1 00:00:02,600 --> 00:00:08,860 In this episode of American Greed, the ringleaders of A andO Resource Management 2 00:00:08,860 --> 00:00:11,640 are putting an old twist on a new scam. 3 00:00:12,380 --> 00:00:15,480 The insurance company will always pay the death benefit to your client. 4 00:00:16,200 --> 00:00:23,040 The A andO management were incredibly bold, brazen, and creative in the 5 00:00:23,040 --> 00:00:25,520 and quality of lives that they devised. 6 00:00:25,900 --> 00:00:31,160 They take a legitimate business and pervert it into a $100 million life 7 00:00:31,160 --> 00:00:32,320 insurance fraud. 8 00:00:32,700 --> 00:00:36,080 They believe that they can outsmart the authorities, and they certainly believe 9 00:00:36,080 --> 00:00:37,080 they can outsmart investors. 10 00:00:37,900 --> 00:00:44,160 But A andO is just a lie that grows, devouring the guilty and the innocent. 11 00:00:44,620 --> 00:00:49,300 They're swimming in a tank of sharks. When that happens, people in the 12 00:00:49,300 --> 00:00:51,960 surrounding areas, they're the ones that get bitten. 13 00:01:08,880 --> 00:01:14,760 In the fall of 2004, 33 -year -old Christian Allmendinger and 30 -year -old 14 00:01:14,760 --> 00:01:17,940 Brent Unkow decide they're ready for a career change. 15 00:01:18,740 --> 00:01:23,160 The investment consultants have toiled for the Houston branch of Hibernia Bank 16 00:01:23,160 --> 00:01:24,200 long enough. 17 00:01:24,640 --> 00:01:28,180 They came from this banking background, which is generally something that's, you 18 00:01:28,180 --> 00:01:29,620 know, it's a pretty conservative industry. 19 00:01:30,200 --> 00:01:32,460 But they took a very different approach. 20 00:01:33,109 --> 00:01:37,950 Houston Chronicle reporter Lauren Steffi says that they also share a taste for a 21 00:01:37,950 --> 00:01:41,890 flashier life than most mid -level bankers can aspire to. 22 00:01:42,110 --> 00:01:46,550 They seem to be very interested in all the trappings of success, if you will. 23 00:01:46,610 --> 00:01:47,690 They like the fast cars. 24 00:01:48,170 --> 00:01:53,090 They like the beautiful women. They wanted to show that they had hit the big 25 00:01:53,090 --> 00:01:54,090 time. 26 00:01:55,020 --> 00:01:59,040 They've discovered that Texas is becoming the epicenter for a little 27 00:01:59,040 --> 00:02:04,220 investment that's exploding in popularity called life settlements. The 28 00:02:04,220 --> 00:02:10,979 premise is that an investor buys a life insurance policy and continues to make 29 00:02:10,979 --> 00:02:14,320 the premiums, and then when the person dies, they collect the benefit. 30 00:02:15,380 --> 00:02:20,060 It might seem morbid, but life settlements allow people to sell their 31 00:02:20,060 --> 00:02:23,080 insurance policies for cash before they die. 32 00:02:23,680 --> 00:02:27,600 They get the money up front. Maybe they have a terminal illness, for example, or 33 00:02:27,600 --> 00:02:31,000 something, and they want to use that money to pay their medical bills. 34 00:02:32,080 --> 00:02:36,740 Investors then hold on to the policies, waiting to collect their payout when the 35 00:02:36,740 --> 00:02:37,740 insured dies. 36 00:02:39,040 --> 00:02:44,180 Life settlements are an investment in death, and by 2007, they become a nearly 37 00:02:44,180 --> 00:02:45,680 $12 billion industry. 38 00:02:47,420 --> 00:02:52,260 IRS Special Agent Rick Raven says life settlements can be an attractive but 39 00:02:52,260 --> 00:02:53,360 risky investment. 40 00:02:53,840 --> 00:02:59,600 The key to a life settlement investment is that the premiums be paid. I can't 41 00:02:59,600 --> 00:03:04,060 stress that enough. If they lapse, the life insurance policy is worthless. 42 00:03:05,360 --> 00:03:08,060 But another problem is longevity risk. 43 00:03:08,420 --> 00:03:13,180 Because if the insured lives past their life expectancy, the investor loses 44 00:03:13,180 --> 00:03:15,520 money paying their premiums until they die. 45 00:03:17,250 --> 00:03:21,910 Allmendinger and Oncow see opportunity and a market to exploit. 46 00:03:22,510 --> 00:03:28,550 They resign from Hibernia Bank in November 2004 and immediately open A andO 47 00:03:28,550 --> 00:03:32,270 Resource Management as equal partners and co -vice presidents. 48 00:03:33,390 --> 00:03:36,570 Investigators say Allmendinger was the brains of the operation. 49 00:03:37,210 --> 00:03:41,790 And as excerpts from this A andO sales tape show, he was never shy about 50 00:03:41,790 --> 00:03:44,690 exaggerating A andO's successes to lure in money. 51 00:03:45,130 --> 00:03:50,470 We normally keep about $100 million of the policies that we warehouse just 52 00:03:50,470 --> 00:03:51,770 waiting for clients. 53 00:03:52,490 --> 00:03:58,670 Currently, this industry is about a $15 billion industry as of this year, and we 54 00:03:58,670 --> 00:03:59,670 only see it growing. 55 00:04:00,230 --> 00:04:04,990 That was all smoke and mirrors to entice investors to invest in this company. 56 00:04:06,190 --> 00:04:08,690 They offer higher than average returns. 57 00:04:09,290 --> 00:04:14,390 But to collect, investors must be patient, says U .S. Attorney Neil 58 00:04:14,730 --> 00:04:18,190 You need to wait four to seven years, which is the lifespan of the insurance 59 00:04:18,190 --> 00:04:22,270 policy, before you're going to start seeing any money. But once you do, it's 60 00:04:22,270 --> 00:04:23,990 going to be 10, 12, 15 percent. 61 00:04:25,470 --> 00:04:29,510 Allmendinger and Oncow purchased life insurance policies from a clearinghouse, 62 00:04:29,650 --> 00:04:32,410 and we sell them as bonded life settlements. 63 00:04:33,180 --> 00:04:35,740 To entice investors, they offer two guarantees. 64 00:04:36,420 --> 00:04:41,300 What A andO was promising investors was that those premiums would be paid up 65 00:04:41,300 --> 00:04:44,760 front, or those premiums would be placed in escrow, and they wouldn't have to 66 00:04:44,760 --> 00:04:48,460 worry about those premiums not being paid because that was the number one 67 00:04:49,500 --> 00:04:54,820 A andO's bonded life settlements offer a unique protection from longevity risk, 68 00:04:55,060 --> 00:04:57,200 those policyholders who live too long. 69 00:04:57,520 --> 00:05:02,480 Re -insurance bonds that pay out the full policy on a predetermined date. 70 00:05:02,780 --> 00:05:04,600 even if the insured is still alive. 71 00:05:05,320 --> 00:05:09,340 If the insured should outlive the policy's expiration date, it's not going 72 00:05:09,340 --> 00:05:12,880 matter to your client because the bond's going to pay out the entire death 73 00:05:12,880 --> 00:05:14,580 benefit on that date. 74 00:05:16,360 --> 00:05:21,940 In 2005, A andO sets up shop in this office building just outside downtown 75 00:05:21,940 --> 00:05:27,300 Houston. Until now, they've been relying on their own bank contacts and word of 76 00:05:27,300 --> 00:05:28,540 mouth to grow the company. 