Sunday, May 27 , 2018, 12:25 am | Fair 56º


Local News

Ex-Insurance Agent Sentenced to Jail in Annuity Fraud

David Abraham reportedly collected more than $1 million in commission scam, officials say

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).

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