Episode Transcript
[00:00:00] Hello and welcome everybody to the new Itty Straight Talk podcast, episode number 173. My name is Brian Anderson, founder and creator of AnnuityStraightTalk.com Got a really good episode for you today that I've hinted about in the past few months. Please like subscribe or comment on any of your favorite podcast platforms or on YouTube. Share it with your friends. Anybody you think it could help. This one is very, very important.
[00:00:24] I cannot emphasize it enough. Annuity First Fraud alert in Arizona. We got some bad actors in the field with a reputation that has followed them around for a while. This is. These are all things that I've learned about it since I started.
[00:00:40] So if you want to make an appointment with me, if you are in Arizona and you saw this and think, hey, wait a second, maybe that's similar to what we did. Make an appointment. Top right corner of any page on annuitystraighttalk.com get ahold of me. Love to help you out, but let me explain this one first. Okay, I'm going to share my screen. This is the newsletter. Give me a visual aid. Help keep me in line as I tell this story. Pretty wild stuff. So I have talked about this and it goes back to Sentinel Securities, a B plus company that got in a little bit of trouble late last year. I think they're sorting things out as far as how they do their accounting, accounting and all that stuff. This podcast is not specifically about them, but a couple people have asked but it's time to tell the story. Very concerning case of doing things the wrong way in financial services business raises a lot of questions. Whether it was a one time deal or not, it costs these guys a lot of money and that's what I want to talk about. The agents involved in this advertise themselves as fiduciaries and claim to be whistleblowers for unethical sales practices and annuities.
[00:01:50] When I look at this, it's nothing short of hypocrisy at its finest.
[00:01:54] We've got an ongoing complaint with the Arizona Department of Insurance that they're continuing to investigate and figure out what's going to happen. I'm going to keep the names of people out of it and I'll decide whether I want to at the end of this when it's all settled. If I want to expose these guys publicly, I don't really need to sling mud. I'm going to tell you guys the facts of the case. You guys can draw your own conclusion and I really would encourage some comments and some back and forth on this and tell me on the YouTube channel or on the website, what do you think of this, what should happen? And we'll go through it from here, right? I'm only trying to help a retired couple straighten things out. I did the Sentinel Security podcast and these guys made an appointment saying, hey, we've got this Sentinel annuity. And then I learned what their backstory was and there were some serious, serious issues. I have been threatened with a defamation lawsuit for bringing this complaint to the Arizona DOI and there's nothing that come out of it. Number one, it's factual information. I stated that. Number two, it's not public. And so that's cooled off a little bit. They want me to withdraw the complaint or they're going to come after me. And I would love to see it in court, love to do it. What anybody else needs to understand, they're going to come after me. Like I live around a bunch of people who have summer homes from Arizona, very well off people, very successful. I do not think it'd be very hard for me to ask a couple of my friendly neighbors, hey, you got a badass attorney in Arizona that's going to represent me in this. I would love to take it to court because I got facts. I worked through the paper trail with the couple that's involved. I found all the evidence that I needed. I have no relationships with the agents involved. I have have since talked to a lot of people that know of them. Now I'm in the western region, so all the wholesalers come to me also deal with guys in Arizona and a lot of the cases they do that. And so the guys that I know also know the agents in Arizona that do a lot of sales. The attorney representing these agents came to me and called me. We talked first and he said, oh, I've been representing these guys in matters like this since the early 2000s. And I thought that was really interesting because I'm going on 23 years in this business and I've never needed an attorney even one time to defend myself.
[00:04:14] So draw your own conclusions to that. So my first concern is to help the find a good solution for the couple that contacted me. And second is to find others who were treated similarly because I think it's probably not a one off deal. That's just my guess. And you be the judge, you will never be able to convince me that this only happened one time. These agents bragged about doing a tremendous amount of annuity business and it stand stands to reason that others have been similarly victimized. Anyone who Sees this. If you think you've had a similar experience, then get contact me and we can help figure it out. Maybe you don't have a complaint. Maybe you do. So here's the deal. John and Jane, not their real names. I'm not using real names. They bought two annuities and we'll consider it one from American equity in 2021. It was from a totally different agent. Now, like a lot of annuities, they didn't quite understand all the facets of it. They got an income rider they had to pay a fee for. The contract didn't grow, so their account value dropped with the fee in the first year. They were not happy about it. See an advertisement, go to a dinner seminar with the agents involved in the new transactions.
