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CFO Sink Returns $1.2 Million to Delray Beach Seniors Scammed out of Life Savings

9/28/2009

CONTACT:
Kyra Jennings or Kevin Cate, 850-413-2842

TALLAHASSEE—Florida CFO Alex Sink today announced the refund of more than $1.2 million to four Florida seniors scammed into buying inappropriate equity indexed deferred annuities that earned a Delray Beach insurance agent thousands of dollars in commissions while leaving the victims without access to their life savings. Department of Financial Services investigators and legal staff worked together with the insurance company to recoup the funds.

Larry Yale Krakow, 52, of Delray Beach has been suspended from selling insurance and ordered to pay a $25,000 fine for numerous violations of the Florida insurance code.  Krakow is the owner, president and director of Golani Financial Group a/k/a Golani Insurance Group, Inc.

“I applaud our investigators and attorneys for protecting these seniors and making sure they got their money back,” said CFO Sink.  “We are sending a strong message that we will not tolerate anyone taking advantage of Florida’s consumers, especially our seniors.”

Josephine Passinissi, 74, is one of the victims of Krakow’s scam.  Krakow regularly ate dinner at her house and he sent flowers on her birthday to gain her trust. Believing him to be a reliable source of investment advice, Krakow convinced Mrs. Passinissi to liquidate her investments and place $274,384 into annuities that paid thousands to Krakow, but left her unable to access her savings.  “Never trust anyone at first, check it out, and read everything,” is Passinissi's advice.  “Never put trust in someone, no matter how nice.”

CFO Sink has heard from hundreds of seniors and their families who say they were convinced to liquidate annuities, CDs, stocks and savings accounts to fund new annuities only to discover these actions robbed them of their savings.  Last year, CFO Sink created her Safeguard our Seniors Task Force to examine and recommend solutions to better protect Florida seniors against financial fraud.  She teamed up with key lawmakers last session to push legislation that would increase the penalty for agents that defraud senior investors to a third degree felony and would establish better disclosures and protections upfront for seniors who invest in these products. The legislation was approved unanimously by the Florida Senate but did not make it out of committee in the Florida House.

“After hundreds of investigations and thousands of complaints, it’s time that we have the ability to crack down on these scammers.  Just like last year, one of my top legislative priorities next session will be to put some ‘alligator teeth’ into the law and crack down on those who prey upon our senior population,” said CFO Alex Sink.  “There is no excuse for inaction when it comes to protecting our seniors.”

Equity indexed deferred annuities are often touted as a vehicle for investors to realize stock-market-like gains without the risk, a “best of both worlds” marketing strategy that has proven appealing to risk-averse seniors. However, CFO Sink cautions seniors to use great care in evaluating these complex investment products, as they often contain detrimental features such as hidden penalties, costs, fees, and massive, multi-year surrender charges.  These surrender charges may leave the funds inaccessible for a 10- to 15-year period or more.  Even then seniors may be required to spread the payments over several years in order to receive the promised bonus and interest rates for that policy.

CFO Sink encourages both licensed annuity agents and seniors to review the Equity Indexed Annuity Alert, at www.myfloridacfo.com/consumers/guides/life/annuity_alert.htm.  Anyone who suspects they may be a victim of annuity fraud should log on to www.MyFloridaCFO.com or call the department’s Consumer Helpline at 850-413-3089 or 1-877-My-FL-CFO (877-693-5236).

As a statewide elected officer of the Florida Cabinet, CFO Alex Sink oversees the Department of Financial Services.  A successful businesswoman with nearly three decades of experience in the private sector, Sink is serving her first term as Florida's CFO.  As CFO, Sink's priorities include using her business experience to cut wasteful government spending, cracking down on financial and insurance fraud and reforming the state government's contracting practices