Allegedly Phony IRA Sales Scheme Under Probe

County and state investigators are probing a Long Beach insurance sales operation that allegedly defrauded as many as 2,500 county employees by selling what the government workers thought were individual retirement accounts but were actually, in part, life insurance policies, court documents revealed Thursday.

The county employees reportedly made payments, through payroll deduction, of an average of $56.75 per paycheck, thinking all the money was going into IRAs, the court documents claimed.

In reality, only an average of $25 out of each check went to an IRA. Another $25 went to a life insurance policy and $6.75 to the Teamsters Union for dues, according to the affidavit filed by sheriff’s investigators seeking search warrants in the case.

Amount Unknown

How much money was involved isn’t known, but investigators and county officials said the alleged fraud ring has been in operation for several years and is still apparently receiving funds from county workers through payroll deductions.

The Teamsters, county officials noted, apparently played no part in the insurance scheme and may not have received any of the funds earmarked for union dues. The insurance sales group used a payroll deduction line assigned to the Teamsters. How many of the alleged victims, if any, were Teamsters members was not clear.

The complicated scheme has been under investigation by the sheriff’s fraud-forgery detail, with the assistance of state Department of Insurance investigators, for nearly two years. No formal charges have been sought.

The sheriff’s office would not comment officially on the case, but Deputy Lenora Snyder told United Press International Thursday that up to 2,500 county employees could have been victimized through the purchase of life insurance policies “they didn’t want, didn’t need and didn’t (intentionally) pay for.”

She declined further comment, adding that the investigation is continuing and could take several more months. In documents filed in Los Angeles Municipal Court in support of search warrants, Snyder alleged that Nathan Forman, a Long Beach insurance salesman, and eight other suspects working for or with him, falsified records and forged signatures of their victims, as well as misrepresented what they were selling through county payroll deduction.

Blank Forms

Many of the approximately 250 complainants interviewed by investigators “thought they were purchasing a county-approved IRA through payroll deduction, when, in fact . . . their monies were going to insurance policies and sources other than IRA accounts,” Snyder said in her affidavit.

Snyder claimed in the court papers that Forman’s agents often had county workers sign blank application forms. The money would then be deducted through a payroll deduction “slot” authorized to the Teamsters.

Forman could not be reached for comment Thursday. However, his attorney, Alan Arnold, told UPI his client was innocent.

“I think this investigation is harassment and as phony as a $3 bill,” Arnold said. He claimed investigators have been carrying out “a personal vendetta” against Forman for a half-dozen years.

George A. Pappy, a Los Angeles attorney for the Teamsters, said his understanding was that the county payroll deduction slot is for a union group called the “All Government Employees League/Teamsters.”

Pappy said the Teamsters abolished the AGEL after learning of the complaints. “I don’t know exactly what the AGEL was, but we abolished it,” he said, adding “the group (Forman’s insurance business) apparently had some control over AGEL.”

Teamsters Cooperated

Pappy said the Teamsters “had no part whatsoever in any of the allegations. . . . As soon as we found out about the complaints, we cooperated with the sheriff’s investigators 100%. We are now in the position of extricating the Teamsters from this company (Forman’s) as fast as we can.”

County officials confirmed that the Teamsters have done what they can to help unhappy county workers get out of their unwanted payroll deductions.

“We asked the Teamsters to help and the Teamsters are working as religiously as we are to get those dissatisfied employees out of it,” said a county official who requested that his name not be used because he hesitated to comment publicly on an ongoing investigation.

According to court documents, the investigation by county and state authorities into the felony charges of fraud and forgery began two years ago when secretaries at various Sheriff’s Department substations began to complain to investigators of the methods used by Forman’s insurance salesmen. Other complaints were made directly to the county’s payroll department, responsible for overseeing the payroll deduction procedure, county officials said.