Five people involved in defrauding more than 800 people, many of them elderly, have been sentenced to prison terms for their involvement in a $100 million scheme that cost many of the victims their retirement funds.

The employees of A&O Resource Management Ltd., headquartered in Houston, Texas, marketed life settlement products as a safe investment alternative. The scheme involved supposedly selling life insurance policies to investors, but instead of putting the money into policies, the A&O executives and employees spent the money on a number of things, including multi-million dollar homes, high-end cars and diamonds, the U.S. attorney's office says.

"The safety, security and no-risk nature of the investment was critical to the sales pitch, and it was all a big fat lie," says U.S. Attorney for the Eastern District of Virginia Neil H. MacBride. Approximately 800 people lost money, many of them their entire life savings in the scheme.

When regulators began looking into the case, they found that A&O principals created sham companies, Blue Dymond and Physician's Trust, to try to cover their tracks, the attorney general says.

"The impact of this massive fraud (which stretched across the United States and Canada) on A&O's investor victims has been disastrous," MacBride says. "Hundreds of elderly investors invested their life savings in A&O and saw it all vanish in an instant."

The five men involved in the firm pleaded guilty to charges stemming from misrepresenting A&O's size and success rate and the risks involved with the investment offerings.  

Russell E. Mackert, general counsel for A&O; Brent Oncale, former owner and founder; David White, former president; Eric M. Kurz, a wholesaler of A&O products, and Tomme Bromseth, a sales agent, were sentenced in federal district court to terms ranging from 188 months to 36 months in prison.

Two others, Adley H. Abdulwahab, a hedge fund manager, and Christian Allmendinger, a founder of A&O, were found guilty at trial of a variety of money laundering and fraud charges and await sentencing.

-Karen DeMasters