77 00:05:28,900 --> 00:05:31,720 But the Houston market is exploding for them. 78 00:05:32,460 --> 00:05:36,620 The two of them could not sell these things quickly enough to grow the 79 00:05:36,620 --> 00:05:39,900 the way they wanted to, and so they started looking for people that could 80 00:05:39,900 --> 00:05:42,560 in to essentially be distributors, to be sales guys. 81 00:05:44,060 --> 00:05:48,780 Thirty -year -old marketing whiz Adly Abdul -Wahab lives in nearby Spring, 82 00:05:49,000 --> 00:05:51,660 Texas, and he's got just the connections they need. 83 00:05:52,110 --> 00:05:56,370 He was the jet fuel that was poured on the fire, basically, because he had a 84 00:05:56,370 --> 00:06:00,510 company that had a network that had, you know, sort of the distribution system 85 00:06:00,510 --> 00:06:04,390 already there. He took these products, and that's when things really began to 86 00:06:04,390 --> 00:06:05,390 take off. 87 00:06:06,050 --> 00:06:11,250 Although investigators say Abdul Wahab, who calls himself Wahab, is a relentless 88 00:06:11,250 --> 00:06:14,190 salesman, he also brings something else to the table. 89 00:06:14,560 --> 00:06:18,420 He brings sort of what you might say is the traditional con man background to 90 00:06:18,420 --> 00:06:22,420 the whole thing. You get the sense that he was the guy that really knew how to 91 00:06:22,420 --> 00:06:23,420 make this thing work. 92 00:06:24,000 --> 00:06:29,020 Abdul Wahab claims he's graduated from Louisiana State University, but that's a 93 00:06:29,020 --> 00:06:33,700 lie. He also fails to mention that he's recently pled guilty to felony forgery 94 00:06:33,700 --> 00:06:37,820 charges for trying to pass fake money orders at a local Neiman Marcus. 95 00:06:38,990 --> 00:06:43,490 But Abdul Wahab's not going to let a criminal pass slow him down, and he 96 00:06:43,490 --> 00:06:48,350 at the chance to aggressively market A andO, even if it means selling a lie. 97 00:06:50,370 --> 00:06:52,390 Up next on American Greed. 98 00:06:52,670 --> 00:06:57,170 The money and the greed take over, and they lose sight of what's right, what's 99 00:06:57,170 --> 00:06:58,170 wrong. 100 00:06:58,990 --> 00:07:02,570 Faced with a choice, the A andO partners must make a decision. 101 00:07:03,030 --> 00:07:06,510 Walk away from millions or start covering their track. 102 00:07:07,150 --> 00:07:10,770 They were lying about what they were delivering. They were lying about who 103 00:07:10,770 --> 00:07:13,270 were. They were lying about their background. 104 00:07:25,970 --> 00:07:31,070 Paula Whitaker Hancock has taught high school classes in Houston for 23 years. 105 00:07:31,820 --> 00:07:36,440 She's also earned two master's degrees, started a couple of private schools, and 106 00:07:36,440 --> 00:07:39,480 more recently opened a crisis and counseling center. 107 00:07:40,260 --> 00:07:44,560 I did a lot of counseling in my private schools, helping families, helping 108 00:07:44,560 --> 00:07:48,600 children, and that was my love, was helping people. 109 00:07:49,300 --> 00:07:54,280 The true center of her universe, though, like any single mom, is her 25 -year 110 00:07:54,280 --> 00:07:55,280 -old son, Ryan. 111 00:07:55,640 --> 00:07:57,020 He was my only child. 112 00:07:57,480 --> 00:07:58,980 I worked like a dog. 113 00:08:00,670 --> 00:08:01,670 For all those years. 114 00:08:01,810 --> 00:08:05,650 And so I wanted my son to have a good future. 115 00:08:07,630 --> 00:08:09,630 Paula's determined efforts pay off. 116 00:08:09,890 --> 00:08:12,950 To her delight, she somehow saved a million dollars. 117 00:08:14,010 --> 00:08:18,350 Her estate planner suggests she invest this money with a new company he's 118 00:08:18,350 --> 00:08:20,690 representing called A andO. 119 00:08:21,550 --> 00:08:25,830 She agrees to meet the two A andO principals, Christian Allmendinger and 120 00:08:25,830 --> 00:08:26,830 Unkell. 121 00:08:27,470 --> 00:08:30,770 When they come to visit, she's impressed by their presentation. 122 00:08:31,790 --> 00:08:35,190 Both of them driving up in twin Hummers. 123 00:08:35,450 --> 00:08:37,669 So they looked very prosperous. 124 00:08:38,429 --> 00:08:39,450 Italian suit. 125 00:08:40,490 --> 00:08:43,270 Young men in their late 20s, early 30s. 126 00:08:44,750 --> 00:08:49,470 Over the course of four months and repeated visits, Allmendinger and Ancal 127 00:08:49,470 --> 00:08:50,269 her down. 128 00:08:50,270 --> 00:08:55,130 They ask her to invest $1 million, and they offer to personally match her money 129 00:08:55,130 --> 00:08:56,790 with $1 million of their own. 130 00:08:57,360 --> 00:09:04,260 And so I thought, well, maybe something that they invest in would be more 131 00:09:04,260 --> 00:09:09,660 secure than other types of policies. Because if this loses, they're going to 132 00:09:09,660 --> 00:09:15,900 lose. They promised her a 100 % return on her investment, adding up to $2 133 00:09:15,900 --> 00:09:18,340 million after six years. 134 00:09:19,000 --> 00:09:23,560 They also tell Paula the investment is completely guaranteed by a Costa Rican 135 00:09:23,560 --> 00:09:27,200 reinsurance company called Provident Capital Indemnity. 136 00:09:28,120 --> 00:09:33,100 PCI will pay on the maturity date, even if the woman named on the policy is 137 00:09:33,100 --> 00:09:34,059 still alive. 138 00:09:34,060 --> 00:09:36,160 It was a guarantee. You had insurance. 139 00:09:36,360 --> 00:09:40,680 And so this was a win -win. If she passed away, the $2 million came. 140 00:09:40,960 --> 00:09:46,220 Even if she didn't pass away at the end of the six years, you would still get 141 00:09:46,220 --> 00:09:47,220 the $2 million. 142 00:09:48,170 --> 00:09:53,610 In January 2006, she takes money from her savings, her retirement, and her 143 00:09:53,610 --> 00:09:56,970 business, investing $1 million with A andO. 144 00:09:57,630 --> 00:10:03,910 Of course, when you're dealing with thieves and criminals, they don't follow 145 00:10:03,910 --> 00:10:04,910 what they thought. 146 00:10:06,490 --> 00:10:11,550 Paula Whitaker Hancock's million dollars seems like a lot, but it's just the 147 00:10:11,550 --> 00:10:13,690 beginning of what A andO is taking in. 148 00:10:14,510 --> 00:10:19,410 Most of their initial success is based on word of mouth and a marketing 149 00:10:19,410 --> 00:10:22,410 that doesn't let the truth get in the way of a sale. 150 00:10:23,210 --> 00:10:28,790 By July 2005, less than six months after they've opened shop at a Houston office 151 00:10:28,790 --> 00:10:33,870 building, A andO's website falsely claims to have satellite offices in San 152 00:10:33,870 --> 00:10:36,370 Antonio, San Francisco, and Los Angeles. 