California Agent Ordered to Pay $2.1 Million, Serve 90 Days in Jail
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July 21, 2009 Tuesday 12:08 PM EST
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California Agent Ordered to Pay $2.1 Million, Serve 90 Days in Jail
Sean P Carr
SANTA BARBARA, Calif.
A California life insurance agent will pay $2.1 million in restitution and serve 90 days in jail after pleading guilty to charges of illegally churning and twisting annuity policies, mostly owned by senior citizens. He also will serve five years probation on the grand theft charges.
David Abraham, 48, is a formerly licensed life insurance agent previously employed by Brown & Brown Insurance, a Santa Barbara agency. According to the state Department of Insurance, after selling an annuity policy, he would wait until the policy was at least one year old -- so he would retain the commission -- then transfer it to another company. The transfer would generate another commission for Abraham while the policyholder took a surrender charge of 10% of the principal.
According to the insurance department, which investigated the case, Abraham would tell clients they would receive bonuses from the new companies to offset the penalties; he did not inform them, however, that they needed to maintain their annuities for a specified length of time in order to realize the bonuses. He also was found to have changed clients' mailing addresses to his own home address and fabricated policy statements.
Abraham made more than $1 million in commissions while clients were hit with $2.1 million in surrender penalties, Insurance Commissioner Steve Poizner said in a statement. "Stealing from seniors is a particularly deplorable crime," he said.
The Santa Barbara County District Attorney's Office prosecuted this case.
(By Sean P. Carr, Washington Correspondent: [email protected])
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