Houston-Based Principal of A&O Entities Resentenced in Virginia in $100 Million Fraud Scheme
|U.S. Attorney’s Office August 29, 2013|
RICHMOND, VA—A principal of A&O Resource Management Ltd. has been resentenced for his role in a $100 million life settlement fraud scheme, which included more than 800 victims across the United States and Canada. Today, Adley H. Abdulwahab, 38, of Houston, a hedge fund manager and part owner of A&O, was resentenced to 60 years in prison.
Abdulwahab originally was sentenced to 60 years in prison on September 28, 2011. On April 29, 2013, the United States Court of Appeals for the Fourth Circuit reversed five of Abdulwahab’s money laundering convictions. Today, United States District Judge Robert E. Payne resentenced Abdulwahab to the same term of imprisonment on the remaining counts of conspiracy, mail fraud, and securities fraud.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Mythili Raman, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Gary Barksdale, Inspector in Charge of the Washington Division of the United States Postal Inspection Service; Thomas J. Kelly, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation; and Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office, made the announcement after sentencing by Judge Payne.
On September 7, 2010, a federal grand jury returned an 18-count indictment against Abdulwahab; Christian Allmendinger, 40; and David White, 41. White and four others associated with the fraud scheme pleaded guilty in the fall of 2010. Allmendinger was convicted at trial on March 23, 2011, and Abdulwahab was convicted at trial on June 10, 2011.
According to court records and evidence presented at trial, the principals at A&O 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. Both Abdulwahab and Allmendinger were active in the day-to-day management of the companies, as well as in the marketing of A&O life settlement investment products to investors. Abdulwahab also lied to investors about having a college degree in economics, as well as failing to disclose to investors that he previously pleaded guilty to a felony charge of forgery of a commercial instrument in Texas state court.
When state regulators began to scrutinize A&O’s investment products, Abdulwahab and others manufactured a sham sales transaction to “sell” A&O to a shell corporate entity named Blue Dymond and later to another shell corporate entity named Physician’s Trust. This sale ended Allmendinger’s association with the fraud scheme; however, A&O and Physician’s Trust were still secretly controlled by Abdulwahab and his co-conspirators, who continued the fraud scheme through September 2009. The A&O fraud scheme caused more than 800 investors, many of whom were elderly, to lose more than $100 million. The vast majority lost all of their investment, which represented for many all of the money they had saved for their retirement.
Evidence at trial showed that Abdulwahab and the other A&O principals used the investors’ money for personal enrichment, including purchasing multi-million-dollar homes, luxury cars, a 15-carat diamond ring, and other property.
On September 27, 2011, Allmendinger was sentenced to 45 years in prison. On June 22, 2011, five other individuals connected with the A&O fraud scheme were sentenced: Russell E. Mackert, 52, general counsel for A&O, was sentenced to 188 months in prison; Brent Oncale, 36, former owner and founder of A&O, was sentenced to 120 months in prison; White, the former president of A&O, was sentenced to 60 months in prison; Eric M. Kurz, 47, a wholesaler of A&O investment products, was sentenced to 60 months in prison; and Tomme Bromseth, 69, an A&O sales agent in the Richmond area, was sentenced to 36 months in prison.
This investigation was conducted by the U.S. Postal Inspection Service, Internal Revenue Service, and FBI, with significant assistance from the Texas State Securities Board, the Virginia Corporation Commission, and the SEC. These cases are being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica D. Aber from the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz, Jr. of the Criminal Division’s Fraud Section.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.