153 00:10:36,970 --> 00:10:40,570 All lies, says IRS Special Agent Rick Raven. 154 00:10:41,320 --> 00:10:48,160 You read further on this website, and it talks about the 150 people nationwide 155 00:10:48,160 --> 00:10:53,480 that A andO employed, including CPAs, insurance and security attorneys. 156 00:10:54,260 --> 00:10:59,620 A andO had four employees who did mostly clerical work in the Houston office. 157 00:11:00,560 --> 00:11:06,160 But even if their marketing materials are a lie, their ambitions aren't. 158 00:11:06,960 --> 00:11:10,940 To expand the operation, they've begun aggressively training a growing 159 00:11:10,940 --> 00:11:16,340 nationwide sales staff composed primarily of independent insurance 160 00:11:16,820 --> 00:11:23,120 As part of the training for the agents were included all of these lies about 161 00:11:23,120 --> 00:11:28,300 success of A andO to essentially brainwash their agents to help them then go out 162 00:11:28,300 --> 00:11:30,600 and spread more falsehoods about A andO's success. 163 00:11:32,330 --> 00:11:37,770 These deceptions quickly bring A andO to the attention of Letha Sparks. She's an 164 00:11:37,770 --> 00:11:40,630 investigator for the Texas State Securities Board. 165 00:11:41,370 --> 00:11:45,350 Fifteen years of tenacious financial detective work has earned her an 166 00:11:45,350 --> 00:11:48,590 affectionate office nickname, Lethal Letha. 167 00:11:49,490 --> 00:11:52,270 Lethal Letha realizes there's a big problem. 168 00:11:52,780 --> 00:11:57,620 Under Texas law, A andO's bonded life settlements are considered securities 169 00:11:57,620 --> 00:12:02,900 than life insurance. But most of A andO's sales force are insurance agents, not 170 00:12:02,900 --> 00:12:04,500 licensed securities brokers. 171 00:12:05,340 --> 00:12:09,800 If you have an insurance license in Texas, you can sell a life insurance 172 00:12:09,800 --> 00:12:15,740 to somebody. You can sell health insurance to that person. Or you can 173 00:12:15,740 --> 00:12:16,740 a fixed annuity. 174 00:12:17,000 --> 00:12:19,160 That's all you're permitted to sell. 175 00:12:20,680 --> 00:12:25,340 But the big commissions A andO pays are enough to make many sales agents ignore 176 00:12:25,340 --> 00:12:30,180 the law, including that estate planner who connected Paula Whitaker Hancock 177 00:12:30,180 --> 00:12:31,180 A andO. 178 00:12:31,380 --> 00:12:34,340 He did not have the license I found out later. 179 00:12:34,600 --> 00:12:40,240 $10 ,000 went to him as commission, so dollar signs in someone's eyes are the 180 00:12:40,240 --> 00:12:43,260 things that make you maybe turn your head. 181 00:12:44,280 --> 00:12:46,980 Fudging the truth pays off for A andO. 182 00:12:47,680 --> 00:12:53,380 Between 2004 and 2007, they would take in nearly $80 million from more than 600 183 00:12:53,380 --> 00:12:54,680 investor contracts. 184 00:12:55,060 --> 00:12:59,940 And much of that money is just sitting around in A andO's accounts to keep the 185 00:12:59,940 --> 00:13:00,940 policies going. 186 00:13:01,420 --> 00:13:05,120 It's a perfect storm of opportunity and temptation. 187 00:13:05,700 --> 00:13:11,020 In reality, that money just passed through those escrow accounts or went 188 00:13:11,020 --> 00:13:13,580 directly to the pockets of the principals of A andO. 189 00:13:14,860 --> 00:13:18,820 Chris Allmendinger will siphon nearly $8 million for himself. 190 00:13:19,320 --> 00:13:23,720 He buys a fleet of sports cars, including a Lamborghini, Bentley, and a 191 00:13:23,720 --> 00:13:24,720 Maserati. 192 00:13:25,120 --> 00:13:30,180 He spends more than a million buying this 14 -room mansion less than three 193 00:13:30,180 --> 00:13:31,340 from A andO's office. 194 00:13:31,740 --> 00:13:35,840 There's an infinity pool and hot tub overlooking the terrace backyard. 195 00:13:37,020 --> 00:13:42,060 Houston is a strange city in that it has a lot of residential areas that are... 196 00:13:42,360 --> 00:13:46,880 Very exclusive, but right in the heart of the city. And that's where this is. 197 00:13:47,980 --> 00:13:54,340 He fills it with a $100 ,000 Steinway Baby Grand piano and a bar with a pool 198 00:13:54,340 --> 00:13:59,360 table. And he jumps into Houston's social scene, lavishly spending on 199 00:13:59,360 --> 00:14:02,680 fundraisers and charity benefits like this costume party. 200 00:14:03,140 --> 00:14:09,060 It was important to him to appear to be wealthy and to have the trappings of 201 00:14:09,060 --> 00:14:11,820 wealth and to flaunt that wealth. 202 00:14:12,220 --> 00:14:13,220 That's what he did. 203 00:14:14,620 --> 00:14:19,560 Partner Brent Oncal is no slouch himself when it comes to raiding A andO's 204 00:14:19,560 --> 00:14:20,560 accounts. 205 00:14:20,800 --> 00:14:25,600 He buys this nearly 7 ,000 -square -foot mansion, complete with nine bathrooms, 206 00:14:25,920 --> 00:14:29,580 in another exclusive area of Houston near A andO's headquarters. 207 00:14:30,280 --> 00:14:32,020 Not a shabby place at all. 208 00:14:32,220 --> 00:14:35,920 It's a nice area. It's a secluded area. 209 00:14:36,420 --> 00:14:39,900 It's near downtown, but it's one of the tonier. 210 00:14:40,380 --> 00:14:41,720 Addresses in Houston. 211 00:14:42,760 --> 00:14:45,620 The neighborhood comes with an exotic appeal. 212 00:14:46,120 --> 00:14:49,360 Wild peacocks roam freely through the yards. 213 00:14:50,280 --> 00:14:54,760 Almendinger and Ancal finally have the life they've dreamed of. But to keep it, 214 00:14:54,800 --> 00:14:56,220 they need to find more money. 215 00:14:56,500 --> 00:14:57,500 Fast. 216 00:14:58,080 --> 00:15:02,740 The more you work the scam, the more money you start getting, the more you 217 00:15:02,740 --> 00:15:05,380 to keep it going. And that's where they always get into trouble. 218 00:15:06,220 --> 00:15:08,020 Next on American Greed. 219 00:15:08,780 --> 00:15:12,820 One of A andO's top salesmen can't sell his policies fast enough. 220 00:15:13,060 --> 00:15:16,720 And we're going to maximize our assets, and we're going to be our own bank. 221 00:15:17,300 --> 00:15:21,540 But ripping off a former federal agent is never a good plan. 222 00:15:22,000 --> 00:15:23,740 I look at them like a mad dog. 223 00:15:24,960 --> 00:15:28,240 They've committed a crime, and they could be put down. 224 00:15:40,080 --> 00:15:45,160 One of ANO's top sales reps is Richmond, Virginia -based Tommy Bromseth. 