SAN DIEGO (KGTV) — A man who pleaded guilty to his role in defrauding San Diego Navy sailors through a tax and insurance scheme has been sentenced to 357 days of house arrest and ordered to pay half a million in restitution.
Paul Flanagan was sentenced on Monday for his role in the fraud, according to San Diego District Attorney Summer Stephan's office. The scheme sold expensive and unnecessary insurance products through a company called Go Navy Tax Services to service members at a substantial commission for themselves, Stephan's office said.
According to Stephan's office, Flanagan and two other defendants operated the tax company out of a trailer located just outside the front gate of Naval Base San Diego. There, they advertised free tax reparation services for military members.
"The trailer was adorned with military flags intended to deceive service members into thinking the business was affiliated with the U.S. military. The defendants lured service members into the trailer under the pretext of free tax preparation services. The defendants then persuaded service members to purchase retirement accounts, but rather than opening those accounts, the defendants used those service members’ personal information to open unnecessary life insurance policies without their knowledge or consent. The defendants earned over $2 million in commissions related to sales of nearly 5,000 applications for life insurance policies and annuity contracts," according to the DA's office.
Flanagan pleaded guilty to one felony count of conspiracy to commit insurance twisting, or making misrepresentations to consumers to convince them to purchase their products.
Another individual, Ranjit Kalsi, previously pleaded guilty to one felony count of identity theft in connection with the fraud and was sentenced on Feb. 10. He was ordered to serve 358 days in custody and pay $500,000 in restitution. A third person, Gregory Martin, pleaded guilty to one misdemeanor count of grand theft on Dec. 7, 2020, and received credit for 517 days served in custody.
“The victims of this scam were Navy sailors serving our country and were tricked into signing up for something they didn’t need and couldn’t afford,” said Stephan. “Working with our law enforcement partners, we were able to shut down the scam, prosecute the offenders, and put money back into the pockets of our hard-working military members. It is particularly satisfying to see these sailors receiving restitution payments, some in the thousands of dollars, to make a positive difference in their lives.”