[00:05:19] And after one year of being with American Equity, the new agents recommended that John and Jane surrender their contracts at American Equity and purchase a new contract at National Western Life. So Initially, between the two contracts, they put about $650,000 into two. But when they transferred them, only $580,000 was sent to purchase a new contract. So they reduced their cash value by $70,000. This is a no loss contract. They lost money. Only one year passed before the new agents again said, hey, the rates are up. You guys can improve your situation. You go from National Western, surrender that contract, move into Sentinel Security, the B plus carrier that got into trouble.
[00:06:03] That's what raised the red flag. Because when Sentinel Security got in trouble, it was their accountant who looked at it and said, this is weird. You guys have had three different annuities in the last three, four years.
[00:06:15] That's strange. You might want to call somebody. I had four. I had just released a podcast on Sentinel Security and they saw it and thought, maybe we'll talk to this guy. Started with 650, 580, went to national Western. By the time they transferred it to Sentinel Security, $526,000 total was transferred. Part of the reduction in cash value is due to rider fees that weren't necessary. But I calculated total losses over four years to be just shy of 120,000, plus a little more for the rider fees. Can't do anything about that, probably.
[00:06:46] These are no loss products and it's supposed to be safe money. So how do they only have 80% of the money they started with four years ago? It is an absolute disgrace.
[00:06:58] Now, bonuses on the new products will make the picture look a little bit better, but there's no doubt they had a major reduction in cash value over the years when their money was Supposed to be growing as well. So 650, even in a terrible product, could have been well over $700,000 now. So how would. How did this possibly happen?
[00:07:17] So you guys might remember last August, I did a podcast when I talked about the guidelines for surrendering an annuity and buying a new one. In the newsletter, you can link back to that. I tell everybody, if you're going to surrender one, watch this one first. There's a process in place across the industry that ensures that if an annuity is swapped out, the new contract must have a material benefit for the client, the consumer, the contract owner. If no benefit can be demonstrated, then the new company will reject the application. I've had this happen before. When you're honest and you go to the company, you're passing the buck in liability. I've demonstrated a benefit, but the company still rejects it because of some losses in other areas.
[00:08:03] So part of it is a competitive comparison is required as part of the paperwork so that an objective decision can be made. There's guidelines with it. Insurance companies do not care about the agents or consumer's opinion.
[00:08:17] It's all down to the numbers. In this case, we're never going to know because the correct procedure was not followed. On the application, the agent attested that the new transaction was not replacing an annuity. So he was able to avoid the process that would have objectively verified the benefit in the new contract, even if there is one. So I'm going to put a link below. I can show that to you guys right now. I got March Madness bracket up there too. So let me show this right, if you're watching the video, you can see that on the application, the questions, the advertising questions. Replacement. Does the proposed client have any existing life insurance or annuity contracts? They said yes. Will the contract, the proposed contract, replace anything? They said? No. In doing that, they eliminate the requirement for comparison of the contracts. Okay, now what is really interesting in this deal is at the bottom of this page, there is a fraud notice. It says, any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance on statement of claim containing any materially false information or conceals for the purpose of misleading information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. Now, this is the second application. They sold the first one. They knew damn they were replacing an annuity. And if you're running a tight ship, you make sure you answer that question correctly. Populate the other Paperwork, do the comparison and verify that it is in their best interest. They didn't do that. Pretty significant issue here.
[00:10:06] Now, don't forget the two transactions. These guys lost $120,000 cash value, right? So that fraud alert at the bottom shows that this omission is taken very seriously. Now, there's another wrinkle that allowed this to happen.
[00:10:21] Even if the questions were answered incorrectly, the new company might see a transfer coming from another insurance company. That would raise a red flag. They delay the transfer and say, you got to do this other comparison before we'll accept this. Right. To get around the possibility of seeing that the agent surrendered the first contract, transferred the money to a Charles Schwab account that they had investment advisory access to. So they had control over that. And then from the Charles Schwab account, they transferred it to buy the new annuity. So the new purchase looked like any other IRA transfer from Charles Schwab to buy an annuity.
