Houston Trio Indicted for Massive Theft
Suppose someone approached you with this offer: Put up, say, $5,000 to take over another person’s life-insurance policy, and you are guaranteed to make 10 to 20 percent profit when the insured person dies. All you need do is keep up with the modest monthly premiums. Would you go for this deal?
At least 800 investors did – and the three men who sold them the policies are now under indictment for theft totaling $103 million.
This supposed scam involves converting life-insurance policies to “bonded life settlements.” First, the insured person is persuaded to relinquish the policy for a flat fee. If that person is in need of quick cash or is ignorant of the policy’s worth, he or she will often take the below-market-value amount offered. The new owner – in this case allegedly a Houston-based “resource management” firm – resells the policy for much more, fraudulently promising extravagant returns and scoring a hefty profit from both transactions.
An indictment for this practice was unsealed on September 9, 2010, in federal court in Richmond, Virginia. The accused were Christian M. Allmendinger, 39, Adley H. Abdulwahab, 35, and David C. White, 40, principals at A&O Resource Management Ltd. The government, says Robert Elder, a spokesman for the Texas State Securities Board believes that neither the life-settlement bonds nor the existing insurance payouts “could possibly pay off their investors,” much less provide a 10 to 20 percent windfall.
The charges include mail fraud, conspiracy, money-laundering and securities fraud. Given the large number of investors and the alleged $103-million swindle, a guilty verdict could carry severe penalties:
- mail fraud – a jail sentence of five years per offense and a fine of up to $200,000;
- conspiracy – five years’ imprisonment;
- money laundering – $500,000 or twice the value of the property involved in each transaction, whichever is greater, and/or 20 years;
- securities fraud – 25 years and a $5,000-$400,000,000 fine.
Obviously, such offenses are very serious. If you are ever so charged, or if the threat of such charges is brought against you, immediately contact an experienced business-law attorney.
