Bay Area Insurance Agents Sentenced To Prison For Respective Roles In Conspiracy, Wire Fraud, And Aggravated Identity Theft Scheme
SAN FRANCISCO – Behnam Halali was sentenced to five years’ imprisonment, Ernesto Magat to four years’ imprisonment, and Karen Gagarin to three years’ imprisonment for their respective roles in a scheme to commit wire fraud and identity theft involving fraudulent life insurance policies, announced U.S. Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The defendants also were ordered to pay $2,837,791.93 in restitution to their former employer, American Income Life Insurance Company (AIL). The sentences were handed down by the Honorable Susan Illston, United States District Judge in San Francisco, after the defendants were found guilty by a jury on March 13, 2017, following a four-week trial.
According to the evidence produced at trial, Halali, 32, of San Jose; Magat, 35, of Hayward; and Gagarin, 32, of San Jose, were former agents of AIL. While working at AIL, the defendants participated in a conspiracy involving the submission of hundreds of applications for life insurance policies on behalf of people at least some of whom did not know that a policy was applied for or issued in their name and/or did not want a life insurance policy. The defendants then shared the commissions and bonuses issued by AIL in connection with the fraudulent policies. The defendants paid recruiters to find people willing to take medical exams in exchange for approximately $100, and then took the personal information associated with those people and submitted applications for life insurance in their names, in many cases without the individuals’ knowledge. The defendants and their co-conspirators also paid people to participate in a fictitious survey of a medical exam company, and took the personal information associated with those people and submitted applications for life insurance, in many cases without the individuals’ knowledge.
The evidence also demonstrated that the defendants and their co-conspirators created phony driver’s licenses so that their co-conspirators could take medical exams purporting to be the applicants. The defendants opened hundreds of bank accounts to fund the premiums on the fraudulent policies, and typically paid one to four months of premiums before letting the policies lapse. The defendants and their co-conspirators returned verification calls to AIL purporting to be the applicants on the fraudulent applications from telephones set up exclusively for the fraudulent scheme. All three defendants were charged with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; wire fraud, in violation of 18 U.S.C. § 1343; and aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). The jury found defendants guilty of all these counts.
In addition to the prison terms and restitution, Judge Ilston also ordered each defendant to serve 140 hours community service and three years of supervised release. Judge Illston ordered all three defendants to self-surrender on or before March 30, 2018, to begin serving their prison terms.
Assistant United States Attorneys Robert Leach and Matthew McCarthy are prosecuting the case with the assistance of Denise Oki and Bridget Kilkenny. This prosecution is the result of an investigation by the FBI; the IRS, Criminal Investigation; and the Commissioner of the California Department of Insurance.