was third-party financed with an agreement to transfer ownership to investors after two years.
The Court of Appeals unanimously affirmed the decision of the District Court in favour of Ameritas. Reviewing the case de novo, the court held that New Jersey law governed the policy. Under New Jersey insurable interest statutes, policies procured as stranger-originated life insurance to benefit third-party investors are void from inception. The panel concluded that the undisputed evidence established the policy was a stranger-originated arrangement as a matter of law, rendering it unenforceable. The court’s decision finalized the summary judgment ruling in favour of Ameritas, concluding the federal appellate proceedings.
