A man who defrauded thousands of U.S. Navy sailors in San Diego County through a tax and insurance fraud scheme was sentenced Monday to house arrest and was ordered to pay $500,000 in restitution.
Paul Flanagan, 56, used a business called Go Navy Tax Services -- which operated out of a trailer just outside Naval Base San Diego -- to sell expensive and unnecessary insurance products to service members.
"The trailer was adorned with military flags intended to deceive service members into thinking the business was affiliated with the U.S. military," the California Attorney General's office said.
Alongside co-defendants Ranjit Kalsi, 54, and Gregory Martin, 51, the trio raked in substantial commission through the scheme, the office said.
"Our military service members and their families contribute so much to our nation – yet there are people without honor who want to cheat our American heroes. We hope that today’s announcement helps right the wrongs that were committed by the malicious scammers of Go Navy Tax," said California Attorney General Rob Bonta, whose office worked alongside the San Diego County DA's office, the Inspector General of the Navy and Naval Criminal Investigative Service to bring charges against Flanagan and his counterparts.
Go Navy Tax Services advertised free income tax preparation services for military service members but once a service member was inside, the defendants persuaded them to purchase retirement accounts, the San Diego County District Attorney's Office said. Instead of using the money for a retirement account, though, the defendants instead opened unnecessary life insurance policies without the service member's knowledge or consent.
The defendants earned more than $2 million in commissions for nearly 5,000 life insurance applications and contracts, the DA's office said.
"The victims of this scam were Navy sailors serving our country and were tricked into signing up for something they didn't need and couldn't afford," said San Diego County District Attorney Summer Stephan.
Two of the defendants, including Flanagan, were ordered to pay $500,00 in restitution. Defrauded military service members will be receiving restitution payments, some in thousands of dollars, Stephan said.
Flanagan pleaded guilty to one count of felony conspiracy to commit insurance twisting. Kalio pleaded guilty to one count of felony identity theft and was sentenced on Feb. 10 to 358 days in custody and ordered to pay restitution. Martin pleaded guilty to midemeanor grand theft on Dec. 7, 2020.
Navy spokesman Brian O'Rourke said service members who suspect they may be the victims of fraud are encouraged to contact their local military legal assistance office. Potential fraud victims can also report what happened to the state Attorney General's Office.