Multi-Million Dollar Fraud Scheme Results in Significant Sentence and Nearly $10 Million Restitution Order
|Dec. 18, 2013|
HOUSTON – Charles Craig Jordan, 34, has been ordered to federal prison for 13 years following his conviction related to his life settlement insurance business, announced United States Attorney Kenneth Magidson along with acting special agent in charge Bernard Butler, Internal Revenue Service – Criminal investigation (IRS-CI) and Inspector in Charge Robert Wemyss, U.S. Postal Inspection Service (USPIS).
Jordan was accused along with Kelly Taylor Gipson, also 34, of misappropriating investor funds which ultimately resulted in policies lapsing and investors losing their investment. Jordan entered a guilty plea to conspiracy to commit mail and wire fraud, while Gipson pleaded to conspiring to launder the proceeds from the fraud scheme.
“Investment scheme promoters prey upon trusting investors and then steal their hard earned money,” said Butler. “IRS-CI is committed to unraveling complex financial transactions and money laundering schemes where con artists promise high returns to investors. This sentence sends a message to would be promoters that IRS-CI will work with our law enforcement partners to actively pursue promoters and bring them to justice.”
At a hearing that concluded approximately 30 minutes ago, U.S. District Judge Lee H. Rosenthal sentenced Jordan to 156 months in federal prison to be followed by three years of supervised release. Jordan was further ordered to pay restitution of $9,661,660.15 to 503 individuals named as victims in the case. Gipson is set for sentencing Jan. 24, 2014.
Jordan and Gipson were accused of devising a scheme to defraud investors from around the United States and Canada who invested millions in the life settlement offerings of Secure Investment Services and American Settlement Associates of Houston. Secure Investment Services was a business name utilized by Jordan initially in this scheme.
A life settlement is an investment in which a person, who is typically elderly or terminally ill, sells his or her life insurance policy for a cash payment, which is a percentage of the life insurance policy’s face value or death benefit payable by the insurance company upon the insured’s death. Once the insured sells an insurance policy, the insured is no longer responsible for paying the policy’s premiums. To keep the policy in force, the life settlement company must ensure any premiums are paid. All premiums due prior to the death of the insured must be paid, in full and on a timely basis, to prevent additional cost or lapse. Investors who purchase life settlements only realize a profit if the total amount invested in the policy, including the purchase price and any additional premium costs, is less than the amount of the death benefit. A life settlement is not profitable if the expenses of acquiring and maintaining the policy (including the amount of premiums that are paid) are more than the amount of the death benefit paid when the insured dies. Typically, the longer an insured lives, the more expensive it is to maintain a life settlement.
“This investigation was an excellent example of a partnership between federal law enforcement agencies working together to bring down a fraud conspiracy,” said Wemyss. “Postal Inspectors have investigated criminal schemes like this for more than 150 years, and we intend to continue delivering justice to anyone targeting our most vulnerable citizens.”
Jordan resided in Los Angeles, Calif., and Gipson lived in Rockwall, Texas, while they have been on bond pending the criminal proceedings. While on bond, each are to make monthly payments into the registry of the court towards an anticipated restitution order.
The criminal investigation was conducted by IRS-CI and USPIS and prosecuted by Assistant United States Attorney Melissa Annis.