News and Press Releases

United States Attorney Benjamin B. Wagner
Eastern District of California

Shasta County Viatical Investment Scheme Defendant Sentenced

FOR IMMEDIATE RELEASE
Friday, October 25, 2013
 

www.usdoj.gov/usao/cae

usacae.edcapress@usdoj.gov

 

Docket #: 2:07-cr-0366 GEB

 

 

SACRAMENTO, Calif. — Mark Wolok, 48, of West Bloomfield, Mich., was sentenced today by United States District Judge Garland E. Burrell, Jr. to five years in prison, United States Attorney Benjamin B. Wagner announced. Wolok pleaded guilty to securities fraud on July 20, 2012.

“These two defendants were part of a group that preyed on investors with the promise that their investments were safe, secure, and risk-free,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable. IRS CI is committed to identifying and investigating those who take advantage and impact the financial well-being of others for their own personal financial benefit.”

Wolok was indicted on August 22, 2007, for a fraud scheme that involved life settlement insurance contracts or viaticals. A “life settlement” or “viatical settlement” is a transaction in which a person sold the death benefit of his or her life insurance policy to a third party in return for a lump sum cash payment, which represented a discounted percentage of the policy’s face value. The insured was usually ill or elderly and would sell his or her interest in the insurance policy to a company. That company would resell the interest to investors, in whole, or as fractional interests. The return on the investment depended on the length of time the ill or elderly person lived, with a greater return the sooner the insured person died. If the insured person did not die within a certain period of time, there was no return on the investment. The life expectancy of the insured person was to be estimated by a medical doctor, after a review of the insured person’s medical records.

According to court documents, Donald Neuhaus based in Shasta County operated a number of businesses for the purpose of acquiring viaticals and life settlements from insured people and marketing these viaticals and life settlements to investors. He had sales people working on his behalf, including Robert and Barbara Eberle, who sold fractionalized interests in these viaticals.

Also according to court documents, between 2001 and 2004, Wolok, in order to sell these life settlement contracts, sold bonds that purportedly guaranteed that investors would not lose their money. However, the bonding company Wolok ran was a shell company and the bonds were not legitimate. None of the bonds were honored. As a result of his fraud, investors lost at least $17.8 million.

Donald Neuhaus died on November 27, 2007. Barbara Eberle, 66, and Robert Eberle, 75, both formerly from Chico, pled guilty to securities fraud on July 20, 2012. They are scheduled to be sentenced December 6, 2013, and March 6, 2014, respectively.

This case is the product of an investigation by the IRS-Criminal Investigation with assistance from the U.S. Postal Inspection Service. Assistant United States Attorneys R. Steven Lapham and Lee Bickley are prosecuting the case.

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