Tuesday, November 3, 2009

Westlake Village man sentenced to 25 years for life insurance scam

life insurance

A Westlake Village man was sentenced Tuesday to 25 years behind bars for what a federal judge called a "wretchedly greedy" Ponzi scheme that bilked investors -- many of them South Los Angeles church parishioners -- out of more than $44 million.

Curtis D. Somoza pleaded guilty a year ago to a felony conspiracy charge, six counts of mail fraud, four counts of wire fraud and eight counts of money laundering in U.S. District Court in downtown Los Angeles as jury selection was under way in his trial.

Somoza and co-defendant Robert A. Coberly, both 41, falsely claimed that the victims' money would be invested in bond trading programs or used to buy pools of existing life insurance policies owned by African-American church members in Watts and Compton, prosecutors said.

Somoza "took advantage of people, preying on their moral, ethical and conscientious features," U.S. District Judge A. Howard Matz said prior to sentencing.

"He abused trust very flagrantly," the judge said, describing the fraud as "widespread, pathetically gross and unsophisticated -- a wretchedly greedy orgy of self-indulgence."

The two men told investors they would buy the life insurance policies for a small percentage of what they were worth, and that when the policyholders died, they would get a $240,000-per-policy windfall, which they would distribute to the investors, according to court papers.

Of the more than $64 million raised from investors for those purposes, only $4.7 million was used to make life insurance premium payments, and no bonds were purchased for investors' benefit, prosecutors said.

Investors were promised an annual return of 25 percent on "risk-free" investments that would eventually yield a five-to-one return, prosecutors said.

In fact, the majority of the funds were used by Somoza and Coberly to buy luxury homes, exotic cars, yachts and jewelry, Matz said.

"Even his family can't understand why he doesn't accept responsibility for what he did," the judge said of Somoza. "He undertook what he did for obvious reasons of greed."

Somoza declined an opportunity to address the court.

Matz also ordered Somoza to pay $44.1 million restitution to the 63 investors who were bilked, and serve three years of supervised release after getting out of prison.

Somoza previously agreed to forfeit $64 million in proceeds, along with personal property and cars seized at the time of his arrest in April 2007, a U.S. Attorney's Office official said.

Coberly pleaded guilty in February 2008 to conspiracy and tax evasion. He is set to be sentenced by Matz on Dec. 14.