Two sentenced to federal prison in Florida for insurance scam
PENSACOLA, Fla. - Two men have been sentenced to federal prison for taking millions of dollars from investors promised big profits on life insurance policies supposedly bought from terminally ill people.
The people, however, remained alive and about 4,000 investors across the country lost their investments in LifeTime Capital Inc. and related companies run by David W. Svete and Ron Girardot in South Florida and the Dayton, Ohio, area, federal prosecutors said.
A federal jury convicted them in March of money laundering, mail fraud and interstate transportation of money obtained through fraud.
U.S. District Judge M.C. Rodgers on Thursday sentenced Svete to 16 years, eight months in prison followed by three years of probation. Rodgers also ordered him to surrender $21 million laundered through the scheme.
Girardot received three years of probation along with his five-year prison term. Both will serve their time in Ohio.
They will have to make restitution, to be determined later, for lost investments and promised returns expected to reach $100 million to $200 million, according to the Florida Department of Financial Services.
Under such investments, called viaticals, a terminally ill person receives money from an investment company, which becomes the beneficiary of the dying person’s life insurance policy. When the person dies, the company makes a profit - but if the person lives too long, the return is small. It has been an industry plagued by fraud.
Tom Gallahager, the department’s chief financial officer, said the case demonstrated the need for a new law the Legislature passed this year to regulate viatical sales. Gov. Jeb Bush signed it last week.
Department officials said viatical fraud has cost investors an estimated $2 billion nationally since 1996. Florida was the last of four states where viatical sales had been unregulated as securities before the new law was passed.
A third defendant, Charme Austin, pleaded guilty and previously was sentenced to 15 months in prison and three years on supervised probation. The jury acquitted defendants Douglas A. Kordel, Roger W. Lange and Kathleen Lafrance.
Other companies involved included Natlis Capital LLC of Fort Lauderdale, Bluecrest Group of Boca Raton and Dove Creative Communications of Deerfield Beach.
