TAG | HIC life settlement fraud
Comments off · Posted by Securities Lawyer in FINRA
Two men from Houston, Texas, have been sentenced to spend more than 45 years in prison for their role in a massive life settlements fraud scheme writes Darla Mercado in an October 7, 2011, article in InvestmentNews.com.
Christian Allmendinger, the co-founder and vice president of A&O Resource Management Ltd., and Adley H. Abdulwahab, a hedge fund manager and part owner of A&O, were sentenced to 45 years and 60 years in federal prison, respectively, on Sept. 27 and 28 in the U.S. District Court in Richmond, Va. The charges against the two also includes conspiracy to commit money laundering, securities fraud and mail fraud.
This case dates back to 2004, when Mr. Allmendinger and another man founded A&O, according to the U.S. attorney’s office in Richmond and the Justice Department.
Ms. Mercado writes that the firm offered individual investors whole and fractionalized interests in so-called bonded life settlements, which were supposedly backed against longevity risk with a reinsurance bond. These bonds were positioned as fixed-maturity investments with a term of four to seven years and marketed as providing a guaranteed minimum compounded annual rate of return of 10% to 12%.
As many as 800 investors, most of them elderly, bought up the investments, and A&O raked in some $100 million in clients’ dollars.
It was reported in the InvestmentNews.com article that Mr. Abdulwahab, who eventually became a partial owner of A&O, entered the picture when his marketing company, CA Houston Investment Center, or HIC, and independent insurance agents who weren’t securities licensed began selling the investments, according to the suit. A&O paid HIC and the agents a commission of 10% of each bonded life settlement purchase, authorities said.
Concerned that the firm was offering unregistered securities, securities and insurance regulators became suspicious in 2006. Federal enforcement agencies said the men set up a phony series of sales of A&O itself in 2007 to place greater distance between themselves and regulators’ scrutiny of the firm. The transactions ended Mr. Allmendinger’s and Mr. Abdulwahab’s ownership interests in A&O, according to law enforcement agencies.
It was reported that A&O went into bankruptcy in September 2009, due to failure to pay down the premiums on its underlying insurance policies.
Mr. Abdulwahab filed an appeal of the sentence last week, and Mr. Allmendinger also will appeal the sentence.
If you or a family member have become alleged victims of life settlement fraud, contact an insurance fraud attorney for a free consultation on how to recover your investment losses. To speak with an attorney, call 888-760-6552, or visit securitieslawyer.com.
We stand up and fight for the rights of consumers. Soreide Law Group, PLLC, representing Insurance Fraud Victims in Federal Court, State Court and before the Financial Industry Regulatory Authority (“FINRA”).
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