225 00:15:45,340 --> 00:15:48,420 Leverage is really important, but you know what's important also about 226 00:15:48,640 --> 00:15:50,160 You've got to have the right tool. 227 00:15:50,500 --> 00:15:55,560 He's a 66 -year -old insurance agent and a former pastor still heavily involved 228 00:15:55,560 --> 00:15:56,560 in his church. 229 00:15:56,640 --> 00:16:01,260 Recently, he's been preaching a new path to financial salvation in marketing 230 00:16:01,260 --> 00:16:04,020 videos touting ANO's life settlements. 231 00:16:04,400 --> 00:16:06,260 I'm looking forward to sharing with you. 232 00:16:06,730 --> 00:16:11,150 Some great idea of a strategy that will help you double your net worth, double 233 00:16:11,150 --> 00:16:14,850 your IRAs, double your 401ks, all without incurring any risk. 234 00:16:16,170 --> 00:16:20,230 Bromseth may not live quite as nicely as his A andO bosses, but he's quickly 235 00:16:20,230 --> 00:16:22,470 become an important part of their operation. 236 00:16:23,730 --> 00:16:25,890 10 % guaranteed. 237 00:16:28,880 --> 00:16:35,180 Between July 2006 and November 2007, Bromseth will sell more than $3 million 238 00:16:35,180 --> 00:16:38,200 worth of ANO products to area investors. 239 00:16:38,960 --> 00:16:42,960 Get up on the couch. Give us a call. It'll be the best time you've ever 240 00:16:44,440 --> 00:16:49,680 One of Bromseth's friends and clients is Philip Kersey, not the sort of person 241 00:16:49,680 --> 00:16:51,480 who's going to fall for any old story. 242 00:16:52,320 --> 00:16:57,180 He spent 28 years as an agent of the Bureau of Alcohol, Tobacco, and 243 00:16:58,360 --> 00:17:00,740 During that time, we worked moonshine. 244 00:17:01,380 --> 00:17:06,560 We worked gun trafficking, explosives, a lot of different things. 245 00:17:07,420 --> 00:17:12,740 Over the years, he's seen his share of smooth talkers and heard enough tall 246 00:17:12,740 --> 00:17:14,300 tales to keep his eyes open. 247 00:17:14,660 --> 00:17:20,480 I did get a good experience in law enforcement and reading people, and I 248 00:17:20,480 --> 00:17:21,469 shouldn't be. 249 00:17:21,470 --> 00:17:22,790 considered a gullible person. 250 00:17:24,270 --> 00:17:28,690 In 2006, Kersey's living just outside Richmond, Virginia. 251 00:17:29,010 --> 00:17:32,450 He's unhappy with his annuities and looking for better returns. 252 00:17:33,310 --> 00:17:40,070 I had gone through two years with a zero growth, both years, and we were 253 00:17:40,070 --> 00:17:45,870 talking about other opportunities, other options, and that's when the life 254 00:17:45,870 --> 00:17:46,870 annuities came up. 255 00:17:48,189 --> 00:17:55,050 Tommy Bromseth jumps on the chance to push A andO. He talks about the bonded 256 00:17:55,050 --> 00:17:59,570 settlements being zero risk, guaranteed, will double your money in seven years 257 00:17:59,570 --> 00:18:00,570 or less. 258 00:18:02,130 --> 00:18:06,690 Kersey examines A andO's website carefully. He likes what he sees. 259 00:18:07,690 --> 00:18:12,270 Everything that I checked, everything that I looked for, came back positive. 260 00:18:12,830 --> 00:18:16,910 The better this thing got, the more guaranteed it got. 261 00:18:18,090 --> 00:18:19,910 the more I should have been afraid of it. 262 00:18:20,970 --> 00:18:27,710 Philip Kersey finally pulled the trigger and invests $105 ,000 at the 263 00:18:27,710 --> 00:18:28,910 end of 2006. 264 00:18:29,770 --> 00:18:35,870 The maturity date for my contract with that policy was May 1, 2010. 265 00:18:36,970 --> 00:18:43,430 And on that date, they promised to pay $145 ,990. 266 00:18:45,380 --> 00:18:48,000 That's a return of 10 % per year. 267 00:18:48,260 --> 00:18:49,300 It sounds great. 268 00:18:49,580 --> 00:18:54,320 But Kersey doesn't know Tommy Bromseth is only a local insurance sales agent. 269 00:18:54,500 --> 00:18:59,020 And legally, he's not allowed to sell securities like A andO's bonded life 270 00:18:59,020 --> 00:19:03,080 settlements. I don't think there's any question that Tommy knew what he was 271 00:19:03,080 --> 00:19:04,500 doing was wrong. 272 00:19:05,520 --> 00:19:10,000 He was making way too much money doing it. I think he just led me down a path. 273 00:19:11,620 --> 00:19:12,820 Back in Texas. 274 00:19:13,310 --> 00:19:17,670 Regulators like Lethal Letha Sparks are wise to what's going on. 275 00:19:17,910 --> 00:19:22,750 They've been dogging ANO partners Chris Armendinger and Brent Oncow for months, 276 00:19:22,810 --> 00:19:25,330 trying to force them to clean up their act. 277 00:19:25,690 --> 00:19:28,190 They were targeting mostly senior citizens. 278 00:19:28,610 --> 00:19:33,730 They were targeting retirement accounts, targeting in some cases teachers, 279 00:19:34,210 --> 00:19:38,150 retired state and federal employees. 280 00:19:39,720 --> 00:19:43,200 Under pressure, the partners decide it's time for some changes. 281 00:19:44,100 --> 00:19:49,980 They shut down their Texas operation and reincorporate in Illinois, at least on 282 00:19:49,980 --> 00:19:55,860 paper. It was really a cynical, shameful ploy to try and suggest that somehow 283 00:19:55,860 --> 00:20:00,140 they were bringing, you know, order to the criminal chaos when in fact they 284 00:20:00,140 --> 00:20:01,140 not. 285 00:20:01,720 --> 00:20:07,340 The new A andO address isn't in Illinois, though. It's in a gleaming high -rise in 286 00:20:07,340 --> 00:20:08,920 Houston's Galleria District. 287 00:20:09,500 --> 00:20:12,440 just around the corner from their previous office building. 288 00:20:13,500 --> 00:20:17,440 They also changed their bonded life settlements to a new product. 289 00:20:18,020 --> 00:20:21,820 They moved on to what they call the capital appreciation bond, where they 290 00:20:21,820 --> 00:20:27,440 a portfolio of life insurance policies, and investors would actually invest in 291 00:20:27,440 --> 00:20:29,180 the securities that came out of that. 292 00:20:30,040 --> 00:20:34,520 They continue to aggressively inflate their track record and marketing 293 00:20:34,520 --> 00:20:35,520 materials. 294 00:20:35,740 --> 00:20:41,400 This website also talks about their past track record of leveraging $375 million 295 00:20:41,400 --> 00:20:47,460 into $800 million in less than five years with a rate of return of 16%. Just 296 00:20:47,460 --> 00:20:52,900 made up money to show unwitting investors how successful their company 297 00:20:53,580 --> 00:20:58,680 This is almost eye -popping and drew a lot of investors in. 298 00:21:00,120 --> 00:21:06,120 Their marketing efforts became more and more reckless and more and more alluring 299 00:21:06,120 --> 00:21:07,820 as time went on. 300 00:21:08,180 --> 00:21:11,340 But their most important move is a personnel change. 