Insurance Agent Accused of Investment Scam
Using 18% interest rates as a lure, Beverly Hills insurance agent Julian Barton bilked investors out of millions of dollars, the Los Angeles County district attorney’s office charged in a 54-count criminal complaint Wednesday.
Investors, including Barton’s neighbors and fellow members of the Hillcrest Country Club, allegedly received interest payments--some for many years. However, Barton notified investors in February, 1987, that he was unable to return their principal, according to court files.
The complaint said 18 victims lost about $3.8 million, but court documents alleged that, in all, about 100 investors were involved and that $11 million was lost. The investors were listed in a search warrant used in a raid of Barton’s home, business office and his bank in December, 1987.
Deputy Dist. Atty. Pamela J. Gelman, of the major frauds division, said Barton, 60, is expected to surrender Monday in Los Angeles Municipal Court on charges of grand theft, securities fraud and selling unqualified securities. If convicted, he could face a 10-year prison term.
Barton’s attorney, Richard G. Hirsch, said he and his client were “disappointed with the district attorney’s decision to press charges in this case.”
Asserting that Barton was innocent of any crimes, Hirsch contended that the investors themselves “knew exactly what they were doing.” That, he said, was collecting “usurious” interest rates in violation of the state law at the time.
“He delivered interest over 20 years to these people,” added the lawyer. “He borrowed money to pay them. Due to circumstances beyond his control he was unable to pay all the money in the end.”
Gelman said the defendant, through his Julian Barton Insurance Agency, had told investors that their funds were used to prepay insurance policy premiums for his insurance clients. He told investors that those clients were paying 18% on the money, and he was passing it along to investors, the prosecutor said. Gelman said Barton claimed that he would profit from a discount from the insurance company for prepaying the policies.
Barton also allegedly told investors that he had assigned insurance policies on his own life to the investors for their benefit.
“It appears,” said Gelman, “that no insurance policy premiums had ever been financed, no insurance policies had been assigned to the victims and no life insurance was held for any of the victims’ benefit.
In March, 1987, Barton and his attorneys met with investors and offered partial settlements of their claims to avoid bankruptcy, court files showed. Some investors said they received only 7 cents back on each dollar.
