An insurance producer who lost his license, for fraud and forgery, charged with selling a nonexistent annuity to a trusting client of his financial planning business.
On September 11, 2019, Secretary of State William F. Galvin’s Securities Division filed a complaint against Michael L. Mr. Piaseczny (“Mr. Piaseczny”), of Orange, a former insurance agent, for defrauding a 54-year-old real estate manager and two other persons by fraudulently soliciting $160,000 of their money. In the case, of the real estate manager, Mr. Piaseczny pocketed the $20,000 he claimed he had used to purchase an annuity.
Mr. Piaseczny had no authority to place any such policy as an insurance agent or to sell any securities as a registered representative. Mr. Piaseczny lost his insurance license and his right to be involved in the insurance business in Massachusetts in 2016. However, he continued to operate a financial planning front company, MLP Financial Services, until April 2019, when he was arrested and charged in the Franklin County Superior Court with grand larceny.
Five charges including fraud and forgery lead to insurance license surrender
Mr. Piaseczny was a licensed insurance agent in Massachusetts from October 12, 2007, to August 3, 2016. In August 2012, the Division of Insurance received a notice from Bankers Life and Casualty (“Bankers Life”) that it had terminated Mr. Piaseczny’s employment for submitting false applications and making misrepresentations on client applications.
Before terminating Mr. Piaseczny, Bankers Life had investigated five complaints from Mr. Piaseczny’s clients complaining to Bankers Life about policies where he had collected premiums based on false or incorrect information:
- Another policyholder contacted Bankers Life requesting that they cancel a life policy that had $954.60 in monthly withdrawals automatically taken from her bank account. She claimed that she never applied for a policy countersigned by Mr. Piaseczny and that also named him as the policy’s primary beneficiary.
- A policyholder complained about inaccurate billing on a Medicare Supplemental Policy issued by Colonial Penn Life Insurance Company, an affiliate of Bankers Life. The insured advised that Mr. Piaseczny had falsely stated the insured would be moving to New Hampshire to place the policy because Colonial Penn Life Insurance Company did not do business in Massachusetts.
- Bankers Life investigators received statements from two insureds who had not signed on two life insurance policies countersigned by Mr. Piaseczny.
- Another insured Bankers Life interviewed confirmed he had never signed any paperwork on a universal life policy that Mr. Piaseczny had placed.
- Two other insureds confirmed to Bankers Life investigators they had discovered they had two separate life insurance policies placed by Mr. Piaseczny without their knowledge.
Mr. Piaseczny surrenders his license and agrees to stay out of the insurance industry
On August 3, 2016, legal counsel for Commissioner Judson, wrote to Mr. Piaseczny and advised him that the Division intended to file a show cause order against him seeking the revocation of his insurance licenses. Also, the Division’s counsel suggested that a hearing could result in “the imposition of a fine up to $1,000 for each and every violation as provided under M.G.L. c. 176D, § 7” for Mr. Piaseczny’s fraudulent actions.
The Division advised Mr. Piaseczny that it would resolve the complaint through a settlement if he agreed to waive the right to a public hearing, agreed to cease and desist from further the violations, and accept a bar from working in the Massachusetts insurance industry. To assist Mr. Piaseczny in making his decision, the Division offered an added inducement, stating in bold type, “Although the Division has authority to do so, for the purpose of this settlement agreement, the Division agrees not to impose a fine.” (Emphasis in original—bold and underlined).
Mr. Piaseczny accepted the Division’s settlement agreement effective August 15, 2016, with provisions that:
- Permanently revoked his insurance producer license.
- Barred him from engaging in the business of insurance, including holding himself out as a licensed insurance producer or otherwise acting as an insurance producer.
- Prohibited him from soliciting, aiding in the placement, continuation, or negotiation of insurance policies or taking any action which may lead any person or entity to believe that he was authorized to engage in the business of insurance in any capacity [as a] licensed insurance professional.
- Prohibited him from owning, managing, directing, or being an employee, consultant or independent contractor, partner, director or officer, paid or unpaid, of any insurance-related business in the Commonwealth.
