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Here It Comes... Beware....
Fla. Agent Arrested for Alleged $2 Million Investment Fraud
May 17th, 2012
Article by Fran Matso Lysiak
Best’s News Service – May 16, 2012 04:05 PM
TALLAHASSEE, Fla. – A former Florida insurance agent was arrested on grand theft charges for allegedly misrepresenting factual details of financial products, including variable annuities, to several elderly clients who lost more than $2 million from the unsuitable investments, state officials said.
An investigation by the Florida Department of Financial Services’ division of insurance fraud showed that Neal Seth Smalbach allegedly made the misrepresentations for personal gain. The seniors invested an estimated $4.6 million in products that weren’t suitable for their financial needs, the department said.
Smalbach sold variable annuities, stocks and real estate investment trusts to the elderly clients, with variable annuities being where the most fraud occurred, said Alexis Lambert, a spokeswoman for the Florida DFS, of the stock market-linked retirement savings and income products.
The division of agent and agency services also investigated Smalbach, and alleged he falsified two applications for insurance, the DFS said. In March, the division entered into a settlement with Smalbach providing for the surrender of his licenses—the same as a revocation—and his permanent ban from the insurance industry.
Smalbach was booked into Pinellas County Jail and is awaiting bond. If convicted, he faces up to 54 years in prison. The Office of Statewide Prosecution will prosecute the charges against him.
The National Association of Insurance Commissioners Suitability in Annuity Transactions Model Regulation of 2010 is intended to stop misleading practices by some agents and brokers when they sell annuities by requiring a supervisory system (Best’s News Service, March 9, 2011). This model regulation makes it “crystal clear” that an insurance company is ultimately responsible if agents and financial sales professionals sell an annuity that isn’t appropriate for someone’s financial needs, the vice president of regulatory affairs for the Insured Retirement Institute said last year (Best’s News Service, April 15, 2011).
California Gov. Jerry Brown signed legislation last September designed to ramp up protections for senior citizens against unscrupulous insurers and agents who may try to sell them annuities that aren’t appropriate for their financial needs. The new law was the latest in a series of recent legislative moves designed to increase protections for policyholders and insurance consumers in California (Best’s News Service, Sept. 22, 2011).
(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected] ) BN-NJ-05-16-2012 1605 ET #
Fla. Agent Arrested for Alleged $2 Million Investment Fraud
May 17th, 2012
Article by Fran Matso Lysiak
Best’s News Service – May 16, 2012 04:05 PM
TALLAHASSEE, Fla. – A former Florida insurance agent was arrested on grand theft charges for allegedly misrepresenting factual details of financial products, including variable annuities, to several elderly clients who lost more than $2 million from the unsuitable investments, state officials said.
An investigation by the Florida Department of Financial Services’ division of insurance fraud showed that Neal Seth Smalbach allegedly made the misrepresentations for personal gain. The seniors invested an estimated $4.6 million in products that weren’t suitable for their financial needs, the department said.
Smalbach sold variable annuities, stocks and real estate investment trusts to the elderly clients, with variable annuities being where the most fraud occurred, said Alexis Lambert, a spokeswoman for the Florida DFS, of the stock market-linked retirement savings and income products.
The division of agent and agency services also investigated Smalbach, and alleged he falsified two applications for insurance, the DFS said. In March, the division entered into a settlement with Smalbach providing for the surrender of his licenses—the same as a revocation—and his permanent ban from the insurance industry.
Smalbach was booked into Pinellas County Jail and is awaiting bond. If convicted, he faces up to 54 years in prison. The Office of Statewide Prosecution will prosecute the charges against him.
The National Association of Insurance Commissioners Suitability in Annuity Transactions Model Regulation of 2010 is intended to stop misleading practices by some agents and brokers when they sell annuities by requiring a supervisory system (Best’s News Service, March 9, 2011). This model regulation makes it “crystal clear” that an insurance company is ultimately responsible if agents and financial sales professionals sell an annuity that isn’t appropriate for someone’s financial needs, the vice president of regulatory affairs for the Insured Retirement Institute said last year (Best’s News Service, April 15, 2011).
California Gov. Jerry Brown signed legislation last September designed to ramp up protections for senior citizens against unscrupulous insurers and agents who may try to sell them annuities that aren’t appropriate for their financial needs. The new law was the latest in a series of recent legislative moves designed to increase protections for policyholders and insurance consumers in California (Best’s News Service, Sept. 22, 2011).
(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected] ) BN-NJ-05-16-2012 1605 ET #
