San Diego Investment Advisor Faces Up to 60 Years in Prison in Scam Case

Calling for more rigorous protection of seniors against financial fraud scams, State Insurance Commissioner John Garamendi said that a San Diego man convicted of defrauding 191 seniors of $13 million should face the maximum punishment for his crime.

Carmen John Palmieri, of San Diego, pleaded no contest to 144 counts of insurance fraud, including grand theft and elder abuse. His reported scheme financially abused 191 seniors, some more than 80 years old, who were tricked into investing in a complex life insurance scam Palmieri operated for more than 18 months. He now faces imprisonment of up to 60 years on the counts.

“My Department is committed to investigating and prosecuting those who prey on seniors to the fullest extent of the law,” said Garamendi. “This scam artist swindled and tricked these unsuspecting investors, some of whom lost their life savings and their homes. My investigators will continue to target scam artists like Palmieri and help put them away.”

Garamendi, who is currently drafting legislation that would help thwart the kinds of scams involved in this case, attended the court sentencing to focus more attention on the serious issue of financial abuse of seniors. He was joined at the courthouse by 43 victims, including Dave Brundage, 56, who lost $645,000; Alice Yellowega-Rude, 83, who invested and lost $143,550; Conley and Bonnie Woltman, 59 and 69, who lost $150,000; Joseph Foster, 79, and Ludmila Loisy, 63, who both lost $100,000 of their life savings.

“The losses to these unsuspecting seniors were staggering,” added Garamendi. “Today’s sentencing sends a clear and unmistakable message that those who scam seniors will be hunted, caught and incarcerated.”

Palmieri was arrested in October 2002 on 144 felony counts of grand theft and fraudulent sale of securities. He sold at least 280 fraudulent viatical settlement contracts. Viatical settlement contracts allow terminally ill patients to sell the future proceeds of their life insurance policies to investors for a portion of the face value. But in Palmieri’s case, he reportedly had no permission or authority to reference the policies he sold to the investors.

The scheme was stopped after a joint investigation by the California Department of Insurance (CDI) Investigation Division and the San Diego County District Attorney’s Office Economic Crimes Unit. In March 2002, CDI and San Diego District Attorney’s investigators served seven search warrants on Palmieri’s home, business locations and storage units. They seized information from over 60 bank accounts tied to Palmieri and C. Palmieri Enterprises, Inc. (DBA: National Medical Funding).