Mr. Piaseczny continues operating his financial planning company, MLP Financial Services
While Mr. Piaseczny had a Financial Industry Regulatory Authority (“FINRA”) number permitting him to sell securities as a registered representative, he last had acted as a registered representative in October 2014 for Signator Investors, Inc.
In September 2015, a dissatisfied client filed a complaint against Mr. Piaseczny alleging $12,000 in damages for his misrepresentations about the performance of a variable annuity they had purchased. Mr. Piaseczny denied the claim. The FINRA website has no further information on any resolution of this claim.
Although after August 2016, Mr. Piaseczny had no insurance licenses and no registered representative status, there was no prohibition against him holding himself out as a “financial planner,” an unregulated designation.
Mr. Piaseczny operated under the d/b/a “MLP Financial Services.” (“MLP”) The website for MLP that is now taken down, according to the Secretary of State, claimed that MLP was:
[A] group of 10 financial planners with various backgrounds of expertise. We’re here to help all of our clients and their unique needs related to their retirement and financial help. No future is too big or too small for us, our goal is to simply help create a positive future for all of our clients.”
Apparently, MLP consisted only of Mr. Piaseczny hustling to find easy marks for his shady business practices.
Mr. Piaseczny converts a client’s 401k proceeds into a supposed variable annuity
In February 2018, a 54-year old property manager at a residential real estate property, who lived in Mr. Piaseczny town of Orange, was in some financial distress and considering bankruptcy. She was financially unsophisticated, and since she was leaving her job, she wanted advice about how to best protect her 401k after she left her then employer. Her assistant recommended Mr. Piaseczny as a knowledgeable adviser.
Mr. Piaseczny met with the prospective client and represented to her that he was an independent financial adviser affiliated with Prudential Financial, Inc. (“Prudential”), a patently false statement.
By the time they met, the client was in the process of filing a Chapter 7 bankruptcy petition. Mr. Piaseczny advised her that he could provide her with a variable annuity issued by Prudential that provided a retirement plan suitable for her that was exempt from her bankruptcy proceedings.
Client’s 401k check payable to Mr. Piaseczny for a variable annuity goes into his bank account
Mr. Piaseczny assisted the client in cashing in her 401k of $27,000. On April 2, 2018, Mr. Piaseczny’s new client gave him a treasurer’s check from her 401k proceeds of $20,000. The memo on the check stated it was for the client’s “annuity.”
While the check initially was supposed to be made payable to Pruco Life Insurance Company (“Pruco”), a subsidiary of Prudential. The client, at Mr. Piaseczny’s request, had the check made payable to Mr. Piaseczny. On April 3, 2018, Mr. Piaseczny deposited the client’s $20,000 treasurer’s check into his personal bank account.
The client receives a mash-up of prior annuities from Mr. Piaseczny
After the client had paid her money, Mr. Piaseczny issued his client documents purporting to be a Prudential Defined Income Variable Annuity. The annuity papers were forgeries as Mr. Piaseczny never purchased an annuity for the client from Prudential. instead he used parts of an annuity he had sold to another client when he was an insurance agent.
When the client pointed out that the variable annuity documents she received had material errors including a misspelling her full name, an incorrect date of her birth, and a wrong contract issuance date Mr. Piaseczny issued her a new forged annuity contract.
The new annuity had a different contract number from the client’s prior annuity. Mr. Piaseczny explained this change as being needed because the original contract had so many errors.
The client’s annuity generated a 35% return in seven months based on Mr. Piaseczny’s phony statements
After Mr. Piaseczny misappropriated the client’s $20,000 for his personal use, he phoned the client and sent quarterly reports, and letters purportedly from Prudential.
The quarterly statements showed remarkable returns:
- The first quarterly statement, for the period April 1, 2018, through June 30, 2018, showed the original account value of $20,000 had increased by 11.2% to $22,245.14 within just ninety days;
- The second quarterly statement, for the period July 1, 2018, through September 30, 2018, showed the original account value of $20,000 now had increased 24.5% to $24,890.36 within only one-hundred and eighty days;
- The third quarterly statement, for the period October 1, 2018, through December 31, 2018, showed the original account value of $20,000 now had increased 32% in nine months contained the ending account value of $26,383.78.
