Former Insurance Agency Owner Pleads Guilty to Defrauding Clients Out of More Than $500,000
April 5, 2016 by Department of Justice, U.S. Attorney’s Office, Northern District of Oklahoma
TULSA, Okla.–A former insurance agent and owner of Grand Lake Investments and Insurance in Grove, Oklahoma, pleaded guilty today to implementing a fraudulent scheme that caused his clients to lose $505,126.43, announced United States Attorney Danny C. Williams Sr. for the Northern District of Oklahoma, Special Agent in Charge R. Damon Rowe of the Internal Revenue Service-Criminal Investigation and Oklahoma Insurance Commissioner John D. Doak.
“The defendant perpetrated a scheme to defraud his clients who entrusted him with their annuities,” said U.S. Attorney Williams. “My office and our law enforcement partners are committed to an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. We are committed to ensuring that justice is provided for the victims.”
“Taking away an individual’s peace of mind by manipulating his or her retirement nest egg is unconscionable,” stated SAC Rowe. “Retirees obviously count on every penny of hard-earned money being there when it is needed, and they should not be subjected to the greed of trusted insurance agents who line their own pockets with dollars manipulated away from clients who have literally placed a portion of their future in the hands of thieves. It is deceitful, it is shameful, and it is just plain wrong. That is exactly why IRS Criminal Investigation is very proud and willing to team up with agencies like the Oklahoma Insurance Department who share our goal of putting people like Mr. Hibbing out of business, and punishing them for their financial misdeeds.”
“Fraud is something I will not tolerate,” said Oklahoma Insurance Commissioner Doak. “It is imperative that consumers be able to trust their insurance agent or broker. I want to thank the U.S. Attorney for the Northern District of Oklahoma, the IRS and the Arkansas Insurance Department for their assistance in this case. It was truly a team effort.”
Gary Edward Hibbing, 52, of Chino, California, and formerly of Grove, Oklahoma, pleaded guilty before U.S. District Court Chief Judge Gregory K. Frizzell to two counts of wire fraud and two counts of unlawful monetary transactions. Hibbing was indicted on August 12, 2015. Sentencing is scheduled on July 12, 2016.
According to admissions made in court, Hibbing defrauded his victims through a scheme called “twisting.” Twisting is an insurance industry term that refers to the fraudulent practice by an insurance agent of convincing a client to surrender an existing annuity in exchange for a new one. Because there is usually a penalty for early termination of an annuity, the client often loses money while the agent makes money on a new commission.
Hibbing admitted that he lied to clients to convince them to surrender their existing annuities and immediately purchase new ones. He intentionally failed to disclose early termination penalties. He also provided false information to insurance companies to facilitate his twisting scheme.
At the time of sentencing, Hibbing faces imprisonment terms up to 20 years on the wire fraud counts and up to 10 years on the unlawful monetary transaction counts. The defendant also faces entry of a criminal forfeiture money judgment in the amount of $505,126.43 representing proceeds obtained as a result of his wire fraud scheme.
The case was investigated by the Internal Revenue Service-Criminal Investigation and the Oklahoma Insurance Department’s Anti-Fraud Unit. The case is being prosecuted by Assistant U.S. Attorneys Kevin C. Leitch, Clemon D. Ashley, and Catherine Depew.
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