The Securities and Exchange Commission (SEC) charged three Ohio financial executives with perpetrating a $230-million Ponzi scheme, which victimized some 5,000 investors, including many seniors. The three executives purchased a long operating consumer-finance company, and then converted it into a Ponzi scheme. In the scam, they offered promissory notes with high interest rates to investors. But instead of investing the money they collected, they spent it on residential mortgages, a $3-million jet, a $6-million yacht, and fancy cars worth more than $7 million. They also used client money to pay for gambling and travel expenses, country club dues and elaborate parties.
A former Maryland insurance agent has been sentenced in connection with three counts of felony theft relating to annuity sales. The agent pleaded guilty to stealing money from several insurance companies by changing the dates of birth on annuity applications and receiving higher commissions for those annuities. According to authorities, he committed this fraud over a six-year period, receiving more than $98,000 in commissions. The agent will serve one year of a five-year sentence, with the remaining time suspended. He was also ordered to serve three years of probation and to pay restitution to the victims.
A Virginia agent recently pleaded guilty to insurance fraud after withdrawing money from his pension account, considered a marital asset, without the consent of his estranged wife. He had wanted to withdraw the funds, but his wife, from whom he was divorcing, refused permission. He then forged her signature on the insurance company form and had a notary public validate the form. The notary, who was also a minister, knew the form was phony, but notarized it anyway. The agent received three 10-year jail sentences, suspended, and the minister received a one-year sentence, suspended, along with a $500 fine.
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Harry Lew is the communications and content director for the National Ethics Bureau.