Three principals of a group of businesses that acquired and marketed life settlements to investors were arrested and charged in an 18-count indictment for their alleged roles in a $100 million fraud scheme with more than 800 alleged victims across the United States and Canada.
The charges were announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division.
An indictment unsealed today in U.S. District Court for the Eastern District of Virginia charges Christian M. Allmendinger, 39; Adley H. Abdulwahab, 35; and David C. White, 40, 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. The indictment also seeks forfeiture of approximately $103 million from all three individuals.
According to the indictment, Allmendinger, Abdulwahab, White and their co-conspirators were principals with A&O Resource Management Ltd., and various related entities, which sold life settlement investments. The individuals allegedly engaged in a scheme to defraud investors by making misrepresentations about such things as A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. The indictment further alleges that when state regulators began to scrutinize A&O’s investment products, Abdulwahab and his co-conspirators allegedly manufactured a pair of sham transactions in which A&O was “sold” to a shell corporate entity named Blue Dymond and later to another shell corporate entity named Physician’s Trust. It is alleged that following these sham transactions, White became the figurehead president of A&O and Physician’s Trust, but that A&O was still secretly controlled by Abdulwahab and other co-conspirators. The indictment also alleges that Allmendinger, Abdulwahab and their co-conspirators routinely used investor funds for personal enrichment.
If convicted of all the charges in the indictment, Allmendinger, Abdulwahab and White face up to 20 years in prison on each count except the four securities fraud counts, on which they face up to five years in prison per count.
In addition to Allmendinger, Abdulwahab, and White, four other individuals have been charged with criminal offenses in connection with the A&O fraud scheme. Brent Oncale, 36, of Houston, was charged in a two-count criminal information with conspiracy to commit mail fraud and conspiracy to commit money laundering for his role as vice president of A&O. Russell E. Mackert, 51, of Spring, Texas, was charged in a two-count criminal information with conspiracy to commit mail fraud and bulk cash smuggling for his role as an attorney in the A&O scheme. Eric M. Kurz, 46, of The Woodlands, Texas, was charged in a one-count criminal information with conspiracy to commit mail fraud and money laundering for his actions as a wholesaler of A&O investment products. Tomme Bromseth, 68, of Blackstone, Va., was charged in a two-count criminal information with mail fraud and structuring financial transactions to evade reporting requirements for his role as an A&O sales agent in the Richmond area. In addition to the charging documents, signed plea agreements for Mackert, Oncale, Kurz and Bromseth were filed in U.S. District Court for the Eastern District of Virginia. Related court hearings have yet to be scheduled.
The correlation between the filing of plea documents and these three indictments is no mistake. Typically, when the government is able to bring charges against additional individuals that are allegedly involved in the same scheme, it is because one or all of those already indicted have decided to enter into plea agreements in which they name others that were allegedly involved. The fact that four plea agreements were filed the same day that Allmendinger, Abdulwahab and White were charged with their alleged participation demonstrates that the only evidence the government has against these individuals is most likely derived from the information of those that have signed a plea agreement. Otherwise, the government would have indicted them originally, but clearly did not for a lack of evidence.
Once an individual makes a plea arrangement, they typically receive a reduced sentence for their cooperation against other individuals. The motivation of a reduced sentence is very enticing to someone that has been indicted, especially when they have the opportunity to blame others.
Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.
The author of this blog is Douglas McNabb. Please feel free to contact him directly at email@example.com or at one of the offices listed above.