301 00:21:11,740 --> 00:21:17,260 When Allmendinger and OnCal promote top salesman Adly Abduwahab to full partner 302 00:21:17,260 --> 00:21:18,700 in the fall of 2006. 303 00:21:19,280 --> 00:21:23,580 It's a marriage of inconvenience for Allmendinger. He and Abduwahab don't 304 00:21:23,580 --> 00:21:27,840 each other. But they do have 80 million reasons to work together. 305 00:21:28,490 --> 00:21:34,230 This case is all about greed. It really is about these principles trying to draw 306 00:21:34,230 --> 00:21:40,330 in as much illegal, illicit money through whatever means from innocent, 307 00:21:40,510 --> 00:21:41,510 unsuspecting investors. 308 00:21:42,730 --> 00:21:48,070 Next on American Greed, as the innocent get caught deeper in A andO's web. 309 00:21:48,590 --> 00:21:55,070 Everybody could have been a winner in this, but the greed overtook it, and 310 00:21:55,070 --> 00:21:56,070 that's what ruined it. 311 00:21:56,380 --> 00:21:58,760 The con men turn on each other. 312 00:21:59,080 --> 00:22:03,160 And that's where we get a level of creativity here that borders almost on 313 00:22:15,160 --> 00:22:20,980 Paula Whitaker Hancock has invested $1 million with A andO, hoping to create a 314 00:22:20,980 --> 00:22:23,240 nest egg for her only child, Ryan. 315 00:22:24,200 --> 00:22:28,740 But 12 months after she sends her check, the unspeakable happens. 316 00:22:29,180 --> 00:22:34,420 On January the 29th, 2007, my son died. 317 00:22:37,140 --> 00:22:42,600 My life was over because he had been the center of my life. 318 00:22:44,260 --> 00:22:46,060 It's like going over the cliff. 319 00:22:47,880 --> 00:22:50,440 You see no future. My future was him. 320 00:22:52,020 --> 00:22:53,300 Ryan was 25. 321 00:22:54,110 --> 00:22:58,230 in the prime of his life, but his breathing stopped prior to routine back 322 00:22:58,230 --> 00:22:59,230 surgery. 323 00:23:00,190 --> 00:23:04,590 Determined to make something good from her tragedy, Paula creates a nursing 324 00:23:04,590 --> 00:23:08,030 scholarship in his name at nearby Lone Star College. 325 00:23:08,550 --> 00:23:15,490 That gave me a vision, gave me a direction of something that I 326 00:23:15,490 --> 00:23:16,730 could do with my life. 327 00:23:17,010 --> 00:23:21,110 It was continuation to help people, but the legacy. 328 00:23:21,960 --> 00:23:23,520 What's the most important thing? 329 00:23:24,580 --> 00:23:27,720 She also starts a foundation in his memory. 330 00:23:28,260 --> 00:23:34,020 I made up my mind to set up the Ryan Paul Whitaker Memorial Foundation 331 00:23:34,020 --> 00:23:39,680 and to do what Ryan wanted to do, and that was to help people. 332 00:23:40,380 --> 00:23:45,280 And the A andO money was to be used for that foundation. 333 00:23:46,890 --> 00:23:52,010 But Paula doesn't know that A andO owners Chris Allmendinger, Brenton Cowell, and 334 00:23:52,010 --> 00:23:56,150 Adly Abduwalhab have been using her money and that of hundreds of other 335 00:23:56,150 --> 00:23:58,310 investors for their own pleasure. 336 00:23:58,970 --> 00:24:02,790 As soon as the checks cleared, they were sent to A andO, and A 337 00:24:02,790 --> 00:24:05,390 whatever they wanted to with the money, and they did. 338 00:24:06,190 --> 00:24:11,650 By the summer of 2007, constant pressure from state regulators convinces 339 00:24:11,650 --> 00:24:14,990 Allmendinger it's a good time to unload A andO. 340 00:24:15,420 --> 00:24:18,160 and let someone else worry about the never -ending questions. 341 00:24:18,900 --> 00:24:24,280 Allmendinger decides he's done, he's out, and he's going to sell his stake in 342 00:24:24,280 --> 00:24:24,879 the company. 343 00:24:24,880 --> 00:24:28,840 On call says, yeah, I'm out too, I'm selling my stake, but that's not what he 344 00:24:28,840 --> 00:24:29,799 did. 345 00:24:29,800 --> 00:24:34,800 Liars and thieves typically come to a disagreement, and we saw that to a 346 00:24:34,800 --> 00:24:35,800 here. 347 00:24:36,100 --> 00:24:40,920 OnCal and Abdulwalhab decide they aren't ready to walk away from A andO's millions 348 00:24:40,920 --> 00:24:41,920 just yet. 349 00:24:42,160 --> 00:24:46,760 Together, they hire an attorney named Russell Mackert to handle a different 350 00:24:46,760 --> 00:24:48,380 than the one Allmendinger expects. 351 00:24:50,040 --> 00:24:54,420 Operating out of a nondescript Houston office, Mackert engineers the sale of A 352 00:24:54,420 --> 00:24:59,800 andO to a company named Blue Diamond in Nevis, West Indies for $2 .2 million. 353 00:25:00,840 --> 00:25:06,380 Allmendinger thinks they are all clearing $750 ,000 to walk away from A 354 00:25:06,680 --> 00:25:08,380 But the sale is just a show. 355 00:25:08,890 --> 00:25:14,150 And Abdulwalhab and Oncaller handed checks for just $750 to sell the sham. 356 00:25:15,850 --> 00:25:19,450 Allmendinger was literally tricked out of his involvement in the corporation. 357 00:25:20,010 --> 00:25:24,150 And that's where we get a level of creativity here that borders almost on 358 00:25:24,750 --> 00:25:30,470 The sales contract is signed by a mysterious man named R .J. Stevenson. 359 00:25:30,470 --> 00:25:33,090 only thing seen from Stevenson is a signature. 360 00:25:33,870 --> 00:25:37,150 R .J. Stevenson is sort of like... 361 00:25:38,480 --> 00:25:42,760 a character out of an Ian Fleming novel in the sense that this is a wholly 362 00:25:42,760 --> 00:25:48,300 fictitious person who the fraudsters create his identity because they think 363 00:25:48,300 --> 00:25:50,020 name sounds vaguely British. 364 00:25:51,000 --> 00:25:56,840 The purpose of this sham sale is twofold. First, it allows Abdulwalhab 365 00:25:56,840 --> 00:25:59,960 to kick Christian Allmendinger out of the company he started. 366 00:26:00,720 --> 00:26:03,560 But it also further insulated... 367 00:26:04,080 --> 00:26:08,900 Mr. Onkel and Mr. Abduwahab from the state regulators that were looking at A 368 00:26:09,000 --> 00:26:13,700 They now were claiming that they sold the company, had nothing to do with it. 369 00:26:14,500 --> 00:26:19,420 To bury their secret further, Abduwahab and Onkel have attorney Russell Mackert 370 00:26:19,420 --> 00:26:24,320 sell Blue Diamond to another fake company named Physicians Trust, also 371 00:26:24,320 --> 00:26:25,320 Nevis. 372 00:26:25,520 --> 00:26:30,160 It's a lucrative series of transactions for Mackert. He'll eventually bill A andO 373 00:26:30,160 --> 00:26:32,400 $250 ,000 for his services. 374 00:26:33,640 --> 00:26:39,440 But it's a much better deal for Abdul Wahab. Between 2005 and 2008, he pockets 375 00:26:39,440 --> 00:26:40,820 more than $8 million. 