Trio Sentenced In Viatical Fraud
ORLANDO, FLA – Two brothers have each been sentenced to more than 10 years in federal prison in connection with their operation of Accelerated Benefits Corporation, a viatical settlement company formally located in Orlando.
A viatical or life settlement is a transaction in which an investor purchases an interest in a terminally ill or elderly person’s life insurance policy death benefit in return for a lump-sum cash payment. An investor in a viatical or life settlement realizes a profit, if, when the insured dies and the policy matures, the policy benefit is greater than the price paid for the policy. The longer an insured lives, the more premium payments must be made to prevent the policy from lapsing and becoming worthless.
Typically a viatical settlement involves a person who has a life expectancy of less than two years. This assessment is based on the nature of the illness or condition, and a review of the particular person’s records by doctors.
Questions have long existed if there a viatical settlement in the case of Terri Schindler-Schiavo, the brain damaged Florida woman who died on March 31, 2005, by court order from injuries suffered in a suspicious incident at her home 15 years earlier.
If so, no doubt only a few people know including her executor, guardian and beneficiary-her estranged husband and guardian, Michael Schiavo and his wife, Jodi Centonze Schiavo.
Last week, U.S. District Judge John A. Antoon, II,sentenced C. Keith LaMonda, 53; Jesse W. LaMonda, 61; and John L. Maynard, 61, for their roles in a multi-million dollar fraud scheme associated with their operation of ABC.
Keith LaMonda was sentenced to 20 years imprisonment, followed by three years of supervised release. His brother Jesse was sentenced to 13 years and four months imprisonment followed by three years of supervised release, and John L. Maynard was sentenced to 10 years imprisonment followed by three years of supervised release.
The LaMondas were also ordered to pay approximately $88 million in restitution to the ABC victims who invested during their involvement in the scheme, and Maynard was ordered to pay approximately $52 million in restitution to the ABC victims.
Both C. Keith LaMonda and Maynard were ordered to pay approximately $1.3 million dollars to the Internal Revenue Service for their roles in the tax fraud scheme.
Previously, a jury found the LaMondas guilty of two counts of conspiracy to commit mail fraud and wire fraud and 11 counts of mail fraud. The jury also found C. Keith LaMonda guilty of conspiracy to defraud the U.S. Department of the Treasury, Internal Revenue Service and making and subscribing to a false tax return.
Maynard, a business associate of the LaMonda brothers and a disbarred attorney, was found guilty of conspiracy to commit mail fraud and wire fraud and conspiracy to defraud the IRS.
The mail and wire fraud charges filed against the LaMonda brothers and Maynard stemmed from their roles in an investment scheme that ultimately collected millions of dollars from thousands of victims. According to court documents, the LaMonda brothers and Maynard fraudulently induced investors to purchase interests in viatical and life settlements through a series of material misrepresentations concerning the safety and security of the investments.
The defendants disseminated false and misleading marketing materials, promising that the insurance policies offered and sold by ABC were safe and secure investments because doctors independently determined how long insured individuals would live. Instead, individuals at ABC dictated life expectancy determinations to one of ABC’s doctors.
The defendants also misled investors by promising to pay premiums on the life insurance policies until the policies matured. The defendants falsely promised investors that the money reserved to pay premiums was held in a trust account maintained by an independent trustee. The evidence at trial showed that the premium money was not held in a trust account, and that C. Keith LaMonda and Maynard diverted over $1.2 million from the premium reserve account to invest in a failed oil and gas venture.
This diversion depleted 70% of the account and ABC was unable to pay premiums on all of the life insurance policies, causing the lapse of a $9.5 million dollar life insurance policy. As a result, investors lost over $6 million dollars on that policy alone. The total actual loss to the investors was about $88 million.
C. Keith LaMonda and Maynard were also convicted of conspiring to defraud the United States by impeding the IRS’s ability to ascertain and collect income taxes due on monies diverted from investor trust accounts and ABC’s operating account. Court documents show that LaMonda and Maynard diverted over $3 million from the trust accounts and concealed the income from the IRS by diverting the money to accounts held in nominee names and mischaracterizing the diversions as loans or expenditures on ABC’s books and records and on tax returns.
They also diverted $261,500 from ABC’s operating account and concealed the income by diverting it to an account held in a nominee name, creating an offshore entity and mischaracterizing the income as a loan from the offshore entity. C. Keith LaMonda was also convicted of filing a false partnership tax return on which he reported the $3 million of diverted funds as a loan from a trust account instead of income.
In 1992, Schiavo collected $10,000 from Terri’s insurance under a “living needs benefit” from Prudential. Schiavo said in a sworn 1993 deposition that he had opened a safe deposit box at First Union Bank in 1992. When asked what he had done with the money, he testified that he had “stuck it there for safekeeping.” From the time of her sudden collapse in 1990 until approximately the middle of 1992 when the payments stopped, he lived off Terri’s paycheck from Prudential Insurance Company. It’s unknown when he removed the $10,000 in cash how he’d spent it considering it was Terri’s money. http://www.northcountrygazette.org/articles/072906DeathBenefits.html
By his own admission, Schiavo lived off Terri’s Supplemental Security Income (SSI) check of approximately $600 per month for over two years until the court award was handed down from the medical malpractice claim in late 1992. It appears that Michael Schiavo used all of Terri’s money – from the SSI checks to the living needs benefit to the malpractice award that had been earmarked for her therapy and rehabilitation.
And after he expended all of her money, including paying for euthanasia advocate George Felos and other lawyers to end her life, he claimed she was indigent and with the assistance of Felos and Judge George Greer, placed her on Medicaid and Medicare so the taxpayers could pay for her care while he spent her money.
