Volume 3 Number 14
April 3, 2006

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GALLAGHER BANS AGENT WHO EARNED COMMISSIONS BY LURING SENIORS INTO COSTLY ANNUITY DEALS

Tom Gallagher, Florida’s chief financial officer, has revoked the license of a Tampa Bay-area insurance agent who used radio advertisements and seminars to lure senior citizens, ranging in age from 78 to 90, into buying annuities that cost them thousands of dollars in penalties, or were inappropriate for their needs, but generated high commissions for the agent.

Gallagher also ordered Bijan Razdar, 52, of Port Richey, banned permanently from transacting insurance in Florida.  Razdar had been a licensed agent in Florida since 1988.

“We have zero tolerance for insurance agents who deceive our seniors and cheat them out of their hard-earned retirement funds,” Gallagher said.  “We will continue to bring the full force of the law against unscrupulous agents and aggressively educate our seniors against these scams.”

Razdar’s license revocation follows an investigation by the Department of Financial Services’ Division of Agent and Agency Services, Bureau of Investigations, and the Division of Legal Services.  As Florida’s CFO, Gallagher oversees the department.  In the last three years, Gallagher has taken action against more than 110 agents for theft and fraud involving the elderly.

An annuity is an insurance contract that offers a guaranteed series of payments over a period of time.  Razdar, who operated American Independent Financial Services, located at 10633 U.S. Highway 19 in Port Richey, made his radio advertisements sound like a financial advice show.

One consumer, an elderly Clearwater widow who explained she needed to maintain access to her assets to meet daily living expenses, was led to believe that the investment she was purchasing would provide her much-needed immediate monthly income.  The 78-year-old Clearwater woman invested the bulk of her retirement nest egg, accumulated from 43 years of work at Sears, Roebuck & Co., in a deferred equity indexed annuity.  She later learned she could not collect a monthly income until age 92.

Razdar further advised four elderly widows to surrender or withdraw from in-force annuities to fund the purchase of other annuity products to generate hundreds of thousands of dollars in commissions for himself.  He convinced them that a “bonus” rate on new annuity purchases would make up for their losses.  His clients suffered hundreds of thousands of dollars in surrender charges and related penalties.  In some instances, the elderly consumers were unaware they suffered such losses.

Responding to calls and letters from hundreds of seniors robbed of access to their savings because they were convinced to liquidate CDs, stocks and savings accounts to fund annuities, Gallagher pushed for legislation that passed in 2004 requiring agents to document the basis for selling annuities to seniors and also gave the department authority to take corrective action if a company or agent violates the law.

“Sadly, seniors are targeted by scam artists because of their access to a lifetime of savings,” Gallagher said. 

As CFO, Gallagher also implemented a “Verify Before You Buy” campaign using websites, billboards, radio ads and various news shows and publications to encourage residents to take steps to protect themselves in financial transactions.  He also created a Senior Resource Center website, at www.flseniors.net/, to help seniors address the diverse questions and financial challenges they may face.

Florida is currently home to more than 2.9 million Floridians over the age of 65, and Gallagher said the state’s senior population is projected to grow by as much as 30 percent over the next several years.  He urged seniors to take precautions to avoid becoming victims.
 

  • Do an assessment of your financial means and investment objectives.

  • Understand that all investments involve risk: generally, the higher the return, the higher the risk.

  • Ask the sales agent (broker) about commissions, fees, penalties, sales charges and any other costs.

  • Ask as many questions as you want and take notes.  Walk away if they avoid your questions.

  • Take your time. High-pressure sales tactics will rush you into an unwise decision. A sound investment will be just as good tomorrow or next week.

  • Document all transactions.

  • Carefully read and understand documents before you sign them.

  • Ignore “inside information,” “hot tips” and “rumors.”

  • Hang up on “cold calls” from strangers.

  • Beware of "bonus" interest rates as they are usually limited in duration and have strings attached.

  • Be cautious of sales pitches that claim you will "recoup" all penalties with the higher returns of a new policy.

  • Remember: if it sounds too good to be true, it probably is.