SAN DIEGO — A San Diego insurance agent pleaded guilty Monday to defrauding senior citizens and others out of nearly $1.5 million by soliciting investment funds and spending the money on personal items such as jewelry, a Maserati and three rental properties.
Shawn Heffernan, 43, faces nine years in state prison when he is sentenced March 7 by Judge Howard Shore.
Heffernan pleaded guilty to 29 felony counts, including multiple counts of elder fraud and grand theft.
According to investigators, Heffernan’s fraudulent activities followed a familiar pattern. Initially, as a licensed insurance agent, he would sell annuity policies issued by legitimate insurance companies.
Before the annuity policies expired, Heffernan would often convince clients to surrender the existing policies and purchase new ones, prosecutors said.
The activity, known as ”churning,” would result in significant commissions for Heffernan and very substantial surrender penalties for clients, according to prosecutors.
In one case, investigators identified more than $490,000 in early surrender fees and $280,000 in additional commissions collected by Heffernan.
The defendant also convinced victims to cash out their annuity policies or invest additional funds into vaguely defined investments directly with him.
Investigators said Heffernan provided few details and little or no documentation to his victims. He would deposit investment money directly into his own bank account and spend the clients’ money in his own personal living expenses, according to investigators.
If a client requested to withdraw money from their “investment,” Heffernan would withdraw money he solicited from later investors to satisfy the earlier investors, according to prosecutors.