August 3, 2005 - Top Stories
By DAVID ROSS
Two very vulnerable people, one of them a 71-year-old man diagnosed with cancer, the other a 62-year-old quadriplegic, were, say their attorney, victims of a financial scam perpetrated by a financial adviser who was based as an independent contractor at the local bank.
Both were sold investments that were unsuitable to their circumstances, and which the person who sold them knew were unsuitable, says their attorney, Ronald Marron.
The elderly man, Richard Petter, was sold a deferred annuity.
A deferred annuity is a type of long-term personal retirement account that is suitable for building up assets prior to retiring. It then provides income after you retire.
It is not normally recommended for someone who is already retired or disabled and who might not have time to wait for the annuity to mature.
In the case of these deferred annuities, access to funds were severely restricted by penalties and charges for a dozen years.
Since Petter has a potentially terminal cancer, such an investment couldn’t possibly be to his advantage or that of his heirs.
The disabled man, Melvin “Corky” Packard, was sold a charitable installment contract and variable annuities.
Both men (as well as several others, including one in Escondio and Temecula) were targeted for investments that could not possibly benefit them, says Marron.
The two residents, Petter Packard, are part of a lawsuit that includes as its defendants the local bank, although the villains of the scam appear to be Robert Frost the former financial adviser who worked out of the bank until May of this year and Allianz Life Insurance Co. of North America.
The latest complaint was filed Monday morning by the San Diego-based attorney for Melvin L. Packard of Pauma Valley and includes as defendants: Sun Life Assurance Company of Canada (US), Inc., Keyport Life Insurance Company, Inc., California Bank & Trust, Inc., Independent Financial Marketing Group, Inc., IFMG Securities, Inc., and Robert Frost.
These same defendants were named in an earlier complaint filed for Petter, which alleges “elder abuse,” fraud, breach of contract and negligence, among other charges.
According to the earlier suit “Since the mid to late 1990s, Allianz has increasingly focused and targeted its deferred annuity sales efforts towards senior citizens without complying with California insurance disclosure requirements and unfair sales practice laws nor Allianz’s own internal polices and procedures to ensure that these complex financial products are not sold to persons who are not suitable candidates to purchase them.”
In the past two decades Allianz has become increasingly aggressive in marketing its unsuitable investments to elderly customers, the suits allege.
The suit also claims that it encouraged its agents not to conduct the sort of in-depth interviews that would have shown that the investments were not suitable for them.
“Rather, policies were systematically issued in nearly each and every instance and without regard to the actual suitability for the senior citizen applicant’s insurance and financial needs,” according to the lawsuit.
California Bank & Trust is included in the suit because Frost was based at the Valley Center branch as an independent contractor. Both Petter and Packard were CBT customers and Frost was recommended to them by employees of the bank.
In Packard’s case, the defendants are accused of bilking “Plaintiffs, quadriplegic citizens, out of approximately $1,500,000 by fraudulently misrepresenting and then selling bogus charitable income trust installment contracts for the purported purpose of building churches and artesian wells in India, unsuitable variable annuity policy (a Sun Life Financial product) with high surrender charges, a Liberty Mutual Intermediate B-share Bond Fund with high contingent deferred sales charges, and a floating-rate fund. Defendants’ agent, or apparent agent, engaged in abusive sales practices with no apparent corporate supervision, or compliance oversight as required by law. Apparently, Defendants sole objective was to foster sales (commissions) in conscious disregard of the consequences to the public or citizenry at large, including Mr. Packard.”
According to attorney Ron Marron, “There appears to be a pattern of fraud in the sale of annuity products by Mr. Frost.”
Interestingly, one of the defendants in the case, Allianz, sent a letter to Petter in which it conceded that the policy Frost sold to him wasn’t the right policy:
Sue Scherer, a customer relations representative for the company wrote in April [in an exhibit filed with the case]: “Dr. Mr. Petter, thank you for your patience while I have reviewed your policies and corresponded with Angel Ayala [another defendant] and Robert Frost. As a result . . .I have discovered that terms of your policies were misrepresented to you.”
The Roadrunner called California Bank & Trust’s public relations department for a comment on the lawsuit. However, so far, our phone call has not yet been returned.
Last week CDF Battalion Chief Kevin O’Leary was handed the keys to the brand new fire station located just off Vesper.
Now comes weeks of inspection to make sure that the station meets all of the laws and regulations. It even has to meet specifications for the federal Americans With Disabilities Act (ADA), even though it is highly unlikely that any firefighter will ever actually be confined to a wheelchair while he or she is staying in the barracks.
The station also awaits installation of its communications equipment.
The station includes six bedrooms that each hold two beds and lockers. There’s also a living room and kitchen in the living quarters.
Normally the station will be staffed by eight firefighters, or four per engine.
The fire engine bay will hold two engines.
The station also includes a gas station that stores 1,500 gallons. An engine holds 50 gallons.
The new station will go on line soon, replacing the old station, located on Cole Grade Road. It was built during the Depression by the Civilian Conservation Corps.
That creaky old facility has had its problems in recent years. For example, firefighters there cannot drink the water from the station’s well.
“At the new station everything is going to work,” the chief commented.
The final disposition of the old property has not yet been determined. The school district has shown some interest in acquiring it, but only if it can tear down the old buildings. That may be a problem since many buildings erected during the 1930s are considered historically significant.
Chief O’Leary said he doesn’t think that will be a problem, however.
The new station has been built on seven acres at a cost of about $1.7 million, according to the chief.
The station doesn’t just benefit CDF. It also directly benefits residents of the VC Fire Protection District because it stays open when the fire season is officially over.
The fire district pays an extra $100,000 to the state so that the station is open all-year round. Most directors agree that this is a pretty cost effective arrangement for the district.
By DAVID ROSS
Inspections of property in Valley Center to see that they abide by the weed abatement ordinance began last week.
The inspections are being conducted by California Department of Forestry and Fire Protection (CDF) firefighters in cooperation with the Valley Center Fire Protection District, Chief Kevin O’Leary told The Roadrunner.
The engine companies are looking at properties and roadways within the district.
They have begun in the area that the chief considers to be the most at risk.
“I have identified areas from Cole Grade north to West Lilac and everything in between,” O’Leary said.
“Everything on the west side of town is the first priority,” he said. “That is the area that has not burned and where you now have the heavier fuels.”
He added, “We are obviously going to have more fires in the grass, but they are easier to control than brush that hasn’t burned in years and years,” he said.
The fire department is particularly concerned with the Keys Creek drainage that comes from Pala over to the San Luis Rey River, where it crosses I-15. That area continues up to Station 72 on Lilac Road (next to the VC Community Center).
“Anything that starts there will come up that drainage. If we have Santa Ana winds it will be a great concern,” said O’Leary.
The department will also respond to complaints about individual properties, he said.
The CDF personnel are able to carry out the inspections as part of their existing duties of inspection of fire hydrants, daily training, and orientation of new reservists.
The engine crews also go out to check the accuracy of their map books against existing roadways. They record where the houses actually are and make corrections on their books.
“Sometimes you look at the map book and the hydrant is on the wrong side of the street. New developments are added all the time and you have to update your map books,” said O’Leary. “We’re combining a number of things.”
The inspections came about partially as the result of an executive order from Gov. Arnold Schwarzenegger signed on July 20.
The executive order provides additional staffing and resources to protect local wildland communities from fire and allows CDF to expand its statewide firefighting efforts.
According to the governor, “We face extreme fire conditions in our state with summer heat, high winds, steep mountains and trees everywhere.”
His order increases staffing levels to four firefighters per engines on 53 CDF engines in this county and two neighboring counties.
The governor also added four more CDF Conservation Camp Fire Crews to Southern California and added a helicopter to San Diego County’s arsenal.
His executive order helped CDF to do what it had already decided to do locally, which was to conduct inspections not only in wildland areas, but also within the fire district.
When crews tag a property for weed abatement, the owner has about six weeks before the case is turned over to the County. The property will then be assessed the fees for the weed abatement. This will be added as a lien onto the property, as if the owner had committed a code violation.
There are a total of three inspections before that step, said O’leary.
“So far, we’ve had over eighty percent compliance,” the chief said.
The rules require that property owners cut back on flammable materials within 30 ft. of a house, and maintain 100 ft. around the property perimeter.
Brush should be reduced by 50%. Tree branches should be cut up from the ground up to prevent a fire from jumping from the ground into the trees.
“We’re not asking them to take everything down to mineral soil around their home,” said O’Leary.
Property owners also must remove dead trees, including firewood, 30 ft. around the house, at least during the fire season.
Firefighters will also be checking to see if addresses are clearly visible, whether there are spark arresters around chimneys and whether leaves and debris have been removed from roofs.
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If you have questions about the weed abatement ordinance or about fire inspections, call the district office at 751-7600.
The Valley Roadrunner
P.O.B. 1529, Valley Center, CA 92082
Tel. 760.749.1112 Fax 760.749.1688
Website: www.valleycenter.com
Email: editor@valleycenter.com
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