Fraud Scheme Sends Conspirators to Prison
Five men including the co-founder and former president of Houston, Texas based A&O Resource Management LTD, were sentenced to federal prison terms ranging from three years to more than fifteen years for pleading guilty to a $100 million fraud scheme perpetrated on some 800 victims in the United States and Canada, according to the Houston Chronicle and other sources.
Neil MacBride, a U.S. Attorney for the Eastern District of Virginia, said “the impact of this massive fraud on many of A&O’s investor victims has been disastrous. Hundreds of elderly investors invested their life savings with A&O and saw it all vanish in an instant. These investors were not looking for quick cash, just a safe alternative to invest their retirement funds. The safety, security and no-risk nature of the investment was critical to the sales pitch, and it was all a big fat lie.”
Assistant Attorney General Lanny Breuer of the Criminal Division said, “Brent Oncale and his co-conspirators operated a sham investment company that turned fraud and deceit into a business model. They stole millions from hundreds of unsuspecting investors, pocketing huge sums for themselves.”
All of the men pleaded guilty in late 2010 and early 2011 for their parts in the fraudulent scheme, marketed life settlement products to elderly investors. The DOJ office said that the victims were misled about the prior success of A&O, its size, office locations, its number of employees, the risks of its investment products and the safekeeping of investors’ funds.
The conspirators created a fake sales transaction to sell A&O to an offshore shell entity named Blue Dymond and later to another offshore shell company named Physician’s Trust, when the regulators were starting to look into the firm’s investment products. However, the principals of A&O secretly controlled A&O and Physician’s Trust.
U.S. District Judge Robert Payne scolded the defendants and told Brent Oncale, an A&O co-founder, that “it turned my stomach” to read statements from victims and “the damage you wrought was absolutely hideous.” Russell Mackert, 52, general counsel for A&O, was sentenced to 188 months in prison; Brent Oncale, 36, former owner and co-founder of A&O, was sentenced to 120 months in prison; David White, 41, former president of A&O, was sentenced to 60 months in prison; Eric Kurz, 47, a wholesaler of A&O investment products, was sentenced to 60 months in prison; and Tommie Bromseth, 69, an A&O sales agent form the Richmond area, was sentenced to 36 months in prison.
In related matters, Christian Allmendinger, 39, a founder of A&O, was convicted by a jury on March 23, 2011, of one count of conspiracy to commit mail fraud, two counts of mail fraud, one count of conspiracy to commit money laundering, two counts of money laundering and one count of securities fraud. He is scheduled to be sentenced on August 14, 2011. Adley Abdulwahab, 35, a hedge fund manager for A&O, was convicted by a Richmond, Virginia jury on June 6, 2011, of one count of conspiracy to commit mail fraud, five counts of mail fraud, one count of conspiracy to commit money laundering, five counts of money laundering and three counts of securities fraud. He is scheduled for sentencing on September 28, 2011. They both face up to 20 years in prison for each count except the securities fraud, on which they face up to five years in prison.