Terri’s mother, Mary Schindler says Schiavo received the living needs money from the insurance policy in 1990, not 1992 as he testified and she personally witnessed him stashing it in the safe deposit box, accompanied by a bank employee who stated that she “wasn’t supposed to be seeing this”. There is no indication what else he may have “stuck” in that safe deposit box for safekeeping or why the money was not deposited in the bank in an account for Terri or if he paid income tax on the money he received as income. So far, it appears that Michael Schiavo hasn’t been held accountable why he was expending Terri’s SSI checks.
Terri’s mother says she was present at the First Union Bank in 1990 when Michael placed $10,000 cash from Terri’s life insurance policy with Prudential in a safe deposit box. To date, no accounting has been found to explain how Michael Schiavo used the proceeds from Terri’s life insurance policy nor has any accounting been produced by Michael for the $250,000 received in August, 1992 for an out-of-court settlement in the malpractice suit against Dr. Joel Prawer.
In order to be admitted to the Woodside Hospice of Hospice of Florida Sun Coast, regulations require that the patient be terminal, a life expectancy of six months or less. Terri wasn’t terminal when she was admitted in April 2000 and she remained there for five years, paid for by Medicaid and Medicare while Schiavo used her money to pay Felos, Deborah Bushnell and others including Felos’ paralegal Cynthia Gay to insure that the disabled woman died.
When Michael Schiavo and Felos placed Terri in the hospice with Felos on the board of directors, they were banking that had a life expectancy of less than two years. Schiavo had expected her to die virtually immediately after Greer signed her first death order on Feb. 11, 2000. The first time the feeding tube was pulled on April 24, 2001 but it was ordered reinserted days later by court of Judge Frank Quesada. Schiavo never expected that his former paramour Cyndi Shook would call a radio show and tell the host that Michael Schiavo had absolutely no idea what Terri’s wishes were as he was claiming that she had previously expressed that she would not want to be kept alive by artificial means. However, at the time she allegedly made such a statement, feeding tubes were not deemed “artificial life support”. Terri was not on any machines such as a respirator.
Terri Schiavo was not terminal, she was handicapped. She had been placed in Woodside Hospice in April, 2000 which requires a certification that she was terminal with only six months to live. But that wasn’t true and the certification wasn’t properly signed by the two physicians as required.
Michael Schiavo’s concubine at the time, Jodi Centonze, now his wife, is a licensed insurance agent holding licenses with multiple insurance companies. Did she act as his viatical settlement broker?
According to filings made with the Florida Division of Corporations, Centonze was listed as a director for the Liberty American Insurance Agency in a filing with the state on April 26, 2001, two days after Terri’s feeding tube was removed the first time, indicating that the firm in which she was a director, Jerger and Sons, had been changed to be known as Liberty American in August, 2000. However, at the time of the annual filing for 2002 on April 28, 2002, Centonze’s name had been removed as a director but the change was not noted on the annual report.
She had been added as an officer of Jerger and Sons in April, 1998. Other officers and directors listed for Jerger and Sons in April, 1998, the month prior to Schiavo and his attorney, George Felos, filing their petition to end Terri’s life with Judge George Greer in May, 1998, were Richard M. Jerger, Centonze’s partner; Jerger’s brothers, Bruce Meyer and Raymond Blacklidge. Blacklidge, a lobbyist with the Florida Legislature, was also the registered agent of the corporation.
After the name change of Jerger and Sons to Liberty American in August, 2000, on Jan. 11, 2001, a certificate of incorporation was filed for the Jerger and Centonze Insurance Agency Inc., listing the address of the Clearwater home of Centonze and Michael Schiavo, property owned by Centonze, according to Pinellas County assessment records.
Officers and directors of the corporation were listed as Richard M. Jerger Jr., Michael Schiavo and Catherine M. Quinn-Jerger. Schiavo was not a licensed insurance agent or salesman. Could he have been listed for purposes of obtaining a viatical settlement?
The corporation was administratively dissolved on Oct. 4, 2002, scarcely three months after Schiavo had petitioned Greer to place his estranged wife on Medicaid which Greer approved despite the more than $1 million received from medical malpractice claims in 1992, the proceeds of which were earmarked to provide rehabilitation for Terri Schiavo. In determining Medicaid eligibility, all marital assets must be considered, including Michael Schiavo’s salary, real estate holdings and bank accounts.
In a viatical settlement, the owner of the life insurance policy (who is typically, but not necessarily, the individual with a life-threatening illness) receives cash for the policy, and the owner transfers the policy to the person buying the policy. In these transactions, the viatical settlement provider becomes the new owner and/or beneficiary of the life insurance policy and is responsible for paying all future premium payments, and collecting the entire death benefit of the policy upon the death of the insured.
In many cases the process is handled by a broker who serves as the intermediary between the person with the life threatening illness (which Terri did’t have) and the person buying the policy. Viaticals are based on a legitimate concept: Allow investors to purchase the life insurance benefits from a terminally ill person, allowing the sick person to receive a partial payment on the policies while they are still alive, which can be a godsend to terminally ill people and their families. The investor pays about 60 to 70 cents on the dollar for the policy, then collects the full death benefit on the policy.
Unfortunately, these programs are often run by scammers and can be disastrous for investors.
Fraudulent viatical settlements schemes have taken off as they can attract people who are desperately in need of more money from their small investment funds, by offering returns that are above market rates. Often most of the money collected from investors go toward purchasing.
Source: North County Gazette
