Viatical Fraud
ORLANDO, Fla. - Two brothers who brokered life insurance policies for the terminally ill and elderly have been indicted on charges they siphoned off $13.6 million from investors and insurance companies.
Clarence Keith LaMonda and Jesse "Jess" LaMonda, both of Kissimmee, were charged in federal court last week with conspiring to commit mail and wire fraud and tax-related crimes. They pleaded not guilty and were released on bond.
"He's innocent. We're going to fight it, and we will go to trial," said attorney Manny Hernandez, who is representing Jesse LaMonda.
The indictment accused the brothers of buying viatical policies on which applicants lied about their health conditions and failed to notify life insurance companies that policyholders, known as viators, had sold their interests to the brothers' company, Accelerated Benefits Corp. (ABC).
Viaticals involve the controversial practice of buying life insurance policies of elderly or terminally ill people at a discount and selling them to investors who would make a profit when the policy holders die.
The defendants also required viators not to disclose their transactions with ABC and to designate individuals associated with ABC as "friends" and policy beneficiaries, according to the indictment. The policies allowed insurance companies to cancel them within two years of issuance if they found applicants omitted information about themselves.
An associate, former attorney John Maynard, also was charged with tax conspiracy for allegedly creating a Bahamas shell company for deposits and transfers, creating a false mortgage deed and other acts to conceal the origin of the invested moneys from the Internal Revenue Service, according to the indictment.
Two others involved with ABC reached plea agreements with the U.S. Attorney's Office and have cooperated with investigators.
Since the mid-1990s, ABC has been investigated by the U.S. Securities and Exchange Commission and regulators in Florida, Oklahoma and other states. Disgruntled clients sued them, and FBI agents raided their office in 2001, shutting them down while state insurance officials yanked their license. The LaMondas relocated their business to Houston.
A Florida Senate report in 2003 estimated that ABC caused $114 million in losses to investors in an industry in which fraud has neared $2 billion nationwide since 1996.
Source: Associated Press
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