Two retired insurance agents pleaded guilty to fraud charges and avoided prison time by repaying nearly $11 million to senior citizens in what state officials describe as a massive annuity scam targeting the elderly.
Regulators say 72-year-old Milton Hooks of Rocky Mount and 69-year-old James Mangum of Tarboro were convicted of six counts each of obtaining property by false pretense Wednesday after the N.C. Department of Insurance unraveled a long-running scheme affecting 77 victims in 14 North Carolina counties.
Hooks and Mangum convinced their clients to divert money from their 401(k) retirement accounts and life insurance policies into a “fixed-index annuity” from 2004-11, N.C. Department of Insurance spokeswoman Lizz Wall said in a news release.
The duo racked up more than $620,000 in commission payments for selling the annuity products under false pretenses, according to state insurance regulators. Wall said Hooks and Mangum also influenced four people to make $316,000 in individual investments, which the men diverted into their own bank accounts and laundered for their own personal use.
“Preying on our senior citizens is wrong,” Insurance Commissioner Mike Causey said in a statement. “I am pleased NCDOI criminal investigators were able to recover nearly $11 million in this important case that hopefully will help deter white-collar crime like this in North Carolina.”
Under their plea agreement, Hooks and Mangum repaid the $316,000 investments directly to the victims and companies from whom annuities were fraudulently purchased reimbursed the 77 other victims their initial investments with interest.
Superior Court Judge Thomas H. Lock dismissed 100 counts of obtaining property by false pretense and handed down a suspended prison sentence, meaning Hooks and Mangum won’t serve time behind bars as long as they abide by the court order.
Wall said the men received suspended sentences because they made full restitution to their victims.
The N.C. Department of Insurance spent seven years investigating the annuity scam, officials said. Insurance investigators are sworn law enforcement officers with statewide jurisdiction.
Regulators say insurance fraud raises the cost of North Carolinians’ premiums by roughly 10 percent.