10/21/2024
If you ever think your insurance agent is bad...
Well...
At least he or she isn't THIS bad...
Maine Regulators Cancel Prisoner’s Insurance License
By Greg Saitz October 18, 2024
Maine insurance regulators Wednesday canceled the license of an agent who's in federal prison for stealing millions of dollars from former financial advisory clients — the same day P&C Specialist featured his case in a story about brokers barred from the financial services industry who still hold insurance licenses.
Gerald Eaton, 55, who's serving an eight-and-a-half-year prison sentence handed down in March 2021, was one of nearly 350 individuals barred by the Financial Industry Regulatory Authority who, as of earlier this month, continued to be actively licensed to sell insurance in states across the country, according to a nine-month investigation by P&C Specialist.
After the story was published, the Maine Bureau of Insurance terminated Eaton's license to sell health, life and variable contracts, according to its website.
An official from the bureau did not respond to requests for comment by deadline.
Eaton pleaded guilty in 2020 to a two-decade-long scheme to steal $3.8 million from clients who were elderly or in poor mental or physical condition, federal authorities said. His insurance producer license in his home state of Massachusetts remained valid until November 2022, 16 months after he began his prison sentence, records show.
Second license canceled
Maine insurance officials yesterday also canceled the license of another former financial advisor after P&C Specialist notified them that he had pleaded guilty in 2019 to defrauding customers of nearly $5 million. James T. Booth, formerly a Connecticut financial advisor, was sentenced to 42 months in federal prison in 2020 and released in July 2023, according to court records and the federal Bureau of Prisons.
Booth, 79, consented in January 2021 to having Connecticut insurance regulators revoke his license there, based on his guilty plea to securities fraud and other charges. But until yesterday, he was licensed to sell life insurance in Maine.
Not doing their job
Critics of the state-based insurance regulatory regime pointed to Eaton's and Booth's cases as examples of insurance regulators not doing their job. Prior to Maine's termination of their licenses, investor attorney Joseph Peiffer said "it kind of blows your mind" that someone could be in federal prison for fraud and still have a valid insurance license.
"What do you have to do to lose it?" he asked.
In a follow-up interview yesterday, Peiffer, also president of the Public Investors Advocate Bar Association, said an insurance license "can be the last refuge of scoundrels because nobody is watching over them."
"They should be embarrassed, truly embarrassed," Peiffer said about regulators allowing felons to keep their licenses. "I don't see this as something slipping through the cracks. I see this as emblematic of a reluctant regulator."
Our investigation uncovered numerous examples of brokers who'd been kicked out of the financial services industry for stealing from clients, putting investors in Ponzi schemes or engaging in questionable behavior related to variable annuity and other insurance product sales. Several other states also license barred brokers charged with or convicted of felonies, the investigation found.
In addition, nearly two-thirds work with at least one of hundreds of insurers, records show.
