On January 22, 2018, the Division of Insurance Hearing Officer Kristina A. Gasson issued a decision revoking the insurance producer license of Glenn Paul Pearson (“Mr. Pearson”) of Whitman, Massachusetts. Hearing Officer Gasson also ordered Mr. Pearson, under the provisions of Massachusetts General Laws Chapter 175, § 166B (“M.G.L. c.”) to dispose of any interests he might have as a proprietor, partner, stockholder, officer, or employee of any licensed Massachusetts insurance producer.
Under this order, Mr. Pearson will have to sell his interest in the CHC Insurance Agency located at 930 Crescent St, Brockton. Also, the hearing officer fined Mr. Pearson $500.00 for failing to report a federal criminal proceeding as required under M.G.L. c. 175, §162V(b), a statute requiring a producer to report to the Commissioner any criminal prosecution taken against him or her in any jurisdiction.
Sentenced to four years in prison for embezzling veteran’s checks and tax return fraud
On May 16, 2017, Mr. Pearson, a former Whitman police sergeant pled guilty to embezzling funds from disabled veterans and preparing false income tax returns for clients of his tax preparation business.
On November 17, 2017, Mr. Pearson, 62, was sentenced by U.S. District Court Chief Judge Patti B. Saris to 48 months in prison and three years of supervised release. Chief Judge Saris also ordered Pearson to pay restitution to the United States Veterans Administration (“VA”) the IRS.
The sentencing judge also allowed Mr. Pearson to delay his reporting to prison until March 1, 2018, because Mr. Pearson’s attorney claimed Mr. Pearson had, “found a person to take over control of his insurance business, a development that could allow him to immediately secure employment after the completion of his sentence and make meaningful contributions to the victims.”
Request for hearing by Mr. Pearson before Division on “mitigating circumstances”
Between Mr. Pearson pleading guilty in federal court and the judge sentencing him to prison, the Division of Insurance (“Division”) on August 4, 2017, filed an Order to Show Cause against Mr. Pearson seeking revocation of his producer licenses and divestiture of ownership of his insurance agency because of Mr. Pearson’s violations of M.G.L. c. 175, §§162R (a)(2), (a)(6), and (a)(8). The Division further alleges that Mr. Pearson failed to comply with M.G.L. c. 175, §162V(b), a statute requiring a producer to report to the Commissioner any criminal prosecution taken against him in any jurisdiction.
Mr. Pearson filed an answer to the Division’s Order to Show Cause and requested an evidentiary hearing in order to present evidence of mitigating circumstances and offer character witnesses.
At the hearing on October 24, 2017, at the hearing the Division’s counsel introduced in evidence:
- The 41-count Indictment in USA v. Pearson, filed July 28, 2016.
- The criminal docket in USA v. Pearson, listing the U.S. District Court proceedings in this matter as of July 31, 2017.
- The plea agreement in USA v. Pearson, dated April 4, 2017.
- A Motion for Order of Forfeiture in USA v. Pearson, dated July 24, 2016.
- The Affidavit of Magnus Paul Carlberg, Director of Producer Licensing at the Division.
- A copy of Mr. Pearson’s licensing record at the Division.
- A Preliminary Order of Forfeiture for Substitute Assets in Satisfaction of Money Judgment in USA v. Mr. Pearson, dated October 13, 2017. and.
- A U.S. Department of Justice Press Release announcing Mr. Pearson’s guilty plea, dated May 16, 2017.
Mr. Pearson submitted unsworn statements from three individuals; two of whom were customers of CHC Insurance Agency and one whom was a member of Mr. Pearson’s church community,
Mr. Pearson admitted to all of the allegations of the Division in its Order to Show Cause. But, he testified that he desired to retain his insurance producer license in order to be able to pay restitution to his victims and testified to his own good character, his ordination as a minister in the Christian faith, and his otherwise clean criminal record, with no prior convictions before his present guilty please in federal court.
Mr. Pearson testified that since the felony convictions did not implicate his work as an insurance producer or at CHC Insurance, he should not be disciplined by the Division and that he had not reported the criminal matter to the Division because he was unaware of his obligation to do so.
The Division’s hearing did not go beyond the evidence Mr. Pearson had failed to report his indictments as required. The Division hearing did not get into his claim of “good character.” However, the federal court file shows Mr. Pearson was someone who earned every day of the four years in prison the federal judge sentenced him to serve.
Mr. Pearson was police sergeant in Whitman who was kicked off the force
Mr. Pearson served as a police office in Whitman for almost twenty years. He rose to the rank of sergeant. One year, Mothers against Drunk Driving named him Officer of the Year.
He also taught a popular criminology course at Massasoit Community College. However, in 2001, he was fired from his teaching post after the college confirmed that he had a stripper perform in the class in a “role-playing exercise.”
