Texas man charged in $100 million fraud case goes on trial in federal court in Virginia
Monday, March 14, 2011; 6:12 PM
RICHMOND, Va. - A federal prosecutor said Monday that a Texas businessman bilked hundreds of investors throughout the country out of more than $100 million, but his defense attorney argued the only crimes were committed by former business partners.
Christian Allmendinger, 39, of Houston is charged with mail fraud, money laundering, conspiracy and securities fraud. His trial is expected to last up to two weeks.
Allmendinger was one of the founders of A&O Life Funds, which bought life insurance policies from insured people at less than face value, then collected the benefits when those people died and distributed some of the funds to investors. Prosecutors say Allmendinger and his associates illegally portrayed investments as risk-free and misrepresented many aspects of their business, including its size and record of success.
"These were lies that brought in millions of dollars and allowed Mr. Allmendinger to live a lavish lifestyle," federal prosecutor Albert Stieglitz Jr. told a panel of 12 jurors and two alternates. He said investors heard sales pitches replete with lies intended to "lull them into a false sense of security and take their money."
Allmendinger's attorney, Barry Pollack, did not dispute that his client and A&O made a lot of money. But he said Allmendinger did nothing illegal.
"He believed in the products A&O was selling to investors," Pollack said.
He said the marketing materials that the government claims are riddled with lies were intended to get the company's sales agents excited about selling the product, and were not targeted to investors.
According to Pollack, the company met all its obligations and nobody lost any money until after Allmendinger was "squeezed out" of the business by his two partners in 2007. He said the partners told Allmendinger a company wanted to buy A&O, then created a sham firm to buy out his share using some $750,000 they took out of A&O's bank accounts.
It was only then, Pollack said, that the company began allowing insurance policies to lapse and investors began losing money. He said the partners made more than $11 million, in part by taking money that should have been used to keep insurance premiums in force, before being shut down by regulators just a few months later.
One of the partners, Brent Oncale of Houston, has pleaded guilty to two conspiracy counts and is scheduled to testify against Allmendinger.
Another, Adley Abdulwahab of Spring, Texas, was indicted along with Allmendinger and is scheduled for trial in July. The two had been scheduled for joint trial, but the case was severed because the defendants will offer "antagonistic defenses," according to court papers.
In all, five people have pleaded guilty to roles in the scheme. The case was brought in Richmond because some of the investors and a former A&O sales agent, who also is expected to testify, live in the area.
Allmendinger's trial is expected to last up to two weeks.
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