Clive Insurance Salesperson Sentenced to 19 Years for Fraud and Contempt

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A Clive resident received a sentence on June 12, 2024, of 18.5 years in federal prison for engaging in wire fraud, along with an additional six-month term for criminal contempt of court. Furthermore, he has been ordered to compensate the victims of his fraudulent activities with a sum exceeding $2.4 million.

Based on public court records and evidence presented during the sentencing, it has been established that Zachary James Flaherty, aged 48, orchestrated an extensive fraudulent scheme spanning a period of seventeen years. From 2006 to 2023, Flaherty deceived more than thirty individuals, causing them to lose all or a portion of their retirement savings and other funds. The collective losses suffered by Flaherty's victims amounted to over $3 million. These victims hailed from Iowa, Kansas, Missouri, and Nebraska, with the majority being elderly individuals, the oldest among them being ninety-three years old at the time of the fraud. Most of these individuals possessed limited financial knowledge.

Flaherty deliberately cultivated close relationships with his victims, going so far as to take them out for meals, purchase gifts for them, and assist with household chores. It is worth noting that at least six of Flaherty's victims were recently bereaved when he exploited them, and he even provided support with funeral arrangements and other matters related to the spouses of multiple victims.

Flaherty employed deceptive tactics to gain access to his victims' funds. He misled them with false information regarding the potential returns and bonuses they could expect from investing with him, as well as the ability to withdraw their funds without penalties. He also downplayed the potential losses they could incur. Once his victims had invested with him, he continued to manipulate and hide information about their earnings, the amount of money they had invested, and the associated costs and penalties.

Flaherty primarily utilized two methods to defraud his victims. The first involved convincing them to write checks to him or one of his businesses, promising to invest the funds on their behalf. Trusting his statements, the victims complied and wrote multiple checks. However, Flaherty did not follow through on his promise. Instead, he used the money for personal expenses, benefiting himself, his family, and his businesses.

Flaherty employed a second strategy by directing the funds of his victims into annuities. He held licenses to sell annuities in various states, allowing him to earn more than $1 million in commission payments from insurance companies through the purchase of annuities for his clients. However, in order to secure annuities on behalf of his victims, Flaherty submitted falsified documents to insurance companies, which included forged signatures on behalf of his victims.

The elderly victims of Flaherty were not financially capable of investing in annuities. Annuities are long-term investments that typically require several years to fully mature. If the annuity owner decides to withdraw or cancel the annuity before it matures, penalties, taxes, and additional fees are usually imposed. Flaherty deceptively downplayed the extent of these financial repercussions to his victims, leading them to believe that investing with him would not result in significant losses. As a result, Flaherty's victims followed his advice, withdrawing their money and canceling their annuities, ultimately suffering substantial financial losses.

During the sentencing, numerous victims expressed how Flaherty's actions had shattered their trust in him, betrayed their faith in humanity, and left them with limited financial resources. Some victims lost their entire life savings, while others can no longer afford necessary medical or assisted-living care. Additionally, victims reported experiencing health issues due to the heightened anxiety and stress caused by Flaherty's crimes.

Flaherty's conviction for criminal contempt of court stemmed from his disregard for court orders issued in February 2024. These orders explicitly prohibited Flaherty from selling or disposing of his personal assets, which could have been used to repay the victims. However, it was revealed during the sentencing that Flaherty willfully sold and attempted to sell various assets, including guitars, in March and April 2024. The evidence presented in court demonstrated that Flaherty consistently violated the court orders that were applicable to him since his federal charges were filed in April 2023.

"Elder financial fraud inflicts devastating losses on its victims, causing immense harm to those who have worked their whole lives to earn their retirement savings and fixed incomes. Zachary Flaherty's actions, which specifically targeted these vulnerable individuals, represent an unprecedented betrayal of the trust they had placed in him. While the severity of Flaherty's punishment, including a 228-month sentence and $2.4 million in restitution, offers some compensation for the financial damage caused, it can never fully heal the wounds inflicted by his conduct. The profound impact of this type of crime leaves victims filled with fear and uncertainty about their futures, causing them to question who they can truly trust. To combat these crimes, accountability and awareness are key factors," stated United States Attorney Richard D. Westphal for the Southern District of Iowa.

The announcement was made by Richard D. Westphal, the United States Attorney for the Southern District of Iowa. The case was investigated by the Iowa Insurance Division's Fraud Bureau and the Federal Bureau of Investigation, with assistance from the Ankeny Police Department, the Clive Police Department, the Des Moines Police Department, and the Iowa Department of Public Safety's Division of Criminal Investigation.