Former life insurance agent gets jail, to pay $500,000 restitution
August 18, 2016 by IFAwebnews Staff
A former Oklahoma life insurance agent has been sentenced to 27 months in federal prison and must pay $500,000 in restitution for insurance and annuity fraud.
Gary Edward Hibbing, 53, of Chino, Calif., and formerly of Grove, Okla., where he operated his elicit insurance dealings, was sentenced after pleading guilty to two counts of wire fraud and two counts of money laundering, according to the U.S. Attorney for Northern Oklahma.
Hibbing, former owner of Grand Lake Investments and Insurance in Grove, was also ordered to pay $505,126.43 in restitution. His federal prison term will be followed by three years of supervised release.
A joint investigation by the U.S. Attorney’s Office and the Oklahoma Insurance Department found that Hibbing defrauded his victims through a scheme called “twisting.” The department said it is an insurance industry term that refers to the fraudulent practice by an agent of convincing his client to surrender his existing annuity in exchange for a new one. Because there is a penalty for early termination of an annuity, the client loses money while the agent makes money on a new commission.
In this case, Hibbing lied to his clients to convince them to surrender their existing annuities and immediately purchase new ones. He never mentioned the early termination penalty. Hibbing also provided fraudulent information to insurance companies to facilitate the twisting.
The investigation found that one of Hibbing’s clients lost nearly $14,000 for surrendering one policy while Hibbing’s commission on the client’s new annuity was more than $17,000. Investigators found twisting tied to 80 different annuity policies from Oct. 17, 2007, to March 4, 2013.
Although the insurance department revoked Hibbing’s license on March 4, 2013, he continued to sell annuities by forging another agent’s name to transact business.
“He took advantage of his clients’ trust,” said Oklahoma Insurance Commissioner John D. Doak. “While cases like this are rare, my office will continue to pursue criminal charges against any insurance agent or broker disregarding the law for their own benefit. 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.”
