Northern California Record

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Office assistant testifies Russon pushed DLG as an opportunity for insurance customers

By Taryn Phaneuf | Aug 26, 2016

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LOS ANGELES — Two witnesses in the trial against MetLife offered glimpses of what workdays looked like in the financial services office that became entangled with a fraudulent real estate investment fund.

Diana Cass worked as the executive assistant to Tony Russon, the managing partner and registered principal of a MetLife subsidiary. She affirmed evidence that her boss called a meeting in 2004, allowing Bruce Friedman, the owner of Diversified Lending Group (DLG), to pitch the investment fund as a way for MetLife customers to pay for insurance.

Later, Denise Pomonik, who became Scott Brandt’s administrative assistant after he started working with DLG, testified that Russon and Brandt were shocked when they heard the news that the U.S. Securities and Exchange Commission had seized DLG and believed it to be a Ponzi scheme.

In the time between those two events, financial and insurance work in the office building seems to have operated on subtle distinctions.

While Brandt held a full-time contract with New England Life Insurance Co. and worked as a registered representative for New England Securities (NES) — the MetLife subsidiaries overseen by Russon — he also sold other insurance products under the name of Westbridge Financial and Insurance Services — his own corporation.

Though he sold insurance products for multiple companies and worked in a separate office suite, Brandt was closely associated with the MetLife subsidiary, attending meetings, submitting to compliance reviews and hosting clients in the conference room. His offerings were broad, but when it came to selling DLG promissory notes to pay for insurance, his product options were exclusive to MetLife.

When Brandt decided to work for DLG directly, he surrendered his securities license registered with NES. Cass processed the paperwork, following a handwritten note from Russon, emphasizing a directive to keep Brandt’s insurance contract intact.

“While he was terminating his securities license, he was not terminating his full-time contract,” she said.

After meetings where the fund was presented, DLG’s presence in the office was limited to meetings Brandt held with prospective investors. These meetings also included two MetLife insurance agents who referred business to Brandt. Notably, marketing materials of approved insurance products, which are kept in a specific location and frequently sorted by Cass, didn’t include DLG.

But Pomonik’s testimony depicted some openness with Russon about the ongoing effort to recruit investors to DLG, which included regular referrals from MetLife agents in Russon’s office. At one point, MetLife refused to accept checks from Applied Equities, Inc. (AEI) — an arm of DLG that cut the checks for insurance premiums — because of a policy against third-party payers. Pomonik said Russon helped resolve the issue in a way that allowed AEI to continue financing premiums.

Pomonik recollected speaking with Russon on occasion and openly praising the opportunity clients had to use the returns from their DLG investment to pay insurance premiums.

“And Tony agreed with me,” she said.

Pomonik also has a lawsuit pending against MetLife and Russon over claims that Russon is responsible for losses she and her husband suffered after investing in DLG. The couple lived next door to Friedman, who convinced them and members of their family to invest in the real estate fund. He later introduced her to Brandt and arranged for a job for her, paying part of her salary for awhile. Later, she and her husband borrowed against their home and applied for MetLife insurance, joining the premium financing program. In total, they invested about $988,000.

The case is being heard in Los Angeles County Superior Court and began July 20. Webcast coverage is being provided by Courtroom View Network.

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Organizations in this Story

MetLifeU.S. Securities and Exchange Commission