7 Charged with Life Settlement Fraud
Christian M. Allmendinger, 39; Adley H. Abdulwahab, 35; and David C. White, 40, all from the Houston area, each were charged in federal court in Richmond with one count of conspiracy to commit mail fraud, six counts of mail fraud, one count of conspiracy to commit money laundering, six counts of money laundering and four counts of securities fraud.
If convicted of all charges, they face up to 20 years in prison on each count except the securities fraud counts, on which they face up to five years in prison per count.
Tomme Bromseth, 68, the Richmond area sales agent formerly from Chester who lives in Blackstone, was charged with mail fraud and structuring financial transactions to evade reporting requirements. He sold more than $3 million of A&O products to 15 investors, MacBride said.
The three executives and their representatives allegedly misrepresented to investors the company’s prior successes, its scope and size, the risk involved in its investment offerings and the use of investor funds.
They dealt in life insurance settlements. A life settlement is an investment in which a person, typically elderly or terminally ill, sells his or her life insurance policy for a cash payment, which is a percentage of death benefit — the amount paid by an insurance company when the insured dies.
A&O, founded in November 2004, bought life settlements from a wholesaler and began selling whole or fractional interests in those settlements to investors, according to the indictment. In such sales, investors typically buy the right to receive a portion of the death benefit when the insured dies.
A&O claimed it had set aside money to pay premiums. If premiums are not paid, insurance companies have no obligations to pay death benefits.
The company had insufficient funds to pay the premiums and filed for bankruptcy protection in September 2009.
Source: InsuranceNewsNet.com
