David Abraham, a licensed life insurance agent and former employee of Brown & Brown Insurance, is set to start serving his sentence today, October 16, after pleading guilty to a felony count of grand theft with a special allegation that he took more than $1 million.
Abraham pleaded guilty to the charge in July and was sentenced to five years in state prison. However, he will serve 90 days in Santa Barbara County Jail and be put on probation for three years instead, while paying restitution to the 60 victims in the case.
Abraham, according to officials, would sell clients an annuity policy, wait until the policy was at least a year old so he would retain a commission, and then transfer the policy to another company. Abraham would get commission off that transfer, while the policyholder would face surrender charges of more than 10 percent of the principal. Clients would confront Abraham, and he would tell them that the new companies would pay bonuses to make up for the surrender charges, but didn’t tell them they had to maintain their annuities for a specific period of time to realize the bonus. He also would allegedly change his clients’ mailing addresses to his home address to hide his illegal actions.
Abraham allegedly made $1.3 million in these transactions, while his customers-many of whom are senior citizens-lost more than $2 million.
Abraham, 48, was charged in January after an investigation by the state Department of Insurance. “Scamming unsuspecting people out of their hard-earned money is unacceptable, and the Department of Insurance will continue to crack down on fraud perpetrators,” said Insurance Commissioner Steve Poizner at the time of the arrest.
He has to pay a total of $2.1 million in restitution, $1 million of which has already been paid. The district attorney’s office is moving as quickly as it can to get the money back to victims, according to Lee Carter, a prosecutor in the DA’s office.