Monday, March 12, 2007
On Nov. 17, 2006, the SEC filed a complaint against ABC Viaticals, Inc. (ABC), and its former President, Keith LaMonda and his brother, Jesse LaMonda, for their roles in the fraudulent and unregistered offer and sale of life settlements. With the consent of the parties, Judge Solis entered an order granting a preliminary injunction, an asset freeze, the appointment of a receiver, and other relief. In its complaint, the SEC alleges that from at least June 2001 through November 2006, ABC raised at least $100 million from over 4,000 investors worldwide from the sale of life settlements with guaranteed returns from 27% to 150%. ABC claimed that investor funds were controlled by an independent escrow agent, that funds sufficient to pay premiums for the life expectancy of the insured were segregated in a separate escrow account, and that financial guarantee bonds purchased by ABC would "fix" the date and amount of the investor's return. The complaint, however, alleges that the LaMondas exercised de facto control over all funds held by its escrow agents, never fully funded the escrow accounts to pay premiums on the policies, siphoned millions of dollars of investor funds into their own pockets or entities they controlled, and used a bonding company that they knew would not perform when bonds came due. The complaint further alleges that the LaMondas never disclosed to investors that in July 2005 they were indicted for their role in the fraudulent sale of viatical and life settlement investments through Accelerated Benefits Corp. (Accelerated Benefits), or the fact that they and Accelerated Benefits were the subject of at least seven state regulatory actions based on their sales of viatical and life settlement investments.
On March 7, 2007, the jury in the LaMondas' criminal trial convicted Keith and Jesse LaMonda on all counts charged, including mail and wire fraud, for their role in selling viatical and life settlements through Accelerated Benefits. The LaMondas face up to 30 years in prison and over $100 million in criminal restitution.