If the results were real, which they were not, the return on this variable annuity would have been spectacular: A gain of 32% in the space of nine months
The three quarterly statements the client received contained several misspellings and grammatical errors. The lead-in for the contact number to call had two misspellings in four words: “Ipiarticipant (sic) Service Representative availble (sic).” The call went to a voice mailbox that stated for the caller to leave a message with their personal information and social security number.
The client seeks to surrender her annuity without success
In December 2018, the client advised Mr. Piaseczny that she wanted to surrender her annuity. She completed and submitted her paperwork to Mr. Piaseczny for withdrawing the funds from her “Renewed Variable Annuity Policy” ostensibly with Prudential.
Mr. Piaseczny, keeping up the charade, sent her back a letter regarding the surrender penalties and the amount to be paid out for her Renewed Variable Annuity Policy. According to this letter, the balance of the account was $26,383.78. However, there was a deduction claimed of a seven percent surrender charge for $1,846.86, and a 10 percent early withdrawal penalty for individuals less than 59.5 years of age of $2,638.38. The net balance owed to the client, according to the letter was $21,638.38.
The check was not in the mail
Over the next three months, Mr. Piaseczny kept responding to the client’s request for her money with dissembling about the causes of the delayed payment and the time she would be receiving her cash balance. He even sent on March 14, 2019, a revised letter on the surrender charges, purportedly accounting for the delay. However, time had run out for Mr. Piaseczny with his client.
Arrested and charged but more charges possible
Since she had not received her money and since Prudential had no record of her annuity, the client went to the police. On April 4, 2019, Mr. Piaseczny was arrested and charged with grand larceny in stealing his client’s 401k proceeds. Presently, the criminal charges against Mr. Piaseczny remain pending in the Franklin County Superior Court sitting in Greenfield.
Notwithstanding these Superior Court charges, Mr. Piaseczny may face additional charges. The Secretary of State’s complaint against him for securities fraud states that at least two other Massachusetts residents invested funds with Mr. Piaseczny. Between the original client and these two different individuals, Mr. Piaseczny, the Secretary claims, solicited investor funds of approximately $160,000.
According to the Secretary’s complaint, Mr. Piaseczny deposited not only the funds received from the original client but also the funds from the two other Massachusetts residents in his bank account for his benefit.
The Secretary of State seeks fines and restraining orders
The Secretary of State’s complaint against Mr. Piaseczny focuses on the Secretary’s jurisdiction to regulate security transactions involving variable annuities that are not insurance products.
In Mr. Piaseczny case, the Secretary’s Enforcement Section seeks orders that include requiring Mr. Piaseczny:
- To permanently cease and desist from further conduct in violation of the [Massachusetts security laws].
- To provide an accounting of those losses attributable to the alleged wrongdoing.
- To provide restitution to fairly compensate investors for those losses due to the alleged wrongdoing.
- To disgorge all profits and other direct or indirect remuneration received from the alleged wrongdoing.
- [To pay] an administrative fine in such amount and upon such terms and conditions as the Director or Presiding Officer may determine.
Also, barring Mr. Piaseczny permanently:
- From associating or registering in Massachusetts in any capacity with any investment adviser required to be registered, any investment adviser exempt from registration, a federal covered adviser notice-filed in Massachusetts, or any entity relying on an exclusion from the definition of an investment adviser.
- From registering or acting in Massachusetts as an agent of any broker-dealer, or as a partner, officer, director, or control person of a broker-dealer.
- Permanently barring Mr. Piaseczny from registering or acting in Massachusetts as an issuer of securities or an agent of any issuer of securities.
and
- taking any such further action which may be necessary or appropriate in the public interest for the protection of Massachusetts investors.
There is no date set, as yet, for any hearing on the Secretary of State’s complaint against Mr. Piaseczny.
