Sunday, July 13, 2014

Criminal Charges Are Brought Against Five For Allegedly Falsifying Life Insurance Applications To Collect More Than $600,000 In Commissions

In a coordinated case between San Diego County and Orange County, California Department of Insurance detectives arrested five people including a former life insurance agent Ian Frisch on multiple felony charges of grand theft. There was also a count of great taking allegation due to the loss amount.  The five suspects are accused of falsifying life insurance applications to collect more than $600,000 in commissions. The other alleged suspects charged are Tyler Wilkinson, and three life insurance applicants: Ruben Banuelos, Edward Putnam and Maxine Putnam.  

It was alleged that Mr. Wilkinson would use cappers (people paid to recruit policy applicants) and finders to locate potential policyholders and create false applications for life insurance. Mr. Wilkinson would then allegedly submit the fraudulent application to insurers through Mr. Frisch, a former life insurance agent. It was alleged that they profited by allowing the life and whole life policies to lapse after a year while retaining the commissions paid by the insurer for the initial policy application. Several insurers allegedly paid commissions totaling more than $600,000.

The life insurance applicants allegedly worked with Mr. Frisch and Mr. Wilkinson and are alleged to be complicit with them. The Putnams and Banuelos allegedly knowingly made false statements on life insurance applications. The policies were then allowed to lapse after just one year while the individuals involved profited from commissions. 

This case was investigated by the California Department of Insurance under its Life and Annuity Consumer Protection Program (LACPP). LACPP provides grant funds to counties for the prosecution of financial abuse in life insurance and annuity product transactions.

Mr. Wilkinson and Mr. Frisch were booked in the San Diego County Jail with bail set at $600,000 for both (the amount of the loss). Mr. Wilkinson and Mr. Frisch are being charged with four counts of Penal Code Section 487(a) PC felony Grand Theft charges, along with the Aggravated White Collar Crime Enhancement under Penal Code Section 186.11 PC, and the Great Taking Allegation under Penal Code Section 12022.6.

Mr. Banuelos and Mr. and Mrs. Putnam were booked at the Orange County Central jail -with bail set for Banuelos at $180,000 and $200,000 and $170,000 for Mr. and Mrs. Putnam, respectively. Mr. Banuelos and Mr. and Mrs. Putnam were charged June 23, 2014, by the Orange County District Attorney's office with one felony count each of Felony Grand Theft and one count each of the Great Taking Allegation.

This case is related to another case involving an elderly Morgan Laws, 84, who was arrested in January 2014, for investment fraud and grand theft related to this case. Mr. Laws pled guilty to Grand Theft and unlicensed sales.  

Commentary:  The prosecution of insurance fraud is on the rise. Companies and carriers are being more aggressive about investigating and turning these cases over to local county district attorney offices. Signing applications that are knowingly false is a crime and applicants cannot assume that insurance companies will not target them. If you are the subject of an investigation, it is important to seek legal advice at the earliest opportunity. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260


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