As he was wheeled into open-heart surgery, 76-year-old William Sirk turned to his only daughter and revealed a secret that he had been too embarrassed to share: The retired construction supervisor had been swindled out of his life savings, all $600,000 of it.
The theft came at a terrible time. On top of his heart ailment, the Richmond man had lung cancer, and he had just learned that Faye, his wife of 50 years, had dementia. Without his retirement savings, Sirk said between sobs, he worried that there would be no way to care for Faye when he died.
Sirk’s daughter saw the fraud as bringing unnecessary pain to the final months of her father’s life. “You cannot understand what this scam did to him, the pressure it put on him,” said Kimberly Sirk Holland, shortly after she tearfully watched a key player in the scam escorted from a Virginia federal courtroom on his way to prison.
The investigation of that nationwide scheme — which resulted in seven convictions — was the first tackled by a Virginia Financial and Securities Fraud Task Force set up by federal prosecutors last year. Neil MacBride, the U.S. attorney for the Eastern District of Virginia, said he believes the task force will allow his prosecutors to tackle more large fraud schemes at a critical time.
In a tough economy, MacBride says, people are even more susceptible and vulnerable to financial scams. And as law enforcement faces tightening budgets, prosecutors say, the task force helps to marshal resources.
“This will allow us to increase the volume and complexity of such cases,” MacBride said.
The task force consists of federal law enforcement agents and federal and state regulators, including members of the FBI, the Postal Inspection Service, the Securities and Exchange Commission, the Commodities Futures Trading Commission and the Virginia State Corporation Commission. Because a federal hiring freeze has not permitted MacBride to replace prosecutors who have left for other jobs — in Northern Virginia, he has nine prosecutors, down from 15, who focus on fraud — he has lawyers on loan from the Justice Department’s criminal division.
Lanny A. Breuer, the assistant attorney general for the criminal division, said he supported the task force in Virginia because it gets “different groups talking to each other” and helps keep them focused on financial crimes. He and other prosecutors said it has already produced results. Last month, for instance, a 46-year-old Michigan man admitted in Alexandria’s federal court to stealing $40 million from 750 members of his investment club.
Federal prosecutors say the recently concluded investigation into the life insurance scam provides a blueprint for other task force cases.
Like many other investigations, this one began with a tip — to Virginia regulators in 2008 about a smooth-talking con artist named Tomme Bromseth, 69, who was selling the fraudulent investments to people in Virginia. Soon, federal investigators learned that Bromseth was targeting retirees with a slick pitch about a guaranteed investment in life insurance settlements for his Houston-based firm, A&O Resource Management.
It worked this way: Bromseth told potential investors that they would hand over cash to A&O, which would buy life insurance policies and pay the premiums. When the insured person died, A&O would collect the insurance settlement money and pass along a share to investors.
A&O’s sales force worked hard; Bromseth even joined his victims in prayer to persuade them to turn over their cash.
During a four-year span that ended in 2008, Bromseth and others helped A&O collect more than $100 million from 825 people, many of them retirees, prosecutors say.
Meanwhile, A&O’s leaders in Houston didn’t invest the millions of dollars as promised. Instead, they spent it on such things as fancy trips, mansions, a Lambor ghini, a Bentley and expensive jewelry, including a 15-carat diamond ring, prosecutors say.
After the initial tip, two assistant U.S. attorneys, Michael Dry and Jessica Brumberg, began digging into the case with FBI agent Sherri Onks, Postal Inspector Marydith Newman, and John Norton, a criminal investigator with the Internal Revenue Service. The prosecutors and agents — who would form the nucleus of the task force when it was officially created in 2010 — persuaded Bromseth to spill what he knew and to make calls to other conspirators. Then they began to untangle A&O’s finances. Within months, they were confronting key players in the scheme and getting them to admit their involvement.
For nearly three years, prosecutors and agents interviewed cooperating witnesses and victims while reviewing hundreds of thousands of pages of records (they ended up collecting 1.1 million documents). “The joke here was that there were no federal holidays on the task force,” Dry said.
In all, five men pleaded guilty to various fraud-related charges and were sentenced to prison terms (Bromseth got three years). In trials this year, two principals in A&O, both of Houston, were convicted of mail and securities fraud and money laundering in a Richmond federal courtroom. Last month, U.S. District Judge Robert E. Payne sentenced Adley H. Abdulwahab, 36, to 60 years in prison, and Christian Allmendinger, 40, to 45 years.
At the sentencings, the human toll of A&O’s scam was apparent as a handful of victims testified in gut-wrenching fashion about how the fraud had wrecked their lives and destroyed their dreams.
One spoke through tears of living frugally only to lose her savings to men who promised that “safety is the cornerstone of our philosophy.” Another said he felt “a great deal of shame for not being smarter” about investing 95 percent of his retirement with A&O. A 65-year-old retiree requested that his name not be reported because he worried that it might cause his elderly mother to have a heart attack if she learned he had lost his savings.
Through it all, prosecutors and agents watched and nodded their heads. They had heard the same stories from hundreds of A&O’s victims, and they will hear them again when they start to unravel the next big scam.