Thursday, April 26 , 2018, 7:30 am | Fog/Mist 52º


Local News

Insurance Agent Charged with Felony Grand Theft

David Abraham allegedly collected $1.3 million in bogus commissions from annuity transfer scheme.

A Santa Barbara insurance agent has been charged with one felony count of grand theft for allegedly stealing more than $1.3 million in an annuity scheme, state Insurance Commissioner Steve Poizner has announced. David Abraham, 48, formerly of Brown & Brown Insurance of Santa Barbara, faces up to five years in prison if convicted.

Abraham, a licensed life insurance agent with Brown & Brown until just over a year ago, is accused of “churning,” a method by which an insurance broker or agent excessively buys and sells their clients’ securities to generate commissions. According to investigations by the state Department of Insurance, after selling a client an annuity policy, Abraham allegedly would wait until a policy was at least a year old so he would retain a commission, and then transfer the annuity policy to another company. The transfer would result in a sizable commission for Abraham, Poizner said, while the policyholders faced surrender charges of more than 10 percent of the principal. Abraham allegedly repeated this scheme until he had made more than $1.3 million in commission payments.

According to state insurance officials, when asked about the surrender charges by clients, Abraham purportedly told them 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 to realize the bonuses. Abraham’s clients suffered surrender penalties amounting to $1.9 million as a result of his alleged actions, Poizner said.

Abraham also faces lawsuits from Brown & Brown for activities the company deems were out of the scope of his employment. He allegedly did this work using his own home address as the clients’ mailing address and faked company letterhead. Abraham also faces civil lawsuits from former clients.

“We were told of the investigation about a year and a half ago, confronted the situation and summarily terminated Mr. Abraham,” said Susan Rodriguez, branch president of Brown & Brown.

The Santa Barbara County District Attorney’s Office is handling the case.

Write to [email protected]

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Maestro, Mastercard, Visa, American Express, Discover, Debit

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >