The insurance and annuity industry taken giant steps to burnish its image and weed out unethical practitioners. However, there are still rogue advisors out there.
One of our industry insiders, Harry Lew, chief content officer of the National Ethics Association (NEA), sent in a list of advisors who have been charged with various indiscretions.
I’ve included those below, but wanted to say that on a personal level, the advisors I have had the opportunity to sit down with and talk to are doing the right thing. We want to get those “good” apples out in the public as well. If you have a good advisor story, please contact me to discuss at [email protected]. I look forward to hearing from you.
A Massachusetts Federal judge ordered a broker to pay over $500,000 for defrauding a 9/11 widow. According to authorities, the broker misled the victim into thinking her investments were safe, while churning her funds in a manner contrary to her interests. During a two-year period, the SEC alleged that the customer’s account, which was funded by a payment from the September 11th Victim Compensation Fund, decreased from about $3.7 million to about $1.6 million. While working with the victim, the advisor received $483,460 in commissions. As part of the settlement, the broker agreed to be barred from any future association with a broker-dealer, investment advisor, municipal securities dealer or transfer agent.
A New Jersey financial advisor who was charged with scamming nuns has been captured in Las Vegas. He had been a fugitive since Nov. 16, 2011, one day after being indicted by a Philadelphia grand jury. According to authorities, the advisor lured an elderly nun into his scheme by having a man pose as a Catholic priest and inform her she was the beneficiary of an estate settlement. However, in order to receive the $2.1 million settlement, she needed to send money for taxes and legal fees. Over time, the fraud widened to include other members of the nun’s religious order, generating $439,000 in payments to the advisor over two years. If convicted, the advisor faces a maximum possible sentence of 260 years and a $3.25-million fine.
A California life insurance agent has been arrested for allegedly embezzling more than $1 million from elderly clients. According to the state insurance department, the advisor will face felony charges of Elder Abuse, Grand Theft and Fraud. If convicted, he could face up to five years in state prison on each felony count and restitution of roughly $1 million. According to investigators, the advisor diverted funds without the consent or knowledge of his clients, providing the victims with fraudulent documents purporting to be from an insurance company. When confronted about the whereabouts of their money, he continued to lie to his clients, two of whom are in their 80s. Rather than properly submitting the money to the insurance company for the purchase of life insurance and annuities, the advisor diverted them for his personal use.
For more from Daniel Williams, see:
- Advisors: Are You Listening to Your Senior Clients?
- Sales Tips for Annuity Advisors
- Video: Annuities and The Power of Zero