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A financial advisor received a five-year prison sentence last year, after he was convicted on fraud charges linked to his annuity and life insurance business.
Background on Annuity Fraud Lawsuit
Edward H. Kahler of Washington state was ordered to pay back over $1 million that he stole from eight older clients. Charges in this annuity fraud lawsuit alleged that Kahler had used proprietary information from a company he used to work for to get access to customer accounts.
Kahler had previously worked from 1983 to 2007 as a financial advisor for Variable Annuity Life Insurance Company, a subsidiary of AIG, where he sold annuities. He lost his job there when it was discovered that he had been promoting competitor annuities.
Investigators had suspected that after getting fired, Kahler took a list of about a million VALIC clients with him. The criminal complaint against Kahler alleged he used customer information in VALIC’s computer system to take customers’ money from their accounts and use it for his own benefit.
Among other allegations, the criminal complaint claims that on Christmas Eve 2012, Kahler liquidated $125,000 from the account of a client who had been dead for almost thirty years. He then allegedly used the money to fund the purchase of a new luxury car and a trip to Las Vegas.
One of Kahler’s clients said he kept working with Kahler for years without realizing he had been fired from VALIC. Kahler kept using VALIC business forms in his transactions, the client states. Based on the trust Kahler had built over several years, the client purchased a new $100,000 annuity. However, the 70-year-old client didn’t realize at the time that the money would be locked up for ten years, guarded by the requirement of pay a hefty fee if the client withdrew his money early.
Another client paid Kahler $186,000 in 1986 to purchase an annuity. Kahler never purchased the annuity, but instead kept the money for himself. He spent years sending the client false account statements showing fictional account information. The client did not catch on until 2012.
When she tried to consolidate her retirement investments after her husband’s death, she found no annuity had ever been purchased. According to the U.S. Department of Justice website, Kahler committed similar annuity fraud with five other clients.
The federal judge who sentenced Kahler called him a “sophisticated fraudster.” The judge states Kahler “took away trust, he took away money . . . and now people’s lives are affected in a terrible way.”
In addition to federal prosecution, Kahler had also attracted the attention of the Washington state Insurance Commission. An annuity fraud investigation by the commission found that when a client of Kahler’s tried to consolidate her retirement assets, she was told by Jackson National Insurance that her assets would be tied up until 2022.
The client was sure she had never signed a renewal contract with that company. But investigators found evidence around the signature lines in her paperwork that was consistent with an attempt to copy and paste.
The investigation also revealed that VALIC continued to receive complaints about Kahler even after they had fired him. The commission revoked his insurance provider’s license in 2012.
Get a Free Life Insurance Claims/Annuity Fraud Lawsuit Review
If you or your loved one purchased a bonus annuity, life insurance policy or Medicaid qualified annuity and it did not turn out as promised, you may need to have an investment fraud lawyer review the policy, the payments, and the potential benefits. You may be surprised at what they find, and you may even qualify for financial compensation beyond what the policy promised.
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