Viatical fraudsters await sentencing

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Demosthenes
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Viatical fraudsters await sentencing

Postby Demosthenes » Thu Mar 15, 2007 12:15 pm

Brothers Await Sentencing After Convicted of Viaticals Fraud

DALLAS March 14 (BestWire) — The decade-long odyssey of public complaints against Accelerated Benefits Corp. of Florida — now known as ABC Viaticals Inc. — appears to be nearing an end, as the brother team who ran the firm await sentencing in Texas following their convictions on federal mail, wire and securities fraud charges.

A federal jury in Dallas handed down guilty verdicts on all charges brought against former ABC President Keith LaMonda and his brother, Jesse LaMonda. The charges arose from a complaint brought against the brothers and the firm by the U.S. Securities and Exchange Commission for their roles in selling viatical and life settlements through Accelerated Benefits.

According to the SEC's complaint, ABC raised at least $100 million between June 2001 and November 2006 from more than 4,000 investors worldwide from the sale of life settlements with guaranteed returns from 27% to 150%. The SEC charged the company fraudulently claimed investor funds were controlled by an independent escrow agent, that there were sufficient funds pay premiums for the life expectancy of the insureds in the segregated escrow accounts, and that financial guarantee bonds purchased by ABC would "fix" the date and amount of the investor's return.

In reality, the commission alleged, the LaMondas controlled all of the funds held by escrow agents, never fully funded the escrow accounts, used a bonding company they knew would not perform, and siphoned millions of dollars of investor funds into their own pockets or to entities they controlled. The complaint also alleged the LaMondas never disclosed to investors their indictment by the U.S. Justice Department in July 2005 for fraudulent sales of viaticals and life settlement investments.

In addition to the SEC and Justice Department investigations, Accelerated Benefits was the subject of regulatory probes and actions in at least seven states. Former Florida Insurance Commissioner Bill Nelson, now a U.S. senator, revoked the then-Winter Park, Fla.-based company's license in August 1999, but the LaMondas pursued a series of appeals until a Florida district appeals court ultimately upheld the revocation in February 2002. By that point, the company had relocated to Texas and renamed itself ABC Viaticals.

In addition to the Florida and Texas complaints, the company also faced regulatory actions in Oklahoma, Pennsylvania, Ohio, Kansas and Virginia.

District Judge Jorge A. Solis released Keith on $1 million bail and Jesse on $100,000 dollar bail. Both face up to 30 years in prison and could be ordered to pay more than $100 million in criminal restitution. Sentencing has been scheduled for May 17.

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