Victims of Investment Fraudster Receive Restitution
News: 2019 Press Release
SAN DIEGO, Calif. — Insurance Commissioner Ricardo Lara today announced the distribution of over $320,000 in restitution funds to 14 California victims scammed by former insurance agent Shawn Heffernan. These restitution funds were acquired through the seizure and sale of property owned by the defendant at the time of his arrest in December 2017.
Shawn Heffernan, 43, of San Diego, was sentenced in March 2018 to nine years in state prison after pleading guilty to 29 felony counts of fraud and related charges. Heffernan defrauded 16 victims out of nearly $1.5 million by soliciting investment funds and spending the money on personal items including jewelry, a Maserati, and a lavish wedding. Eight of the victims were senior citizens at the time they were defrauded by Heffernan.
“Heffernan targeted seniors on fixed incomes and left them financially devastated,” said Commissioner Lara. “Thanks to the joint work of our investigators and the San Diego District Attorney’s Office, these victims will be able to recoup a portion of the money stolen from them.”
Heffernan, a licensed insurance agent at the time operating as the Heffernan Group, initially sold annuity policies issued by legitimate insurance companies. He would often convince clients to surrender existing policies and purchase new annuity policies. This activity -- known as “churning” or “twisting” -- would result in significant commissions for Heffernan and very substantial surrender penalties for clients. One elderly victim defrauded by Heffernan paid over $490,000 in early surrender fees while Heffernan collected $280,000 in additional commissions.
The property seized from Heffernan included three rental condos and over $75,000 held in Heffernan’s bank account. The Department of Insurance suspended Heffernan’s insurance agent license in July 2017 and revoked it after his conviction in 2018.
The case was investigated by the Regional Fraud Task Force, comprised of members from the San Diego District Attorney’s Office, the U.S. Secret Service, and the San Diego Police Department, in conjunction with Investigators at the California Department of Insurance. The case was prosecuted under the Life and Annuity Consumer Protection Program by Deputy District Attorney Michael Zachry, with assistance from Deputy District Attorney Anna Winn.
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The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.