Former California life insurance agent David Abraham, 48, of Santa Barbara, has pled guilty to felony grand theft and been ordered to pay $2.1 million in restitution to victims. He also was sentenced to serve 90 days in county jail plus five years probation, the California Department of Insurance reported.
Abraham, a former licensed life insurance agent and previous employee of Brown & Brown Insurance in Santa Barbara, was charged with twisting and churning annuity policies of his clients, many of whom are senior citizens. After selling a client an annuity policy, Abraham would wait until a policy was at least one year old so that he would retain a commission, and then transfer the annuity policy to another company. The transfer would result in a sizeable commission for Abraham, while the policyholders faced surrender charges of more than 10 percent of the principal.
He allegedly repeated this scheme for several years. When asked about the surrender charges by clients, Abraham told them that the new companies would pay bonuses to make up for the surrender penalties. The unsuspecting clients were not informed that they needed to maintain their annuities for a specified period of time in order to realize the bonuses. Abraham’s clients suffered surrender penalties amounting to more than $2.1 million as a result of his actions, while he made more than $1 million in commissions.
CDI investigators also discovered that Abraham changed his clients’ mailing addresses to his home address on the new annuity policies to conceal his actions. According to investigators, Abraham fabricated policy statements with inaccurate figures using the original annuity company letterhead.
Several victims spoke at Abraham’s hearing. Many of them, in tears, asked Abraham why he did this horrible thing to them.
The Santa Barbara County District Attorney’s Office prosecuted this case.
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