An insurance agent from Clayton has been sentenced in Alameda County Superior Court in Hayward to three years and eight months in prison for a scheme in which he defrauded six investors of $800,000.Victor Weber, 55, was given the prison term by Judge Stuart Hing on Friday and was also ordered to pay the victims $800,000 in restitution. Weber pleaded guilty in December to three felony crimes: grand theft by embezzlement, unlawful selling of a security and theft of fiduciary funds.
Alameda County District Attorney Nancy O’Malley said the fraud was a sophisticated Ponzi scheme in which Weber solicited investments in a specialized type of life insurance.The insurance was known as STOLI, or Stranger Owned Life Insurance. In these investments, a third party purchases a life insurance policy from a policyholder who no longer needs to have the insurance benefits available to his heirs. An example is the situation in which a parent outlives his children, O’Malley said. The investor takes over the payments and eventually receives the insurance benefits when the policyholder dies. The procedure is legal in the absence of fraud. O’Malley said Weber took the money from investors between 2006 and 2009 and told them he would use it for STOLI investments, but never bought any life insurance policies and instead used the funds for personal and business expenses.
In some cases, he employed the classic Ponzi scheme technique of using money from new investors to pay returns to previous investors, O’Malley said. O’Malley’s office and the California departments of insurance and corporations jointly carried out the investigation.State Insurance Commissioner Dave Jones said, “This former agent used his license and position of trust to steal large sums of money from his victims apparently for his own personal gain. “This sentence should stand as a warning to those who think that they can steal from consumers,” Jones said.
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