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Ex-Insurance Agent Sentenced to Jail in Annuity Fraud
A former Santa Barbara insurance agent has been sentenced to 90 days in Santa Barbara County Jail and five years’ probation after pleading guilty to felony grand theft.
David Abraham, who worked for Brown & Brown Insurance, 1025 Chapala St., had been “churning” annuity policies belonging to his clients, according to the state Department of Insurance, one of the agencies investigating the case.
According to the Insurance Department, Abraham would sell clients’ policies, wait a year so he would earn commission and then transfer the annuity to another company. He repeated the scheme for several years, gaining a sizable commission, and made more than $1 million this way, officials said.
Policy holders faced fees of more than 10 percent of the principal for withdrawing their money before the policies matured. The Insurance Department said Abraham told clients the new companies would pay bonuses to make up for the surrender penalties.
“The unsuspecting clients were not informed that they needed to maintain their annuities for a specified period of time in order to realize the bonuses,” the department said in a statement. As a result, surrender penalties amounted to $2.1 million.
“Stealing from seniors is a particularly deplorable crime,” Insurance Commissioner Steve Poizner said. “CDI investigators will continue to work with local authorities to bring these criminals to justice.”
The county District Attorney’s Office helped to investigate the case. Insurance Department investigators found that Abraham had been using his home address instead of his clients’ on new annuity policies, and even printed false numbers on fake policy statements using the letterhead of the original annuity companies.
— Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address).
Comments
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» on 07.17.09 @ 08:01 AM
BRAVO! And here I thought the California Insurance Department were just a bunch of lazy lackeys. Good for them. Now that they nailed a little guy, I hope they go after multi-billion dollar ripoffs like Mega Life, Mid West Life, and similar as-yet-unconvicted felons.
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» on 07.17.09 @ 09:37 AM
Wow! Here is an interesting piece of justice. I guy steals over a million dollars and gets 90 days and probation. Crime still pays. Watch out for financial planners, insurance brokers and the like. They all make a living off commissions from your money.
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» on 07.18.09 @ 11:14 PM
I TAKE OFFENSE TO YOUR STATEMENT:
“Watch out for financial planners, insurance brokers and the like. They all make a living off commissions from your money.”
I AM AN INSURANCE AGENT HER OR FLIPPED BUSINESS AS MR ABRAHAM DID.MY PRIMARY BUSINESS IS WITH SENIORS AND I WOULD NEVER THINK OF TAKING ADVANTAGE OF A CLIENT FOR MONETARY GAIN.
THERE ARE MANY PROFESSIONS IN OUR SOCIETY WHICH PAY COMMISSIONS ONLY…DOES THIS MAKE THEM UNSCRUPULOUS?
I AGREE THAT 90 DAYS IS NOT JUSTICE FOR WHAT HE DID TO HIS CLIENTS INVESTMENTS, BUT THAT HAS NOTHING TO DO WITH THE JOB THAT MANY MEN AND WOMEN DO DAILY WITH PRIDE AND INTEGRITY.
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