Two Houston Schemers Get Major Prison Time
Christian Allmendinger and Adley H. Abdulwahab have been ordered to serve more time in prison than Enron’s Jeff Skilling, 45 and 60 years, respectively, according to Investment News and other sources. Allmendinger was a co-founder and vice president of A&O Resource Management LTD and Abulwahab was a hedge fund manager who became part owner of A&O Resource. Originally, he worked for CA Houston Investment Center, a group of insurance agents not licensed to sell securities. The firm helped peddle A&O investments making a 10% commission on every life settlement sale they made. The sentencing came down in U.S. District Court in Richmond, Virginia for their respective roles in a massive life settlement fraud scheme.
After A&O Resource was founded in 2004, Allmendinger and Abdulwahab began to impress potential investors. According to one report, the two would show up at a new client’s residence in matching white Hummers to show potential investors that they were successful investment advisers worthy of overseeing large amounts of money. If the first visit or the second failed to persuade, the pair was persistent until the deal was struck.
The two were peddling life settlement through their firm, A&O Resource Management. A&O purchased life insurance policies from people with limited life expectancies. A&O investors were offered whole and fractional interests in bonded life settlements, which would provide a guaranteed return of 12%. One investor indicated that she was told her investment would double. She was provided with a bond which would pay her off in six years if the policy failed to do so. However, when A&O Resource went bust in 2009, the bond providing protection became worthless.
Unfortunately, the investigation revealed that many of the 800 or so investors who invested over $100 million in the scam were senior citizens. The tip of the iceberg came in 2006, when regulators focused on the firm’s offering of unregistered securities. Then in 2007 the pair embarked on a series of fake sales to remove them from being associated with their firm, A&O Resource Management.
Both men have said that they will appeal their sentences, claiming that they were too harsh. Obviously, the Court in the case was impacted by the severity of the losses and wanted to issue a strong message of deterrence.