376 00:26:43,000 --> 00:26:47,860 He moves from this exclusive gated community just north of Houston to a 377 00:26:47,860 --> 00:26:52,840 -dollar mansion with seven bedrooms and a swimming pool surrounded by an acre of 378 00:26:52,840 --> 00:26:53,900 landscaped property. 379 00:26:54,760 --> 00:27:01,720 He was siphoning off his share of the proceeds to buy vehicles, a BMW, a Jeep, 380 00:27:01,720 --> 00:27:03,640 very large custom -built estate. 381 00:27:04,420 --> 00:27:07,900 Certainly fraud, waste, and abuse of investors' money. 382 00:27:09,200 --> 00:27:14,960 He buys a Ferrari and BMW and drops $60 ,000 on watches and jewelry. 383 00:27:15,340 --> 00:27:19,540 Ever the good son, he even gives $1 million to his family. 384 00:27:20,920 --> 00:27:25,520 Unaware their funds are being looted, Investors like Philip Kersey are looking 385 00:27:25,520 --> 00:27:26,920 forward to their payouts. 386 00:27:27,380 --> 00:27:30,640 Kersey's money is scheduled to arrive in May 2010. 387 00:27:31,380 --> 00:27:38,240 But in 2007, just months after investing $105 ,000, the former ATF 388 00:27:38,240 --> 00:27:40,440 agent begins to smell a rat. 389 00:27:42,060 --> 00:27:47,480 When he has trouble changing the beneficiary on his account, he calls the 390 00:27:47,480 --> 00:27:48,480 headquarters in Houston. 391 00:27:48,700 --> 00:27:52,060 I felt like I was talking to a storefront with one person in it. 392 00:27:52,350 --> 00:27:53,350 answering phones. 393 00:27:53,790 --> 00:27:57,070 It just didn't have the feel of a large company. 394 00:27:57,350 --> 00:28:01,470 And I guess that's one of those things where being an investigator for 30 395 00:28:01,570 --> 00:28:02,790 it piqued my interest. 396 00:28:04,270 --> 00:28:09,650 Soon after, Kersey gets a call from Tommy Bromseth, the sales rep who sold 397 00:28:09,650 --> 00:28:10,569 the investment. 398 00:28:10,570 --> 00:28:14,270 He was very quick to come back to me after I called the office. 399 00:28:14,490 --> 00:28:18,850 And basically what he let me know was, hey, if you need anything, call me. 400 00:28:19,270 --> 00:28:20,370 Don't call the office. 401 00:28:21,080 --> 00:28:25,080 And that was my second feeling that something wasn't quite right. 402 00:28:25,760 --> 00:28:29,840 But Bromseth knows the right things to say to calm his fears. 403 00:28:30,260 --> 00:28:36,640 We had a discussion about going out to visit A andO. But before we could go, he 404 00:28:36,640 --> 00:28:38,240 told me one day that he had already been. 405 00:28:39,040 --> 00:28:43,620 And he gave me this brilliant rendering of what A andO looked like. 406 00:28:44,400 --> 00:28:48,120 Marble floors, big building, nice, great people. 407 00:28:50,030 --> 00:28:52,490 I guess you could say being a fool, I believed him. 408 00:28:53,990 --> 00:28:59,290 Despite his misgivings, Kersey decides to sit and wait, hoping his investment 409 00:28:59,290 --> 00:29:02,250 will be secure until its 2010 maturity. 410 00:29:02,850 --> 00:29:04,250 But the clock is ticking. 411 00:29:04,950 --> 00:29:08,530 It was just a matter of time before A andO unraveled at that point. It was just a 412 00:29:08,530 --> 00:29:14,590 few short months. But in those few short months, both Brent and Adley were able 413 00:29:14,590 --> 00:29:17,390 to continue to stipend assets out of that company. 414 00:29:18,730 --> 00:29:24,770 Coming up on American Greed. The A andO fraud was a mirage in the financial 415 00:29:24,770 --> 00:29:26,590 that when you got up close, it just vanished. 416 00:29:28,210 --> 00:29:32,670 The feds get wind of A andO, and now they're closing in. 417 00:29:33,010 --> 00:29:37,730 None of these things can go on forever, and so they always collapse. 418 00:29:38,330 --> 00:29:40,790 Would you fall for A andO's promises? 419 00:29:41,070 --> 00:29:45,630 Listen to their sales pitch at AmericanGreed .CNBC .com. 420 00:29:46,310 --> 00:29:47,410 Feeling greedy? 421 00:29:48,060 --> 00:29:52,400 Want more than your share of behind -the -scenes dirt? Follow at AmericanGreedTV 422 00:29:52,400 --> 00:29:54,680 on Twitter. We'll be right back. 423 00:30:02,980 --> 00:30:07,700 Adly Abduwalhab and Brent Oncal have successfully kicked partner Chris 424 00:30:07,700 --> 00:30:09,940 Allmendinger out of their life settlement scam. 425 00:30:10,320 --> 00:30:14,300 And they've hidden their involvement by selling A andO to two West Indies shell 426 00:30:14,300 --> 00:30:15,300 companies. 427 00:30:15,560 --> 00:30:19,860 To throw off regulators, they've invented an imaginary Englishman named R 428 00:30:20,000 --> 00:30:21,780 Stevenson to serve as the front. 429 00:30:22,200 --> 00:30:26,080 Well, if somebody doesn't exist, they have no history, it makes it very hard 430 00:30:26,080 --> 00:30:29,840 the regulators to find out who this person is, and so it became a convenient 431 00:30:29,840 --> 00:30:34,260 field, if you will, for this reconstituted A andO. 432 00:30:35,120 --> 00:30:40,060 But to sell the ruse, Ancal and Abdulwalhab need a real person to run 433 00:30:40,060 --> 00:30:42,380 company and meet with nosy investigators. 434 00:30:43,530 --> 00:30:47,290 Essentially, they were stealth owners, if you will, in this company, and so 435 00:30:47,290 --> 00:30:51,990 needed a figurehead to be the public face of the new A andO. 436 00:30:52,830 --> 00:30:58,070 In September 2007, they recruit Brent Oncow's former fraternity brother, David 437 00:30:58,070 --> 00:30:59,470 White, to be president. 438 00:31:00,010 --> 00:31:04,330 He really didn't know what was happening at the company at the time he came in. 439 00:31:04,370 --> 00:31:07,910 He thought he was being asked to actually step in and help turn around a 440 00:31:07,910 --> 00:31:08,910 legitimate enterprise. 441 00:31:10,160 --> 00:31:12,980 White quickly realizes he's caught in a scam. 442 00:31:13,340 --> 00:31:18,200 But when he meets with securities investigators, including lethal Letha 443 00:31:18,380 --> 00:31:21,080 he does everything he can to protect his bosses. 444 00:31:21,960 --> 00:31:28,900 He lied substantially, significantly when he came in, voluntarily. 445 00:31:29,060 --> 00:31:32,800 And usually when people come in voluntarily, they're going to be 446 00:31:34,000 --> 00:31:37,640 So it was one big lie after another. 447 00:31:38,860 --> 00:31:43,200 The biggest lie he spread is that A andO is keeping enough money in the escrow 448 00:31:43,200 --> 00:31:45,800 accounts to pay premiums when they come due. 449 00:31:46,920 --> 00:31:50,120 Unbeknownst to them, that money that was supposed to be paying the premiums 450 00:31:50,120 --> 00:31:53,800 continued to go into the pockets of Mr. Onkel and Abdul Wahab. 