The California Department of Insurance April 6 announced that former insurance agents Ali Kakande and Sulaiman Lutale were arrested on multiple felony counts of insurance fraud, identity theft, money laundering, grand theft and forgery.
Kakande and Lutale allegedly falsified life insurance applications to collect more than $300,000 in unearned income, the insurance department said.
“I have zero tolerance for dishonest agents who rip off insurers or consumers for their own financial gain,” insurance commissioner Dave Jones said in a statement. “The Department of Insurance regulates more than 360,000 licensed agents and brokers who work hard to be professional and honest in their business practices. Agents like these tarnish the reputation of the California insurance industry.”
The insurance department and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations investigated and alleged that prior to becoming licensed agents, Kakande and Lutale submitted roughly 70 bogus life insurance policy applications to various life insurance carriers under another licensee’s agent appointments.
From the false applications Lutale collected more than $81,000 in unearned commissions, the department said.
The two both became licensed agents in 2012 and kept conducting the scheme, adding another 89 policy applications from 2012 to 2014, amounting to more than $138,000 in unearned commissions.
They continued the scheme by using licenses from at least three other licensees to submit over 70 additional fraudulent applications and collect more than $90,000 in unearned commissions when they were no longer able to submit new business under their own licenses, it said.
“Fraud schemes like the one uncovered in this case result in billions of dollars in losses every year in this country and cause incalculable heartache and financial harm to law-abiding consumers,” said Joseph Macias, special agent in charge for HSI Los Angeles. “HSI is committed to working with its law enforcement partners to pursue such cases aggressively, ensuring those who brazenly enrich themselves through fraud and identify theft are held accountable for their crimes.”
Investigators believe Kakande and Lutale recruited applicants by paying them $50 to $200 and promising that they would receive free life insurance policies as part of the scheme. Other applicants were victims of identity theft and unaware that life insurance policies had been issued in their names, they said.
Life insurance policy applications were also submitted with Kakande and Lutale as the purported policyholders, it added.
The applications submitted to the insurance carriers contained misrepresentations and fabricated information, including false occupations, income, net worth or beneficiary information. Some of the applications also contained forged signatures of the alleged applicants, the department noted.
The investigation also showed that premium payments were generally not paid by the applicants, but instead paid from accounts owned by Kakande or Lutale, or from accounts opened by other individuals who assisted them in carrying out the advance commission scheme, according to the insurance department.
Kakande was booked into Orange County Central Jail by CDI fraud detectives and bail was set at $470,000. Lutale was booked into Los Angeles County Jail by CDI fraud detectives and Homeland Security agents and bail was set at $370,000.