John Hancock Life Insurance Co. and a subsidiary will refund Massachusetts seniors $550,000 for its failure to properly supervise a salesman who persuaded elderly customers to take out a reverse mortgage and invest the money in risky variable annuities and life insurance policies, Attorney General Martha Coakley’s office said Friday.
Under the settlement, John Hancock, which didn’t admit wrongdoing, will make 145 refund offers. The insurer also will pay $165,000 to the state under the settlement.
The salesman, James Moniz, was fired from John Hancock in October 2013 during the investigation, according to the attorney general’s office. He allegedly worked with a separate mortgage broker to target elderly clients and persuaded them take out the equity in their home and use the money to invest in these variable investments, which carry steep fees and penalties if money is withdrawn early.
Some of those additional fees are pocketed as commission by sales representatives.
Moniz, who worked as a broker for John Hancock for 35 years, denied wrongdoing.
He said consumers were aware of the fees and the investments helped them pay for elderly care and protect their nest eggs.
“Those that we did were completely appropriate,” Moniz said. “We preserved assets, and we provided care and income.”
Moniz still has his Norwell wealth management firm and received a six-month suspension that bars him from selling investment products, such as variable annuities and life insurance policies. That suspension is set to expire in December, he said.
In a statement, John Hancock said, “The integrity of our financial representatives is of utmost importance . . . and as a result of the company’s internal investigation, this rep was terminated in 2013. In addition, we have cooperated fully with all regulatory entities on this matter and taken appropriate action to address affected consumers.”
John Hancock, which is based in Boston and owned by Canadian financial services firm Manulife, said in a statement that it fired Moniz after conducting an internal investigation, that it has cooperated with authorities, and taken steps to address affected clients.
The company will provide its brokers with additional training to prevent and detect similar misconduct, according to Coakley’s office. Consumers seeking more information about the settlement can contact Coakley’s office at 1-888-830-6277.