451 00:31:54,900 --> 00:31:59,900 But he also assures them he is in contact with R .J. Stevenson, the 452 00:31:59,900 --> 00:32:02,240 owner of A andO's new parent company. 453 00:32:02,750 --> 00:32:03,770 physicians trust. 454 00:32:04,050 --> 00:32:08,930 He claims to have spoken to Mr. Stephenson by phone, but when he's asked 455 00:32:08,930 --> 00:32:13,110 telephone number, oh, my cell phone just died. I don't know it. 456 00:32:14,610 --> 00:32:19,670 White's presidency is short -lived. After five months of questions and lies, 457 00:32:19,670 --> 00:32:20,970 resigned from A andO. 458 00:32:21,410 --> 00:32:24,890 Attorney Russell Mackert steps in to publicly run the company. 459 00:32:25,910 --> 00:32:29,770 In 2008, the investigation into A andO picks up speed. 460 00:32:30,620 --> 00:32:35,800 Letha Sparks sends investors, including Philip Kersey, a letter asking about 461 00:32:35,800 --> 00:32:36,900 their A andO experience. 462 00:32:37,640 --> 00:32:40,100 Basically, I sent them all the information I could. 463 00:32:40,580 --> 00:32:42,700 I sent them everything they asked for. 464 00:32:43,880 --> 00:32:48,360 Thanks to the hard detective work of Letha Sparks, A andO comes to the 465 00:32:48,360 --> 00:32:51,960 of a whole different level of investigators, the federal government. 466 00:32:53,160 --> 00:32:57,380 Civil regulators are often kind of the early warning system. Often they're the 467 00:32:57,380 --> 00:33:02,000 canary in the coal mine that may catch wind of something before it ever comes 468 00:33:02,000 --> 00:33:04,080 the attention of criminal investigators. 469 00:33:04,480 --> 00:33:06,100 That's exactly what happened here. 470 00:33:06,820 --> 00:33:11,880 The Financial Task Force is created in Virginia, bringing together the FBI, the 471 00:33:11,880 --> 00:33:17,500 IRS, and the U .S. Postal Inspection Service to take down A andO. All this 472 00:33:17,500 --> 00:33:18,500 us to... 473 00:33:18,510 --> 00:33:22,530 do a deep dive, something that could have taken a whole lot longer that we 474 00:33:22,530 --> 00:33:27,150 able to do in a series of months, and then stop the fraud in its tracks. 475 00:33:27,770 --> 00:33:29,430 Double your money in seven years or less. 476 00:33:29,710 --> 00:33:34,890 Amazing. One local A andO salesman comes to their attention almost immediately. 477 00:33:35,170 --> 00:33:39,790 The video star, 66 -year -old Richmond resident Tommy Bromseth. 478 00:33:40,070 --> 00:33:44,550 When we initially began speaking with Bromseth, there was some hesitancy 479 00:33:44,550 --> 00:33:46,630 initially, but as we... 480 00:33:46,910 --> 00:33:51,950 got more involved, he became more cooperative and began to reveal 481 00:33:51,950 --> 00:33:53,510 that was usable in our investigation. 482 00:33:54,330 --> 00:33:59,450 Peeling the layers, investigators realize Abdul Wahab and Ancal have been 483 00:33:59,450 --> 00:34:02,190 running the operation from the shadows all along. 484 00:34:02,590 --> 00:34:07,390 We quickly realized the scope and expanse of this and the impact that this 485 00:34:07,390 --> 00:34:11,870 had on victims across the country. 486 00:34:13,070 --> 00:34:16,889 More than $20 million has already been looted from A andO. 487 00:34:17,670 --> 00:34:23,090 Now, Abdul Wahab and Oncal make a last series of money grabs, with Attorney 488 00:34:23,090 --> 00:34:25,870 Russell Mackert helping them every step of the way. 489 00:34:26,550 --> 00:34:32,989 $12 .6 million of A andO money was taken out of the A andO bank accounts and run 490 00:34:32,989 --> 00:34:33,649 through Mr. 491 00:34:33,650 --> 00:34:35,790 Mackert's attorney account. 492 00:34:36,750 --> 00:34:41,050 And from that, Mr. Oncal got over $4 million. 493 00:34:42,060 --> 00:34:45,480 plus a Ferrari that was over $400 ,000. 494 00:34:46,219 --> 00:34:51,900 As A andO spirals out of control, the lawyer desperately tries to keep the 495 00:34:51,900 --> 00:34:58,620 afloat. Mackard was left to take the calls from the concerned investors when 496 00:34:58,620 --> 00:35:03,740 was readily apparent to them that this was a thinking ship and was in that role 497 00:35:03,740 --> 00:35:05,660 as sort of the face of the corporation. 498 00:35:07,580 --> 00:35:10,760 Mackard needs to pay $120 ,000 a month. 499 00:35:11,180 --> 00:35:13,820 to keep A andO's life settlement policies active. 500 00:35:14,180 --> 00:35:18,080 But most of the money in his escrow accounts has already been bled dry. 501 00:35:18,480 --> 00:35:21,540 But the bigger problem is Provident Capital indemnity. 502 00:35:21,980 --> 00:35:26,920 PCI is the Costa Rican company that guarantees to pay out policies even if 503 00:35:26,920 --> 00:35:29,200 insured live past their maturation dates. 504 00:35:29,500 --> 00:35:32,080 But now PCI is refusing to pay. 505 00:35:33,920 --> 00:35:37,980 Mr. Mackert even sent a letter out to the investors telling them... 506 00:35:38,280 --> 00:35:42,700 Looks like PCI is not going to pay off, so by December you're going to have to 507 00:35:42,700 --> 00:35:46,080 be prepared to make premium payments because we don't have any money to pay 508 00:35:46,080 --> 00:35:47,080 premiums. 509 00:35:47,700 --> 00:35:53,680 Unknown to Mackert, PCI's owner has been running his own unrelated scam, and 510 00:35:53,680 --> 00:35:57,120 he's about to be arrested for defrauding clients around the world. 511 00:35:57,720 --> 00:36:03,100 Well, it turned out PCI had its own global fraud to the tune of a half 512 00:36:03,100 --> 00:36:05,700 dollars. And so the poor investor... 513 00:36:06,960 --> 00:36:08,700 essentially get screwed both ways. 514 00:36:10,520 --> 00:36:14,720 Unable to pay the premiums, attorney Russell Mackert has run out of options. 515 00:36:15,640 --> 00:36:21,840 In September 2009, he places A andO into Chapter 11 bankruptcy, forever 516 00:36:21,840 --> 00:36:24,340 investors' hopes of recovering their money. 517 00:36:24,760 --> 00:36:28,400 Once you enter the bankruptcy process, one of the first things you have to do 518 00:36:28,400 --> 00:36:31,800 state your assets and liabilities, and it became very clear that the money was 519 00:36:31,800 --> 00:36:32,800 no longer there. 520 00:36:34,000 --> 00:36:35,000 Up next. 521 00:36:35,480 --> 00:36:37,860 The con men scramble to save themselves. 522 00:36:38,160 --> 00:36:40,620 When a house charge comes down, it comes down quick. 523 00:36:41,440 --> 00:36:44,200 And their victims are left to pick up the pieces. 524 00:36:45,340 --> 00:36:50,940 There are days that I just want to lay down and not get up. 525 00:36:51,320 --> 00:36:52,620 But I have to get up. 526 00:36:52,960 --> 00:36:54,760 And I have to do this for my boy. 527 00:37:08,230 --> 00:37:14,130 When A andO collapses in 2009, federal investigators are stunned by the scope 528 00:37:14,130 --> 00:37:15,130 the scam. 529 00:37:15,170 --> 00:37:19,470 In less than five years, prosecutors believe the company has stolen more than 530 00:37:19,470 --> 00:37:22,050 $100 million from 800 investors. 