[00:11:03] So the insurance companies that got the new business were defrauded on two occasions to get the National Western contract, then the Sentinel Security contract. And the consumers were defrauded because they lost money every time. This easily concealed the source of funds and completed the unethical transaction. And there's no way to look at it and say that was not done intentionally to avoid the extra responsibility of verifying how good or how much better the new transaction would be.
[00:11:34] So that addition, it brings an additional problem in that there's a major brokerage company that is responsible for overseeing the account. It's not Charles Schwab. I'm not going to say that company. I don't know if it really matters, but there's an investment advisory firm out of Nashville that had oversight over the Schwab account. They are responsible. They could have stopped it. They could have asked for verification. They could have done something. I don't know. Now, we look at a possibility of a complaint with the sec because we can. Right? So I emailed back in December, early January, I emailed one of the executives at the company in the ownership group and a compliance officer. They have not responded to me. An SEC complaint will certainly get an attention, light a fire under their ass. And the reason I want to do that so badly is not to peg these advisors again. That might happen as well. But that company could easily identify any similar transactions that were done.
[00:12:34] Because this case could go huge. And I'm not kidding. It could be an episode of American greed. Only an extremely naive person would think that this only happened one time. You really think that John and Jane are the only people they did it to. When Sentinel Security got in trouble, these guys said, oh, hey, go get alliance. It's a 40% bonus. You'll have way more money. They didn't do it. These guys built a large business and collected substantial compensation, maybe amassed even great wealth by doing this. We may never know how deep it goes, but I'll stick with the couple I already know through the whole thing and push them to get as much as they possibly can out of it. I don't see an upside. For me, I'm just doing this because it makes me sick to think that we work so hard to do things the right way and they're guys like this that are making piles of money doing it the shady way and you don't have to. The bottom line is we have laws in place.
[00:13:30] These transactions should be reversed, that John and Jane are restored to their initial position. Everybody says, oh, there's no way that'll happen. That's never happened. It's like, if we have laws in place, where's the enforcement and how do we deal with it? Because those guys should be restored with every penny they have. Back at American Equity. I don't know what's going to happen if nothing happens. I'm going to lose a lot of faith in this business. First we got to see if Sentinel is going to back out that transaction, give them their money back without surrender fees. I think that is quite likely. I think it is also likely that they get back to National Western if they reverse that transaction because what they paid in surrender fees at the second company would be easily clawed back via commissions and all that stuff. So whether you've been involved in something like this or you want to avoid it, learn to ask the right questions, at the very least get a second opinion. I can promise you that no one that comes to me is ever going to be treated like this. I have respect for your money. You worked hard for it. I am honored that people trust me to help them deal with it. I will never abuse your trust, ever. So I want to hear some comments about this. What do you think should happen to these guys? John and Jane deserve to have a happy retirement. Man, they're. They're a lot like me. They're just good people. And we're going to. Yeah, hopefully we'll get this thing settled up and they'll get back to a good place and then we're going to meet and have a medium rare steak somewhere. So John told me if I figured out he'll buy me all the steaks I can eat. I think he doesn't know how much steak I can eat. But anyway, this has been episode 173, annuity fraud alert in Arizona. This happens all over the country, unfortunately, and I'm going to do everything I can to highlight it and make sure you guys know what to look out for so you don't make mistakes, make the right decisions like subscribe or comment. Any of your favorite podcast platforms are in YouTube. Please comment and let me know what you think about this and go ahead and share it with your friends. Top right corner of any page on annuitystraighttalk.com if you want to talk to me. You got a case like this or something similar, I will help you sort it sort it out. If you get me the paperwork, I'll tell you how it should be done, how it should have been done, and we'll see if we can help you straighten things out. So thank you so much for joining me on episode 173. I'll be back next week. Maybe something not quite as exciting, but it'll still be good. All right, guys, thanks so much. I'll catch you next week. Okay, bye.
