Insurance agent sentenced in annuity scheme
A former Santa Barbara life insurance agent has been sentenced to 90 days in jail and ordered to pay $2.1 million for misleading seniors in a scheme that left them paying penalties while he reaped $1 million in commissions.
David Abraham, 48, of Santa Barbara, pleaded guilty to felony grand theft on July 9, the California Department of Insurance said in a news release. Calls to a number listed for Abraham’s insurance business on July 13 were unsuccessful.
Abraham allegedly sold annuity policies to customers, many of them seniors and would then wait until those contracts were a year old before transferring them to another company, state officials said.
The result was a hefty commission for Abraham but penalties for the clients, state officials alleged. When clients asked him about the fees, he told them that the money would be made up in bonuses later on.
But Abraham didn’t tell clients they had to hold on to the policy for a specific length of time to make up the penalties, state officials said. After allegedly running the scheme for years, his clients had racked up $2.1 million in penalties while he got more than $1 million in commissions.
State investigators said Abraham changed his clients’ mailing addresses to his home address to conceal his actions. Abraham faked policy statements with false figures using the original annuity company letterhead, the state’s news release said.
The Santa Barbara County District Attorney’s office prosecuted the case.