That same year, the Whitman Board of Selectmen fired Mr. Pearson for police code of conduct violations including improper arrest procedures, falsifying payrolls, inappropriate conduct, untruthfulness and insubordination. Mr. Pearson appealed to the Civil Service Commission, but his appeal was denied in 2004. His appeal of the Civil Service Commission decision to the Superior Court was denied and upheld by the Appeals Court in 2007.
Stealing $252,992 from disabled veterans’ disability checks
After losing all his appeals over being terminated as a police officer, Mr. Pearson eventually became a fiduciary receiving the government checks paid to disabled veterans by VA who were unable to handle their own affairs.
Under a VA program family members or third-parties, usually attorneys, can receive and administer these funds receiving up to four percent of the checks’ face amount in payment of their services. Mr. Pearson was a graduate of New England School of Law but he never became a licensed attorney because he never passed the Massachusetts Bar Exam.
As the Assistant United States Attorney stated in a sentencing memorandum: “Mr. Pearson, taking advantage of his position as a fiduciary duly appointed, embezzled VA benefits from the accounts that he was supposed to be safeguarding for his beneficiaries. The victims, all veterans of the country’s armed forces, had returned from their service with permanent life-long disabilities.”
For example, from one of the disabled veterans, between 2009 to 2012, Mr. Pearson embezzled all the veteran’s checks totaling $153,739 by transferring the government’s payment into his personal bank account and using the money to pay his own mortgage and for his living expenses.
In all, Mr. Pearson acted as a VA fiduciary for eight disabled veterans and before the VA removed him a fiduciary in 2012. By that time, he had stolen $252,992.57 from these veterans. The VA, after removing Mr. Pearson as a fiduciary, reimbursed the veterans for all the money he had stolen at taxpayers’ expense.
New scheme for defrauding the government through false tax returns
In 2012, while being removed by the VA from access to veterans’ disability checks, Mr. Pearson started a tax service, FTS Tax Service. The FTS standing for “Faith in Thou Savior.”
According to the U.S. Attorney’s sentencing memorandum, Mr. Pearson, “quickly built up a robust tax business bilking the U.S. Treasury by creating false tax returns that claimed big refund amounts for clients. He boasted of his tax credentials and convinced clients that, as a law school graduate and licensed minister, no one knew more about the tax code than he did.”
The tax credentials Mr. Pearson claimed were that was a graduate of New England School of Law he had expertise in tax law. He also claimed that he benefited from close contacts with IRS employees. “Citing supposedly new and little-known ‘Obama Deductions,’ Mr. Pearson prepared tax returns that claimed deductions for ‘theo-germal heat pumps,’ commuting costs for personal vehicles, made-up business expenses, and false personal property taxes.”
For some clients, Mr. Pearson prepared amended tax returns for prior tax years claiming fraudulent refunds. As word spread of Mr. Pearson’s tax wizardry, his office soon had long lines of clients waiting for his tax preparation services. According to the prosecuting United States Attorneys, witnesses reported that his office was “standing room only” during tax season because of the crowds. His business grew exponentially from 2012 through 2016 through client word-of-mouth advertising.
On Friday, June 13, 2015, an unlucky day for Mr. Pearson, federal authorities executed a search warrant on his insurance agency’s office and carted off the records relating to his tax preparation service.
On August 2, 2016, Mr. Pearson was arrested on a 41-count indictment charging him with various federal crimes including wire fraud, misappropriation by a federal fiduciary, preparation of fraudulent tax returns, and obstruction of the Internal Revenue Service.
Hearing officer imposes $500 fine but Mr. Pearson’s federal restitution order comes first for $1,079,857.57
In the Division’s case, the hearing officer found no “mitigating circumstances” in Mr. Pearson’s case. She entered final orders against Mr. Pearson which were:
ORDERED: That the insurance producer license issued to Glenn Paul Pearson by the Division is hereby revoked; and it is
FURTHER ORDERED: That, within ten (10) days of this decision, Glenn Paul Pearson shall return to the Division any license in his possession, custody or control; and it is
FURTHER ORDERED: That Glenn Paul Pearson is, from the date of this order, prohibited from directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in Massachusetts; and it is
FURTHER ORDERED: That Glenn Paul Pearson shall promptly comply with the provisions of M.G.L. c. 175, §166B and dispose of any and all interests in Massachusetts as proprietor, partner, stockholder, officer or employee of any licensed insurance producer; and it is
FURTHER ORDERED: That Glenn Paul Pearson shall pay a fine of Five Hundred Dollars ($500) to the Division within 30 days of the date of this decision and order.
On the $500 fine the hearing officer ordered Mr. Pearson to pay there is little chance of that ever being collected. As part of his federal sentence, after serving his four-year prison term, Mr. Pearson must first pay $252,992 in restitution to the VA, and $826,865 in restitution to the IRS.