Two Legacy Network Executives Sentenced
Father and Son Ordered to Pay More Than $1.6 Million in Restitution
| U.S. Attorney’s Office October 22, 2013 |
POCATELLO—U.S. Attorney Wendy J. Olson announced today that the former founder and chairman of the board of The Legacy Network, an insurance brokerage agency in Rexburg, Idaho, and his son were sentenced this afternoon in United States District Court in Pocatello.
Adrian Rand Robison, 67, of Rigby, Idaho, was sentenced to four months in prison and ordered to pay restitution of $1,371,634 for mail fraud. Chief U.S. District Judge B. Lynn Winmill also sentenced Robison to 18 months of supervised released with eight months of home detention and fined him $20,000.
Adrian Russell Robison, 38, of Idaho Falls, Idaho, the former chief executive officer of the company, was also sentenced to four months in prison for making and subscribing false tax returns. Russell Robison was also sentenced to 12 months of supervised release, the first eight months on home detention, fined $10,000, and ordered to pay restitution to the IRS of $270,631. The defendants were charged by information in May 2013; they pleaded guilty to the charges in June.
According to the plea agreement, Rand Robison, a licensed insurance agent, owned a majority interest in The Legacy Network, a company that brokered the sale of life insurance policies between the carriers that offered the policies and the independent insurance agents that marketed the policies to clients. In return for its services, The Legacy Network received a commission paid by the carriers for each policy sold. According to the plea agreement, Rand Robison admitted that he encouraged some high net-worth clients to apply for high face-value life insurance policies with the promise of rebating all or part of the first-year premiums back to the customer. Robison further admitted that he misrepresented in agent reports and other contractual documents that he would not rebate, or otherwise finance, the premium payments of his clients. The Legacy Network received commission payments from the insurance carriers of approximately 105 to 138 percent of the first-year premium. Robison admitted that with those funds, he rebated some of the premiums to some high net-worth clients and kept the remainder. From 2006 to 2009, the Legacy Network received approximately $1,371,634 in commissions from life insurance carriers on the policies of a group of their high net-worth clients; they rebated approximately $923,497 to the clients and kept approximately $448,137.
According to the plea agreement, Russell Robison was aware that agents of The Legacy Network rebated all or part of the premium payments to some of their high net-worth clients and had, in fact, signed rebate checks to the clients. Neither Robison nor The Legacy Network issued IRS Forms 1099-MISC recording the rebates as income to the high net-worth clients. The company’s internal books and records recorded the rebates as deductible business expenses. After some clients’ policies lapsed due to non-payment of premiums—which occurred typically in the second year of the policies—some policies were replaced with policies issued by different insurance carriers. According to the plea agreement, Robison admitted that for tax years 2007, 2008, and 2009, he filed a partnership income tax return for The Legacy Network, knowing that the returns contained false information by improperly overstating expenses for rebates paid.
The cases were the result of a joint investigation by Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, and Idaho Department of Insurance.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.