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Agents Behaving Badly Part II

Brian Anderson

A number of new stories hitting the wires in recent weeks provide another opportunity for a cautionary look at what the lure of big commissions can encourage the unethical life insurance agent to undertake.

As pointed out in the first “Agents Behaving Badly: 4 cases of caught in the act” piece back in November, the vast majority of agents behave ethically and always act in the best interest of clients. But there are always a few out there who – lured by huge commission payments – are willing to scam clients and insurance companies, thinking they can cash in and get away with it. Fortunately their misdeeds are often brought to light by law enforcement and their own local media, effectively ending their insurance career.

Here are a few more recent instances of agent transgressions – some big, some small – all making news in recent weeks…


• 3 charged in N.J. life insurance fraud scheme

A 73-year-old life insurance agent in New Jersey was charged along with two co-conspirators in a scheme that netted them more than $200,000 in ill-gotten commissions from Allianz Life.

Arthur Sinuk allegedly recruited James Vasiloff, 55, and John Jansen, 52, to apply for life insurance policies from Allianz Life under the premise that Sinuk would arrange for premiums to be paid for each policy, according to N.J. Attorney General Christopher Porrino.

Vasiloff and Jansen were charged with conspiracy, insurance fraud and theft by deception. Sinuk was charged with two counts of conspiracy, insurance fraud, theft by deception, money laundering, insurance fraud and theft by deception.

Per an April 5 article on the Mahwah Patch website:

Vasiloff’s policy was for $5 million, Jansen’s was for $2 million; all three misrepresented to Allianz that Vasiloff and Jansen would be paying for their own policies and that no “free insurance” or rebates were offered, Porrino said.

Sinuk allegedly took out loans to pay the policy premiums — $108,000 for Vasiloff’s and $42,000 for Jansen’s; Allianz then paid Sinuk $151,000 in commissions, which he allegedly used to repay the loans.

The policies lapsed after premiums were not paid on them for 18 months, Porrino said.


• Signing a dead person up for life insurance

A Durham, N.C. woman is accused of signing people up for life insurance – including one woman who was already dead – without their knowledge.

According to a March 28 story on WRAL.com, the North Carolina Department of Insurance charged Monica Jubert, 45, with 16 counts each of identity theft and obtaining property by false pretense.

Per the article:

According to arrest warrants, Jubert obtained people’s birth dates and Social Security numbers last October and November and then signed them up for policies with Transamerica Life Insurance. One of the alleged victims was a deceased woman, authorities said. Jubert pocketed $19,285 in commissions from Transamerica on the bogus policies, warrants state.

This case spurred a recent thread on Insurance Forums as well: $19,285.00 Chargeback!


• Fraud investigation nets $11 million in refunds for elderly in N.C.

North Carolina Insurance Commissioner Mike Causey announced March 29 the conviction of two retired insurance agents, Milton Hooks, 72, of Rocky Mount and James Mangum, 69, of Tarboro on six counts each of obtaining property by false pretense.

The case was the result of an extensive seven-year investigation in 14 counties conducted by the N.C. Department of Insurance’s Criminal Investigation Division. Hooks and Mangum targeted senior citizens in a regional scam that involved the reallocation of money people had in savings and insurance policies.

“Preying on our senior citizens is wrong,” said Causey. “I am pleased NCDOI criminal investigators were able to recover nearly $11 million in this important case that hopefully will help deter white collar crime like this in North Carolina.”

Department of Insurance criminal investigators brought the case against Hooks and Mangum for influencing 77 victims across North Carolina to remove money from their 401(k) and other life insurance policies and put it into Fixed Indexed Annuity products unsuitable for their situations from 2004 to 2011. Hooks and Mangum used their credibility as fiduciaries to move approximately $11 million into various annuity accounts with three companies – American Equity, AmerUs and North American – that sold the FIAs and garnered over $620,000 in commission payment for the sale of these products under false pretense.

As part of a plea agreement with the court, these victims were refunded their initial investment plus interest by the companies to the victims. The companies agreed to this after the scheme was uncovered.

It was discovered during the investigation that Hooks and Mangum also influenced four victims into making individual $316,000 investments which they directly diverted into their bank accounts and laundered the money for their own personal use. These four victims were repaid the money directly from Hooks and Mangum as an additional part of their plea agreement.

