Appeals court: Creditors can't get life insurance

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By Catherine Holland By Catherine Holland

PHOENIX (AP) -- The Arizona Court of Appeals says creditors can't go after the life insurance paid to the widow of a Phoenix mortgage banker and philanthropist who committed suicide after his company failed during the 2008 mortgage crisis.

The court ruled Tuesday that the successor company to Mortgages Ltd. can't sue Scott Coles' widow, Ashley, for the insurance benefits she collected.

ML Servicing Co. alleges the $130,000 annual insurance premiums were paid with cash misappropriated from the company. But the court said Arizona law protects life insurance from creditors even if premiums were paid with ill-gotten gains. ML Servicing could have sued to get back the premiums.

The ruling upheld the dismissal of the case. The ruling said it's believed Coles had more than $60 million in insurance that was paid out.