RICHMOND, Va. - A lawyer for a former Texas businessman who helped orchestrate a $100 million life insurance fraud scheme urged a federal appeals court Tuesday to toss out his convictions and 60-year prison sentence.
A federal jury in 2011 convicted Adley Abdulwahab of Spring, Texas, on 15 counts of conspiracy, wire fraud, securities fraud and money laundering.
Abdulwahab, 37, was one of the executives for a group of companies called A&O that used investor funds to buy life insurance policies from the policyholders at less than face value. Investors were supposed to be paid when the insured died, but A&O's partners spent their money on lavish lifestyles rather than safeguard the funds and pay premiums.
The scam claimed more than 800 victims in 36 states and Canada. Many lost their life savings.
Abdulwahab is appealing all counts of his conviction, but the 30-minute hearing before a three-judge panel of the 4th U.S. Circuit Court of Appeals focused on the money laundering. He claims that the commissions that were paid to A&O sales agents were essential business expenses rather than a distribution of profits, and therefore cannot support the money laundering convictions.
"They were putting the money back into the business by paying commissions," said Joe Gonyea, an attorney for Abdulwahab.
At the very least, Gonyea said, Abdulwahab is entitled to resentencing.
Assistant U.S. Attorney Jessica A. Brumberg said the trial judge correctly rejected Abdulwahab's argument on the money laundering counts. Even if the judge had agreed with Abdulwahab on that point, Brumberg said, he "made it crystal clear" that he would have imposed a 60-year sentence.
"It would be a waste of time and resources to do a full resentencing," Brumberg said.
Gonyea argued that prosecutors could not predict what the judge would do in a new sentencing hearing.
The appeals court usually takes several weeks to issue a ruling.
Abdulwahab was one of seven people convicted in the A&O conspiracy, which was prosecuted in Richmond because one of the sales agents and several of the victims live in the area. In a related case, the president of a Costa Rican company that sold bonds purportedly backing the "life settlement" contracts was convicted on 10 counts and also was sentenced to 60 years in prison. An accountant who faked an audit for that company also was convicted.
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