531 00:37:23,750 --> 00:37:26,930 If you're taking that money that's supposed to pay the premiums and you're 532 00:37:26,930 --> 00:37:30,950 sticking it in your pocket and buying toys with it, that's a fraud. 533 00:37:32,170 --> 00:37:36,770 Of the missing money, nearly $30 million has gone straight into the pockets of A 534 00:37:36,770 --> 00:37:37,990 andO's management team. 535 00:37:38,730 --> 00:37:42,890 The rest has been spent on sales commissions, paying into the escrow 536 00:37:43,170 --> 00:37:47,850 and on an outside scam run by the reinsurance company Provident Capital 537 00:37:47,850 --> 00:37:54,170 Indemnity. It is like a small cancer that starts, and then it spreads, and 538 00:37:54,170 --> 00:37:56,190 it metastasizes and moves. 539 00:37:57,130 --> 00:38:03,050 In September 2010, Adli Adewalhab and original partner Christian Allmendinger 540 00:38:03,050 --> 00:38:06,390 are indicted on charges including securities fraud. 541 00:38:06,770 --> 00:38:12,190 Although Christian Allmendinger was driven from A andO in 2007, nearly $80 542 00:38:12,190 --> 00:38:14,450 disappeared while he was in charge. 543 00:38:14,950 --> 00:38:21,650 He was forced out, but that didn't make him any less culpable, any less sort of 544 00:38:21,650 --> 00:38:23,470 the genius behind this conspiracy. 545 00:38:27,120 --> 00:38:30,880 was willing to acknowledge that role and his culpability. 546 00:38:32,520 --> 00:38:37,260 Faced with overwhelming evidence, most of the conspirators quickly cooperate. 547 00:38:38,160 --> 00:38:40,680 Brett Oncal has pocketed more than $13 million. 548 00:38:41,440 --> 00:38:46,360 He pleads guilty to money laundering and mail fraud and is sentenced to 10 years 549 00:38:46,360 --> 00:38:47,360 in federal prison. 550 00:38:48,000 --> 00:38:52,960 Attorney Russell Mackert pleads guilty to bulk cash smuggling and mail fraud. 551 00:38:53,460 --> 00:38:54,700 He didn't necessarily... 552 00:38:55,310 --> 00:39:01,310 concoct the fraud or direct sales agents out into the field to market the risky 553 00:39:01,310 --> 00:39:03,710 products, but he played a key role in it. 554 00:39:04,690 --> 00:39:06,950 Mackert is sentenced to 15 years. 555 00:39:08,450 --> 00:39:13,810 David White, the figurehead president, who spent less than six months at A andO, 556 00:39:13,890 --> 00:39:17,650 pleads guilty to a single fraud count and receives a five -year term. 557 00:39:18,830 --> 00:39:22,970 Salesman Tommy Bromseth also pleads and receives a three -year sentence. 558 00:39:23,790 --> 00:39:25,730 He's released 14 months later. 559 00:39:26,490 --> 00:39:31,590 Only Christian Allmendinger and Adly Abduwalhab decide to test their fate and 560 00:39:31,590 --> 00:39:32,590 to trial. 561 00:39:34,050 --> 00:39:37,050 Prosecutors are ready, and the evidence is overwhelming. 562 00:39:37,610 --> 00:39:41,930 This was, in some respects, an incredibly sophisticated and complicated 563 00:39:42,930 --> 00:39:47,590 But on the other hand, as we said to the jury, this case is ultimately about a 564 00:39:47,590 --> 00:39:51,170 bunch of fraudsters who lied to old people and stole their money. 565 00:39:52,200 --> 00:39:56,320 And at the end of the day, it was as simple as that and as sad as that. 566 00:39:57,060 --> 00:40:02,200 After a trial that lasts only 10 days, Allmendinger is found guilty on all 567 00:40:02,200 --> 00:40:05,140 counts and sentenced to 45 years in prison. 568 00:40:06,180 --> 00:40:10,940 Two and a half months later, a jury deliberates less than three hours before 569 00:40:10,940 --> 00:40:15,560 convicting Adli Adewaham. He's sentenced to 60 years in prison. 570 00:40:15,880 --> 00:40:20,660 These are effectively life sentences. These are white -collar criminals who 571 00:40:20,660 --> 00:40:21,529 never going to... 572 00:40:21,530 --> 00:40:24,050 walk free outside the walls of a federal prison. 573 00:40:25,050 --> 00:40:31,110 They've lost everything, their families, reputations, and freedom, and destroyed 574 00:40:31,110 --> 00:40:33,410 hundreds of victims' lives in the process. 575 00:40:34,070 --> 00:40:35,590 It's enough to break your heart. 576 00:40:36,230 --> 00:40:43,150 They went from having a reasonable income that was supposed to last for the 577 00:40:43,150 --> 00:40:47,690 next 10, 15, 20, 30 years to having absolutely nothing. 578 00:40:49,800 --> 00:40:54,600 Christian Allmendinger's mansion sits vacant, waiting to be auctioned by U .S. 579 00:40:54,600 --> 00:40:59,980 Marshals. The property has been repeatedly vandalized, and now the scum 580 00:40:59,980 --> 00:41:03,560 pool offers only a tantalizing hint of what once was. 581 00:41:05,500 --> 00:41:11,360 The house will be sold through forfeiture, but investors have little 582 00:41:11,360 --> 00:41:12,580 recovering much money. 583 00:41:13,960 --> 00:41:17,940 Philip Kersey invested $105 ,000 in 2006. 584 00:41:18,890 --> 00:41:22,070 and hoped to make another $41 ,000 six years later. 585 00:41:23,190 --> 00:41:29,970 Instead... We went through the bankruptcy proceeding, and as a result, 586 00:41:29,970 --> 00:41:36,330 July the 6th, 2012, they sent me a check for 587 00:41:36,330 --> 00:41:39,530 $4 ,670 .86. 588 00:41:41,030 --> 00:41:43,450 So that was the end result. 589 00:41:45,600 --> 00:41:49,800 Paula Whitaker Hancock still struggles to pick up the pieces of her life. 590 00:41:50,400 --> 00:41:55,600 She's lost $1 million, but she is determined that A andO won't tarnish the 591 00:41:55,600 --> 00:41:56,740 of her son, Ryan. 592 00:41:57,660 --> 00:42:03,560 I love coming here because I can feel my son's spirit, and this is his legacy. 593 00:42:04,270 --> 00:42:09,690 It's not about stealing, and it's not about the awful things. It's the good 594 00:42:09,690 --> 00:42:15,670 things that make, I think, our country wonderful and the blessings that we 595 00:42:17,030 --> 00:42:21,950 It's all part of Paula's daily efforts to remind herself that the greed of A andO 596 00:42:21,950 --> 00:42:25,410 can't destroy or define her life. 597 00:42:26,170 --> 00:42:29,710 Every child is a gift, and he was my gift. 598 00:42:32,170 --> 00:42:38,830 I didn't get to keep him as long as I wanted to, but I will continue to do 599 00:42:38,830 --> 00:42:44,310 everything that I can to leave the legacy that he wanted, and that's 600 00:42:44,310 --> 00:42:46,930 people. I won't let them steal that. 601 00:42:47,470 --> 00:42:49,510 I will never let them steal that.