Close Close

Life Health > Life Insurance

Unscrupulous advisors bilk clients for personal gain

Your article was successfully shared with the contacts you provided.

A California life insurance agent has been sentenced to three years and eight months in state prison for multiple felonies in a Ponzi scheme used to bilk unsuspecting victims out of approximately $800,000. He has also been ordered to make restitution to the victims for the full amount. Between December 2006 and March 2009, the agent solicited six victims into purportedly investing money for the payment of STOLI life insurance for unnamed third parties. Instead of sending the money to the insurance company to cover the life insurance premiums, he instead diverted the funds for his own personal use.

A California insurance agent was found guilty of two misdemeanor counts of theft from an elder and was sentenced to 36 months of formal probation and 100 hours of community service. He was also ordered to surrender his insurance license and not to reapply for licensing for the rest of his life. According to authorities, the agent convinced an elderly client to obtain a reverse mortgage to fund home repairs. The agent then convinced the victim to give him $25,000 for an investment promising her a 10 percent return in six months. But he never made the investment, returned the $25,000 or paid the promised 10 percent interest. After making a fraudulent transaction relating to a life insurance product he sold the victim, the agent also obtained a $7,000 personal loan from her, but only repaid $4,500.

A Louisiana insurance agent has been sentenced to more than four years in federal prison for mail fraud that cost several of his clients nearly $1.4 million. The agent admitted he sold annuities and other life products to six of his clients. But rather than use their money to execute those purchases, he used it for personal purposes unbeknownst to the clients, who trusted him to execute their purchases. The U.S. District Judge in the case ordered the 67-year-old agent to not only serve four years in prison, but also two years of federal supervision after finishing his sentence. He must also pay full restitution to his victims.

For more articles about rogue advisors, see: