Cecil A. Hyatt, 80, met David Alfred Tetley in 1988 at a financial planning seminar for retirees from Lockheed Martin, according to Hyatt's daughter.
Over the years, Hyatt, who now suffers from dementia, bought a number of annuities from Tetley. Authorities say Hyatt never knew that each time he cashed out one policy to buy another he lost thousands of dollars in penalties.
"I trusted the man," Hyatt said. "He had a good personality.... He made you feel like you just got out of church.... I'm very hurt and very disappointed."
The Camarillo man and 10 others were victims of an insurance scam called "churning" or "twisting," said prosecutors and state insurance investigators. In all, Tetley cost these investors more than $750,000 in early withdrawal penalties alone, authorities said.
Los Angeles County Superior Court Judge Michael M. Johnson sentenced Tetley, 50, to six years in prison Tuesday and ordered him to pay full restitution to his victims. Tetley is one of the first financial planners ever charged with felonies for such actions, according to prosecutors and his defense lawyer.
"The brokers had better look carefully at what happened here because this is the first time the district attorney has taken on churning as a felony," said David Daar, Tetley's criminal defense lawyer. "This is the warning of the state to brokers. It has to be heard."
Churning is a misdemeanor under state law, punishable by up to one year in county jail and a $1,000 fine. But prosecutors alleged that Tetley's practices resulted in the much more serious crimes of financial elder abuse and grand theft. He profited every time a client sold one annuity to buy another, Deputy Dist. Atty. Alexis de la Garza said.
Tetley pleaded guilty to six of the 38 criminal counts. He was accused of churning 95 policies for 11 victims over a six-year period, De la Garza said.
Of the prison sentence, Hyatt said it's not long enough. "I think that's where he belongs -- for the rest of his life," he said.
California Insurance Commissioner John Garamendi investigated the case and referred it to Dist. Atty. Steve Cooley for prosecution.
"This is an extremely important case because we are going to put a stop, if we possibly can, to what is financial senior abuse here in the state of California," Garamendi said.
"All too often, seniors who are looking to enjoy their retirement years are finding that unscrupulous insurance agents and brokers are using a technique of churning or twisting as a mechanism of taking away their life savings," he said.
