Adviser Sentenced After Embezzling Almost $1 Million in Settlement Funds
Monday, July 22, 2019 | 5461 | 0 | 21 min read
A Long Beach financial adviser has been sentenced to 124 months in state prison after being convicted of embezzling funds intended to pay for injured workers’ medical care after a settlement.
Tom Fallon, 65, was sentenced Thursday in Long Beach Superior Court after being convicted in an open plea of 25 criminal counts of money laundering and grand theft, the California Department of Insurance announced. In addition to serving time in prison, Fallon was ordered to pay restitution of $995,118.
According to CDI, Fallon worked in the same office as the victims’ attorney. Fallon urged the injured workers to deposit their settlement funds in a workers’ compensation Medicare set-aside account with his companies, Fortis Financial Insurance Services Inc. and Legacy Group Financial, CDI said.
But CDI investigators found that although the victims’ money was deposited, no WCMSA accounts were ever established. Instead, CDI said, Fallon used the $995,118 for his personal gain and to fund various other businesses.
Those businesses included Big Daddy’s Cigar Lounge in Naples, according to the Long Beach Post, which reported that there were 12 victims in the case. It’s not known if they will get their money back because Fallon’s bank accounts had been emptied, the Post said.
"Fallon abused his clients' trust in order to access their money and then stole it to stuff his own pockets,” Insurance Commissioner Ricardo Lara said in a statement.
During impact statements made in court last month, victims described losing their homes or retirement nest eggs as a result of the scheme. In one case, a victim took her own life because she was unable to cope with the impact of her loss, according to CDI.
The workers’ comp Medicare set-aside is a financial arrangement that allocates a portion of workers’ compensation settlements to pay for future medical services related to the worker’s compensation injury or illness. The funds must be depleted before Medicare will pay for treatment related to the workers’ compensation claim.