Superior Court Judge Thomas H. Lock dismissed 100 counts of obtaining property by false pretense across Beaufort, Bertie, Bladen, Chowan, Cumberland, Edgecombe, Halifax, Hertford, Hoke, Martin, Mecklenburg, Robeson, Wake and Washington counties and suspended Hooks and Mangum’s sentence because all the victims would be repaid the money that was defrauded from them.

An estimated 10 cents of every dollar paid in premiums goes toward the payment of fraudulent claims. The NCDOI employs 20 sworn state law enforcement officers dedicated to investigating and prosecuting claims of insurance and bail bonding fraud.

For more details about this case, see this March 29 article from the Charlotte News & Observer.

• SEE ALSO: Agents Behaving Badly: 4 cases of caught in the act

• Thoughts or comments? Please visit this thread: Agents Behaving Badly

Vector illustration of stop scams background concept

• Phony apps lead to wire fraud, identity theft convictions for Bay Area trio

A March 14, 2017, article in the San Jose Mercury News tells of three former Bay Area life insurance agents being convicted of wire fraud and identity theft in connection with a scheme to submit phony applications for policies and splitting the subsequent commissions and bonuses.

Following a month-long trial early this year, a federal jury found Ernesto Magat, 35, and Behnam Halali and Karen Gagarin, both 32, guilty of charges carrying a maximum statutory penalty of 20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense. The maximum statutory penalty for aggravated identity theft is two years in prison.

Per the article:

While working for the American Income Life Insurance Co., the trio submitted applications for policies on behalf of people at least some of whom did not know that a policy was applied for or issued, or did not want a policy, according to prosecutors.

The trio then shared commissions and bonuses issued by the Waco, Texas-based company in connection with the policies.

Prosecutors said personal information used to apply for the policies was collected through various means, including paying recruiters to find people to take medical exams and paying people to participate in a fictitious survey of a medical exam company.

The trio opened hundreds of bank accounts to fund the premiums on the policies and typically paid the premiums for one to four months before letting the policies lapse, according to prosecutors. They also returned verification calls to the company purporting to be the applicants.

Magat, Halali and Gagarin are scheduled to return to court July 28 for sentencing.


• Assuming identities of former clients to fraudulently apply for policies leads to charges for former N.J. agent

Back on December 23, a former New Jersey insurance agent was charged with assuming the identities of former clients to fraudulently apply for new life insurance policies in order to collection commissions on the policies.

Marta Cristina Cunha, 36, of Union Township, N.J., was charged with second-degree insurance fraud, second-degree identity theft and third-degree theft by deception in the alleged scheme that involved at least seven individuals she submitted policies for while working with American Income Life Insurance Co.

From a Dec. 23 article on myCentralJersey.com, the alleged scheme netted Cunha about $6,292 in commissions. More from the article:

According to the indictment, after Cunha left American Income she used various insureds’ personal information she had obtained while working as an agent for American Income and applied for new policies for these individuals with American Memorial Life Insurance Company (American Memorial) without the authorization and knowledge of these individuals.

“We allege that instead of working to solicit new clients, as honest insurance agents do, this defendant tried to make some easy money by exploiting former clients who trusted her with their personal information,” said state Attorney General Christopher Porrino. “We will not allow shady agents to victimize their clients and undermine the integrity of the insurance system for their own personal gains.”

Prosecutors said that American Income paid Cunha about $1,752 in commissions and bonuses for policies she submitted on behalf of about eight individuals between December 2012 and November 2014, according to the news release. After Cunha left American Income and began working with American Memorial in April 2015, she allegedly contacted American Income and impersonated or pretended to be several insureds in order to direct the insurance company to change an insured’s contact information, cancel an insured’s policy or change an insured’s billing method.

Cunha then allegedly used the information of those insureds to fraudulently apply for about seven policies with American Memorial.

“The public places a great deal of trust in licensed insurance agents and expects them to adhere to high ethical standards,” said Christopher Iu, acting insurance fraud prosecutor. “My office will continue to vigorously investigate and prosecute thefts by insurance agents.”

• SEE ALSO: Agents Behaving Badly: 4 cases of caught in the act

• Thoughts or comments? Please visit this thread: Agents Behaving Badly



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