Agent Fraud —Pennsylvania

Amount: $8.2 Million

An insurance agent from Swissvale Pennsylvania pled guilty to five counts of mail fraud in a fraud scheme operating out of the agent's business. Hogan & Associates was the front of the scheme and sold whole life insurance policies to clients. The agent also claimed to be a financial planner, despite lacking the credentials to sell investment products.

The fraud began in 2002, when the agent began persuading his clients to borrow against the cash value of their policies so he could lend their money to other clients on a short term basis. The promised return was 10 percent, but instead of lending as promised, the agent used the money to fund twenty-five homes and investment properties that he owned across the country. Authorities have attempted to seize the homes, but most have more owed on them than the properties are worth and, if sold, the banks will receive all of the money and the clients who were ripped off will receive little or nothing.

The reality of the scam was that the agent had no borrowers and spent the money trying to maintain properties, or to pay his own high-interest debts. He swindled almost eighty clients out of over $8.2 million. The clients would pay in $10,000 increments, and some received small interest payments, but did not receive any of the principal in return.

The seventy-seven year old agent is free on bond until sentencing.