Seniors beware-scams abound


Malibu senior residents take steps to avoid being victims of fraud, or through schemes called

“churning” or “twisting.”

By Edie Riggins/Special to the Malibu Times

The recent arrest of a former California Life Agent and president of Data Financial Services in Malibu has given local residents cause to reconsider their trust in agents selling investments.

David Tetley was charged with 40 felony counts of financial elder abuse, grand theft and forgery in an annuity scheme. Investigators with the California Department of Insurance (CDI) allege that Tetley has defrauded unsuspecting individuals and senior citizens of approximately $3 million through a sophisticated scheme of deception, embezzlement and “churning” or “twisting.” Tetley pled no contest to the charges.

Tetley’s attorney David Daar said Tetley is in the middle of a misunderstanding. “Insurance is a very complicated subject and too often the people insured simply do not understand the product,” Daar said. “Once there is a mistake in understanding of what has happened it gets very complicated.

“It’s a shame that it reached this level where there is actually a criminal prosecution of the man.”

“Churning” or “twisting” occurs when an agent induces a policyholder to surrender a policy from one insurance company to another for the purpose of generating lucrative commission fees.

According to CDI spokesperson Nancy Kramer, agents may receive thousands of dollars in commission fees on the sale of these insurance products. The CDI said that agents can garner hefty commission fees on each surrender, while victims could lose a great percent of the value of their annuity each time a transaction occurs.

CDI investigators said potential clients/victims can be found at various self-promoting events such as money management seminars.

One victim of such schemes, Dorothy Jones (not her real name), said she attended a financial and retirement planning seminar held at the American Red Cross in Santa Monica. Jones said she met an agent there who said he was a volunteer.

“I felt that lended to his credibility,” Jones said.

She said she received numerous phone calls with offers to have a financial analysis done for her. Jones put her investments in the agent’s hands.

“He said he could really help me increase my investments and he created a portfolio of my investments,” she said. “He gave me quarterly reports and said my investments were doing very well.”

After the agent had control over Jones’ portfolio she says he convinced her to sell all of her investments in other companies and then he said he would put her money into more highly rated companies.

“It seemed like a plausible strategy to increase my financial stability,” she said, “What I did not know is that he inflated my investments by three or four or more times. I thought I had three or four more times the money than I really have.”

Jones entrusted her mother’s investments with the agent as well. Her mother, 86, is elderly and infirm. Jones said everything eventually started to unravel. An associate of the agent called to ask if she knew where the agent was.

“I spent many sleepless nights wondering what was going to happen to me,” she said.

Avoiding the scam

There are numerous resources and advocates in Southern California who are intent on helping seniors avoid con artists.

Seniors in Malibu educate one another on the most common forms of fraud said Jo Fogg, a Malibu resident for more than 40 years.

“I comb through the newspaper regularly for articles and I watch television looking for stories that may be useful then I tell others,” she said. “Everyone just tries to help each other.”

“You wonder how people think of such things, it’s just terrible.”

Fogg said she finds the American Association of Retired Persons (AARP) newsletter to be a valuable resource. Some of the warning signs seniors should look for, according to the AARP, are sales pitches that require payment right away and callers or salespeople who won’t provide written information. Also, they say to avoid offers that promise sizable returns with minimal risks as well as requests for donations where the caller will not disclose how the money will be used.

Former Malibu Mayor Walt Keller said he too relies on the AARP and media outlets to provide information on scam artists and then he passes the word around.

Keller said he has learned that the most important way to escape fraud is to avoid phone solicitations.

“If someone sends something in writing, that’s different,” he said. “Also, it is important to find out how long a company has been in business.”

Keller, president of the Malibu Senior Citizens Club, said Kathryn Holguin presented “Learn to Protect Yourself from Telemarketing and Investment Crimes” to club members in March.

Holguin, a Malibu resident, is a consultant for Seniors Against Investment Fraud (SAIF), a statewide outreach program organized under the California Department of Corporations and funded by the governor’s Office of Criminal Justice Planning. Holguin investigated investment and telemarketing fraud for the Department of Corporations for 25 years.

Financial advisers, money managers, financial planners and investment advisers can be checked through the SAIF. It is also an outlet for complaints on unethical practices. The SAIF may be reached by calling 866.275.2677.

According to Holguin, seniors should treat investments like buying a used car.

“Go to different certified financial planners and get several opinions,” she said. “Even if it costs $1,000, it’s worth spending the money to get some good advice.”

The red flags that seniors should look out for go back to the basics said Holguin.

“If it sounds too good to be true it probably is,” she said. “Also, if they are getting pitched for something they should just hang up the phone. Go to local people who have a license to sell.”

Holguin said the SAIF will have a booth at the upcoming Scam Jam Fraud Prevention Expo in San Diego on June 7, which will take place at the San Diego Community Concourse’s Golden Hall, 202 “C” Street.

Admission is free for all. For more information call the San Diego Better Business Bureau at 858.496.2131.