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Lilith
11-14-2004, 02:21 PM
Book Excerpt, Thieves in High Places, by Jim Hightower.

Stopped by the cops for a traffic violation in the 1940's, New York City mob boss Lucky Luciano was asked to explain why the backseat of his car was filled with guns and ammo:

"We just got back from hunting," said Lucky.
"What were you hunting?"
"Oh, peasants."
"Pheasants?"
"Yeah, that's right. Pheasants."

Apparently, Wal_mart has been taking lessons from Lucky, for it's been a leader among corporations engaging in an elaborate, money-grubbing scheme called Dead Peasants life insurance. Under some state laws, the corporation can take out up to $750,000 worth of life insurance on a single employee- without ever telling the employee.

The macabre aspect of this is that the policy is not for the worker, but for the corporation! When the worker dies, the insurance money goes to the corporation while the family of the deceased doesn't get a dime or even know that such a policy existed.

When Douglas Sims died suddenly of a heart attack in 1998, for example, Wal-Mart quietly pocketed $64,000 from a Dead Peasant policy it had taken out on him. His widow, Jane, got nothing and knew nothing. When she later learned about it, she told a Houston Chronicle reporter: "I never dreamed that they could profit from my husband's death."
(Am I the only one to notice that this scheme could make an employee worth more to the company dead than alive?)

The laws say that the employees are supposed to give thier consent but it turns out that you can consent without knowing it, for it can be buried in the legalese of an employment form you sign- there's no requirement that the company actually tell you what you're signing.
Wal-Mart has taken out some 350,000 of these policies on employees, buying them from Hartford and AIG insurance companies. Its green-eyeshade accounting whizzes even jiggered the deal so Wal-Mart could get a tax deduction on the premiums. The company hires a firm to run sweeps of Social Security numbers- called "death runs"- every quarter to find out who has died, then it submits those names to the insurers... and collects.

A Wal-Mart spokesman told the Chronicle: "The company feels it has acted properly and legally in doing this."
Some of the "peasants" have rebelled, however, filing lawsuits from Texas to Maine. Wal-Mart is fighting them in court**, but because of the worker's suits and bad publicity it says it has now stopped buying Dead Peasant policies.

**Wally World ought to be used to this, as they have the distinction of holding the title of Most Sued Corporation In The Country. They face more than five thousand actions per year, which is almost fourteen per day.


Call this one Reason #369 Not To Shop At Wal-Mart. Aside from that god-awful Mary-Kate and Ashley line of lingerie for little girls (Starting in a size 6! As in, six years old!) and the fact that their products suck arse.

RedZ28
11-14-2004, 06:56 PM
Just another reason not to shop there. And I thought Enron was run by a bunch of unscrupulous felons.

madmaxine
11-14-2004, 07:16 PM
This is an awful story, but on a good note, it made me think of "Monty Python and the Holy Grail"..........

Deogol
11-15-2004, 07:04 AM
Have ya all been watching the Walmart special on CNBC?

Jay Zeno
11-15-2004, 10:01 AM
To be honest, this sounded like an urban legend, so I had to check it out myself.

I saw the allegations in a number of anti-Wal-Mart sites, which I didn't really pursue as having obvious bias.

Then I saw this article in and surely an insurance industry site must have the scoop on it. It turns out that Wal-Mart did indeed take out such policies, was sued, stopped taking out the policies in 2000, and settled the suit. That doesn't tell the whole story, of course - they and other corporations (Camelot Music, National Convenience Stores) took out those policies for their obvious profitability and tax benefits that they offered.

If it hadn't been for the lawsuit, perhaps Wal-Mart would be taking those policies out still. More of those damn lawyers running down society, y'know.

Mr Hyde
11-15-2004, 10:41 AM
I implore you all not shop at Wal-Mart. They are all that is bad about big business. Go to Target instead. Besides, they have cooler stuff.

doc-catfish
11-15-2004, 11:34 AM
Some interesting articles about Dead Peasants Insurance, (or the less abrasive Corporate Owned Life Insurance if you prefer).

http://moneycentral.msn.com/content/Insurance/P64954.asp



Have ya all been watching the Walmart special on CNBC?
Frontline on PBS (http://www.pbs.org/wgbh/pages/frontline/shows/walmart/) is supposed to have a special on Wal-Mart airing at 9 PM Eastern tomorrow night. Me thinks that I'm going to watch it.

montythegeek
11-15-2004, 08:49 PM
There CAN be perfectly legit reasons for company owned life insurance. Consider the example of John Ritter a principle raeson people watched the show. Or a famous chef at a restaurant who makes it a hot spot. If either star dies, the business sufferrs a severe loss and the franchise is worth less.

The Walmart example was not one of these but a pure tax dodge. The company bought insurance on its employees because, at the time, they were turning pretax income into an expense and getting the insurance proceeds free of taxation as insurance benefits have traditionally been. they could make money on this because the insurance commisions and profits were lower than the tax rate. The loophole was eliminated. Without it is a lossing proposition.

NinaDaisy
11-16-2004, 10:23 AM
I read about this months ago on Micheal Moore's web site. A lot of companies do it, not just Wal-Mart.