Misrepresentations And Omissions
Investment Scheme Targeting Retirees
Most Invested Funds Pocketed As Fees
Insurance agents may exploit older consumers by selling them expensive and unsuitable insurance products, or even offer unregistered “investments” that are far beyond the insurance policies the agents are licensed to sell. These investment “opportunities” often promise above-market returns in the years to come. Agents and advisors convince older persons to liquidate their retirement savings based on false promises for these so-called opportunities. Victims of fraudulent investment schemes may end up losing everything. When perpetrated against older investors, such schemes violate federal and State securities laws, wire and mail fraud laws, theft, and financial elder abuse, itself an additional crime under California law. See 18 U.S.C. § 1341 (elements of mail fraud); 18 U.S.C. § 1343 (elements of wire fraud); Cal. Corp. Code §§ 25401, 25540 and 25541 (fraud in securities offerings); Penal Code § 487 (grand theft); Penal Code § 368 (crime of financial elder abuse) and Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse for civil liability). Evans Law Firm, Inc. represents injured seniors and their families in Napa, Marin, San Francisco, or elsewhere in California against any insurance agents or brokers, financial advisors and others who prey upon seniors. We can be reached at (415)441-8669. Our toll-free number is 1-888-50EVANS (888-503-8267).
Example of Recent Insurance Agent Fraud
An insurance agent has recently been sentenced to five years in prison for orchestrating an investment fraud scheme that targeted elderly clients. According to court documents, the defendant made material misrepresentations and omissions to sell “illiquid, highly speculative investment vehicles” to seniors especially over a number of years. These investments were part of a nationwide investment fraud scheme that led to more than $25 million in losses for more than 300 victims – most of whom are elderly. The insurance agent’s own participation in the scheme caused his victims to lose over $3 million in the scheme according to the government. Prosecutors said that due to the fraudulent misrepresentations made by the insurance agent, unsuspecting investors cashed out of 401(k) and other retirement accounts to purchase the investments, unaware that between 20% and 70% of their money would be pocketed by the insurance agent in the form of “fees.”
Red Flags of Potentially Fraudulent Schemes
The reported scheme illustrates several “red flags” common to many fraudulent investment schemes:
- Lack of qualifications of sellers. In the reported sentencing, an insurance agent was promoting a complicated investment that had nothing to do with insurance. We have seen similar instances where insurance agents promote unregistered securities or notes in businesses that have nothing to do with insurance. Ask yourself if the person suggesting an investment to you really knows what he or she is talking about.
- High returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any “guaranteed” investment opportunity.
- Overly consistent/guaranteed returns. Investments tend to go up and down over time. Be skeptical about an investment that regularly generates positive returns regardless of overall market conditions, or any investment that promises a “guaranteed” return or amount of income.
Ingrid M. Evans and Evans Law Firm, Inc. pursue all available remedies for the elderly victim against those persons or businesses responsible for their abuse, including getting their money back, undoing illegal contracts and getting awards of attorneys’ fees and expenses for the costs of bringing suit. Cal. Welf. & Inst. Code § 15657.5. Ingrid represents seniors in Napa, Marin, San Francisco and throughout California who are victims of financial elder abuse or fraud, including by insurance agents. Ingrid can be reached at (415) 441-8669, or by email at firstname.lastname@example.org. Our toll-free number is 1-888-50EVANS (888-503-8267).