SAN FRANCISCO – On January 5, 2015, the United States Attorney’s Office announced the prison sentences for three Bay Area residents convicted of a scheme which defrauded their employer, American Income Life Insurance Company, of millions of dollars.
Behnam Halali, 32, of San Jose, was sentenced to five years’ imprisonment, Ernesto Magat, 35, of Hayward, was sentenced to four years’ imprisonment, and Karen Gagarin, 32, of San Jose, was sentenced to three years’ imprisonment for their roles in a life insurance fraud scheme. They were, also, ordered to pay $2,837,791.93 in restitution to their former employer. All three were found guilty by a jury on March 13, 2017, following a four-week trial.
While working as agents at American Income Life, the three participated in a conspiracy involving the submission of hundreds of applications for life insurance policies on behalf of people who did not know that a policy was applied for or issued in their name and/or did not want a life insurance policy. The defendants then shared the commissions and bonuses issued by their employer in connection with the fraudulent policies.
The defendants paid recruiters to find people willing to take medical exams in exchange for approximately $100, and then took the personal information associated with those people and submitted applications for life insurance in their names, in many cases without the individuals’ knowledge. The defendants and their co-conspirators also paid people to participate in a fictitious survey of a medical exam company, and took the personal information associated with those people and submitted applications for life insurance, in many cases without the individuals’ knowledge.
The evidence also demonstrated that the defendants and their co-conspirators created phony driver licenses so that their co-conspirators could take medical exams purporting to be the applicants. The defendants opened hundreds of bank accounts to fund the premiums on the fraudulent policies, and typically paid one to four months of premiums before letting the policies lapse. The defendants and their co-conspirators returned verification calls to American Income Life purporting to be the applicants on the fraudulent applications from telephones set up exclusively for the fraudulent scheme. All three defendants were charged with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. The jury found defendants guilty of all these counts.
In addition to the prison terms and restitution, each defendant is ordered to serve 140 hours community service and three years of supervised release. All three defendants are to self-surrender on or before March 30, 2018, to begin serving their prison terms.
Investigating agencies included the FBI; the IRS, Criminal Investigation; and the California Department of Insurance.
“Fortunately, the investigating agencies were able to put a stop to these three criminals,” said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona. “Insurance fraud of any kind is not a victimless crime. We all pay higher premiums due to this kind of theft. Thankfully there are local, state and federal investigators who experts in investigating this type of crime and can see these cases through to prosecution and sentencing.”