Case # 18NF0615
Date: June 22, 2018
INSURANCE AGENT CONVICTED OF $1.6 MILLION ANNUITY FRAUD SCHEME TARGETING ELDERLY CALIFORNIANS
SANTA ANA, Calif. – A licensed insurance agent was convicted today of a $1.6 million annuity fraud scheme targeting elderly Southern California residents.
Sentence (Court Offer)
Mark Malatesta, 55, San Clemente
Pleaded guilty today to the following felony counts:
- (10) Insurance fraud
- (9) First degree residential burglary
- (2) Theft from elder
- (2) Grand theft
Sentencing Enhancement Allegations
- Non-accomplice present during residential burglary
- Over $100,000 loss
- Property damage over $1.3 million
- Aggravated white collar crime over $500,000
- 10 years in state prison (suspended)
- Five years of formal probation
- Full restitution in the amount of $282,000
- No longer allowed to work in finance or insurance industry
Circumstances of the Case
- At the time of the crime, Malatesta was a licensed insurance agent with Heritage Financial Insurance Services and was appointed by EquiTrust Life Insurance Company to sell their products.
- Between 2014 and 2016, the defendant exploited at least 10 elderly consumers by falsifying their age on annuity applications and obtaining more than $135,000 in illegal commissions.
- The victims were over 75 years old, the maximum age for these annuities, and Malatesta modified their date of birth so they would appear young enough to quality.
- Malatesta convinced his senior victims to terminate a total of $1.6 million in existing investments, which caused them to lose a total of $45,000 in surrender penalties before the funds matured.
- The defendant falsely promised the victims large bonuses to offset their losses.
- Malatesta sold the victims new annuities for which they did not qualify due to their advanced age.
- Insurers canceled the fraudulent investments once they discovered Malatesta provided false information, subsequently losing nearly $1.8 million in refunds and interest paid to the victims.
- This case was investigated by the California Department of Insurance (CDI), and CDI investigators arrested Malatesta on March 12, 2018.
Resources from CDI
Be Aware Of Deceptive Sales Practices When Purchasing Annuities
What Seniors Need to Know About Annuities
Prosecutor: Senior Deputy District Attorney Marc Labreche, Major Fraud Unit