San Clemente insurance agent, arrested for defrauding the elderly, had child pornography possession conviction from 1996 he did not disclose when applying for licenses, Department of Insurance says
Article updated at 2:05 p.m. on Thursday, March 15
By Eric Heinz
The California Department of Insurance announced Monday afternoon, March 12 that Mark Malatesta, 55, of San Clemente was arrested for his alleged contributions in defrauding “elderly” residents of Orange County in a $1.6 million scheme.
“Malatesta, a licensed insurance agent at the time, allegedly exploited at least six elderly consumers by falsifying information on annuity applications and netted more than $135,000 in illegal commissions,” the release stated. “Malatesta faces a range of other charges.”
According to Orange County Superior Court Records, Malatesta has been charged with dozens of felonies related to elder abuse, fraud, property damage of more than $1.3 million, aggravated white-collar crime in excess of $500,000, burglary and more.
The Department of Insurance suspended Malatesta’s license following his arrest. Malatesta is scheduled to be arraigned on April 4 as well as have a bail hearing.
Further in its release, the Department of Insurance stated its investigation found Malatesta convinced his “senior” victims to terminate their investments, “causing them to lose a total of $45,000 in surrender penalties,” the release stated.
“In a classic churning scheme, Malatesta then sold them new annuities for which they did not qualify due to their advanced age. The fraudulent investments were canceled by the insurers once they discovered Malatesta provided false information.”

According to the Securities Exchange Commission (SEC), “churning” is when brokers buy and sell at an unusual rate and capitalize on the commission for the exchanges. How that relates to Malatesta’s charges is because the clients were described as “elderly” and it’s likely the investigation stemmed from life insurance policies.
“It’s a common scam that targets seniors,” said Nancy Kincaid, a spokesperson for the Department of Insurance. “They convince someone to buy an annuity, and a little while into it they suggest they can make more on a different vehicle. They don’t tell them there are surrender penalties. The agents who sell these often make six-figure commissions, and it costs seniors a lot of money.”
An annuity is a life insurance investment product that pays dividends. Some insurance agents have additional certifications for planners and sell securities that the Department of Insurance doesn’t regulate but could exist, Kincaid said.
“This isn’t unusual in places like Orange County because they’re retirement communities in the area and baby boomers who are sitting targets,” Kincaid said.
“When insurers canceled the new investments, they refunded the $1,616,897 in deposits when they refunded the victims,” the release stated.
Malatesta has been a licensed broker of life insurance policies for a number of providers since 1992, according to the Department of Insurance records. His latest license approval may have been as early as a “life-only” policy for Great American Life Insurance Company issued on Aug. 9, 2016.
Matters are further complicated in the allegations again Malatesta, as the Orange County District Attorney’s office confirmed he was arrested in 1996 on a misdemeanor child pornography possession, to which charges he entered a plea and was sentenced with a misdemeanor. The details of the case were not readily available on Tuesday, as it’s a more than 20-year-old case.
Kincaid said agents are required to disclose of any convictions when they apply or renew their license, and Malatesta did not.
“Certain things need to be disclosed to the department and financial crimes, but according to our licensing folks, this should have been disclosed,” she said.
A 1996 article by the Los Angeles Times with descriptions matching Malatesta stated he was arrested and found with a gun in his car in Huntington Beach on Oct. 19, 1996.
The case is being prosecuted by the Orange County District Attorney’s Office.
The press release did not reveal which insurance agency Malatesta worked for and a cursory internet search, but Department of Insurance officials said he may have been an independent insurance agent.
The release from the Department of Insurance did not specify the age range of the victims allegedly involved.
The Department of Insurance also has tips for people to avoid insurance fraud, which can be found by clicking here.
This is a developing story. More information will be provided when it becomes available.
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