Search Our Blog
Maserati-Buying Insurance Agent Admits to Stealing $1.5 Million from Elderly Clients
By Jessica L. Mackaness, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, February 9, 2018.
Jessica L. Mackaness
Senior Associate
Jessica L. Mackaness, Esq.
619.696.9500 ext. 122
[email protected]
On February 5, 2018, a San Diego insurance agent, Shawn Heffernan, pleaded guilty to defrauding senior citizens and others out of nearly $1.5 million by soliciting funds for “investments,” and then spending the money on personal items such as jewelry, a Maserati, and three rental properties.
According to prosecutors, Heffernan convinced victims to invest funds into sham, non-existent investments. In soliciting these investments, the defendant provided few details and little to no documentation to his victims, but assured them they would receive high returns. Instead of investing these funds, however, Heffernan would deposit the money directly into his own bank account and spend it on his own personal living expenses. And if a client requested to withdraw money from their “investment,” Heffernan would simply use money he had solicited from later investors to satisfy the earlier investor’s withdrawal request---a classic Ponzi scheme maneuver.
Heffernan’s misconduct also included the gross mishandling of his clients’ legitimate investments, according to prosecutors. Initially, as a licensed insurance agent, he would sell annuity policies issued by legitimate insurance companies. Before the annuity policies expired, Heffernan would then convince clients to surrender the existing policies and purchase new ones, forcing the clients to incur high surrender penalties, but resulting in substantial commissions for Heffernan. This practice, known as “churning,” is prohibited. In one case, investigators identified more than $490,000 in early surrender fees and $280,000 in additional commissions collected by Heffernan.
Heffernan pleaded guilty to 29 felony counts, including multiple counts of elder fraud and grand theft. He faces nine years in state prison, and will be sentenced on March 7 by Judge Howard Shore.
Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. For more information, or if you or your company require counsel in these areas, contact us today for a confidential, complimentary consultation.
