Lawyer for A&O Entities Pleads Guilty to His Role in $100 Million Fraud Scheme Involving Life Settlements
|U.S. Department of Justice November 23, 2010|
WASHINGTON—Russell Mackert, 51, of Spring, Texas, pleaded guilty today in U.S. District Court in Richmond, Va., to conspiracy charges in connection with his role as a lawyer for the A&O entities, a group of businesses that acquired and marketed more than $100 million of fraudulent investments in life settlements to more than 800 victims across the United States and Canada, announced U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Assistant Attorney General Lanny A. Breuer of the Criminal Division.
“Russell Mackert today admitted he helped perpetuate a massive fraud estimated at over $100 million against innocent investors—including a number of elderly retirees—throughout the country,” said U.S. Attorney MacBride. “Mr. Mackert abused his position as an attorney to mislead investors, and now he is being held responsible for his financial crimes. I want to commend the outstanding work of the Virginia Financial and Securities Fraud Task Force for its outstanding work in uncovering this massive fraud.”
“Investment fraud schemes like the one perpetrated by Mr. Mackert and his co-conspirators can lead to devastating losses for individual victims,” said Assistant Attorney General Breuer. “We will continue to be aggressive in prosecuting individuals who attempt to profit by such criminal schemes, including the lawyers and accountants who facilitate them.”
Mackert pleaded guilty before U.S. Magistrate Judge Dennis W. Dohnal in the Eastern District of Virginia to a two-count criminal information alleging conspiracy to commit mail fraud and bulk cash smuggling involving losses to investors of more than $19 million. At sentencing, he faces a maximum penalty of 20 years in prison on the conspiracy to commit mail fraud charge and five years in prison on the bulk cash smuggling charge, as well as a $250,000 fine on each count.
According to court documents, Mackert admitted to making material misrepresentations and omissions to investors about A&O. Specifically, he admitted making false statements and omissions about A&O’s safekeeping and use of investor funds and about the risks of A&O’s investment offerings. Mackert also admitted that he and his co-conspirators failed to inform A&O investors that the vast majority of investor money was used for purposes wholly unrelated to purchasing and maintaining portfolios of life settlements. Mackert also admitted that he facilitated the sham sales transaction of A&O to Blue Dymond and created a fictional person named “RJ Stephenson” to serve as Blue Dymond’s purported representative. Mackert also admitted to taking undeclared cashiers’ checks totaling $10 million out of the United States as part of an effort to open offshore bank accounts in which to hide his co-conspirators’ gains from the conspiracy.
This ongoing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service, and FBI, with significant assistance from the Texas State Securities Board. The case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg 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.
President Obama established the interagency 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.