Stealing millions

A Texas businessman faces 22 to 27 years in prison after a Richmond court convicted him Wednesday for a $100 million life insurance fraud scheme.

Christian Allmendinger, 39, was one of the founders of A&O Life Funds, a company that used investors' money to buy life insurance policies from insured people at less than face value, then collected the benefits when those people died. He showed no reaction as the verdict was read guilty on all federal charges of mail fraud, money laundering and securities fraud; his wife and mother wept quietly.

U.S. District Judge Robert Payne in Virginia set sentencing for Aug. 12 and ordered Allmendinger held in custody until he can determine whether the former executive's wife has enough money to make him a flight risk. Allmendinger, who had remained free before his trial, surrendered his suit jacket and tie and was led away by a U.S. marshal.

The scam allowed him to live lavishly at the expense of over 800 victims in about 3 dozen U.S. states and Canada. John Norton, an IRS agent who testified against Allmendinger, says the businessman earned $8.4 million in less than three years. Toward the end of the trial, the jury was shown photographs of Allmendinger's sprawling Spanish-style home, a 15-carat diamond ring, a grand piano and Lamborghini and Maserati automobiles, the spoils of his ill-gotten fortune, prosecutors said.

"Christian Allmendinger stole millions from elderly retirees to buy flashy cars and a multi-million-dollar home," U.S. Attorney Neil MacBride said in a statement. "Mr. Allmendinger now has been held accountable for his crimes, and we will continue to pursue other financial fraudsters who prey on those in Virginia and throughout the country."

Prosecutors argued during a seven-day trial that Allmendinger and his associates lied to investors about several aspects of the company he helped found, including its size, the way it handled people's money and its record of success.

A Virginia investor who lost $100,000 testified last week that he was led to believe his investment would be held in escrow and that he was guaranteed a 10 percent gain. Philip Kersey, 68, of Mechanicsville said when the time came to cash in, he got nothing and learned that the company was in bankruptcy.

"I thought it was safe," Kersey said.

Defense attorney Barry J. Pollack claimed during the trial that his client did nothing wrong, and that investors only lost money after Allmendinger was squeezed out of the business in 2007 by partners who looted A&O's accounts and failed to make payments to keep insurance premiums in force.

"Mr. Allmendinger is not responsible for what happened after he left," Pollack said. After the verdict, he said he will take the case to the 4th U.S. Circuit Court of Appeals.

Assistant U.S. Attorney Michael Dry urged Payne to keep Allmendinger locked up, saying several factors made him a flight risk: he lives in a border state, he had $200,000 cash stashed in his home when he was arrested, and he had sent a text message suggesting that a former A&O sales agent under investigation should flee.

Dry produced a copy of the message, which read: "You need to vanish, bro." He said the message showed Allmendinger, facing a lengthy sentence, would be inclined to vanish too.

Pollack said the text message was just an offhand remark, not serious advice. He said Allmendinger has strong ties to the Houston area, his assets have been frozen by the government, and his passport has been surrendered to federal court officials in Houston. Payne was concerned, however, that there was no accounting of Allmendinger's wife's assets.

Five other people have pleaded guilty to roles in the scheme. Another alleged co-conspirator, Adley Abdulwahab of Spring, Texas, is scheduled for trial in July.

The Associated Press contributed to this report.

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