Three San Diego insurance agents were charged in indictments unsealed Thursday alleging they targeted Navy service men and women to buy more than 4,700 policies they didn’t understand or need, but a defense attorney said the sales were legitimate.
The indictments charge Paul Flanagan, 54, Ranjit Kalsi, 52, and Gregory Martin II, 49 collectively with a 67 counts of grand theft, identity theft and forgery and two counts of conspiracy to commit forgery and “twisting,” a type of insurance fraud, dating back to 2010.
Flanagan owned Go Navy Tax Services, which agents Kalsi and Martin operated out of a trailer located near the main gate of Naval Station San Diego. An attorney for Flanagan said the company also had an office outside of Camp Pendleton, where it served Marine Corps clientele.
The San Diego County District Attorney’s Office and state Attorney General’s Office allege that more than 100 victims lost an estimated $4.8 million in premiums paid on life insurance policies and annuities sold, often in the guise of tax preparation documents or savings accounts like IRAs.
Prosecutors say the insurance agents opened client accounts within the Department of Defense payroll system and set up automatic payments to the tax company without their clients’ knowledge.
Defense attorney Earll Pott, representing Flanagan, said Thursday that the clients knew about the accounts because they had to enter codes to create them.
Flanagan, who was not in custody, appeared in San Diego Superior Court with his attorney to plead not guilty to the charges. Kalsi and Martin, who remain in jail pending a bail review hearing next week, entered pleas of not guilty on Wednesday.
Complaints against the trio were investigated by Naval Criminal Investigative Service, Navy Region Southwest Office of the Inspector General Investigators, the California Department of Insurance and Department of Justice. Prosecutors brought evidence to a San Diego County grand jury, which heard testimony from 40 witnesses over a two-week period.
The indictments were handed down Monday.
Flanagan’s lawyer said his client has been aware of the investigation for a year, and at some point the Navy issued a ban on sailors patronizing Go Navy Tax Services, effectively putting the company out of business. Flanagan, who had left San Diego to work out of a Texas office, has since retired to his livestock farm in New York, where he also produces maple syrup, Pott said.
“This was not a Ponzi scheme. These were real products with real benefits,” Pott said, adding, “There is nothing illegal about getting more insurance or another investment.”
Deputy District Attorney Gina Darvas agreed that some valid life insurance policies and annuities were sold by the company and remain in effect — but that the products were misrepresented to an unsophisticated, young clientele.
“There was never a full explanation by the defendants to the victims,” Darvas said.
She said Flanagan was earning $400,000 in commissions off the product sales made by the two agents he oversaw.
Navy Region Southwest spokesman Brian O’Rourke issued a statement saying, “Financial predators are sadly a reality for many military families, even in areas as traditionally supportive to the troops as San Diego. Service members who suspect they may be the victims of fraud are encouraged to contact their local military legal assistance office.”
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