A man was sentenced to prison Wednesday on fraud charges related to spending $1.5 million of client money on a lavish lifestyle.
Shawn Heffernan, 43, will spend nine years in prison after pleading guilty on Feb. 5 to 29 felony counts of fraud and related charges, announced the San Diego County District Attorney's (DA) Office.
Those charges included 11 counts of elder fraud, 16 counts of grand theft, one count of forgery and one count of making a fraudulent tax return, the DA's Office said.
Heffernan swindled his victims by soliciting investments funds to spend the money on personal items like jewelry, a Maserati and a lavish wedding.
The DA's Office said his victims included eight senior citizens and one dependent adult at the time they were defrauded.
“Stealing money from investors and defrauding them out of their hard-earned savings, especially when some of the victims are senior citizens, is disgraceful and will not be tolerated,” District Attorney Summer Stephan said in a statement.
Heffernan first sold annuity policies issued by legitimate insurance companies. He worked as a licensed insurance agent operating as the Heffernan Group, stated the DA's Office.
Then he began regularly persuading clients to give up their existing policies to purchase new annuity policies. According to the DA's Office, this activity is known as "churning" or "twisting."
As a result, he would gain lucrative commissions while his clients suffered great financial losses through surrender penalties.
The DA's Office stated that one elderly victim was subject to more than $490,000 in early surrender fees while Heffernan collected $280,000 in commissions.
Heffernan targeted victims that appeared vulnerable due to their older age and other factors. According to the DA's Office, he offered them a private contract as an investment opportunity.
He obtained money from 16 victims while promising them a 6 percent annual rate of return. When the authorities investigated his bank records, they found he did not use investment funds to make profits, according to the DA's Office.
When a client asked to withdraw money from their investment, Heffernan would use money from newer investors to satisfy the earlier investors, said the DA's Office.
Investigators from the California Department of Insurance and the Regional Fraud Task Force, which includes the DA's Office, the U.S. Secret Service and the San Diego Police Department, worked together on this case.