Criminal Justice News

Monday, April 30, 2012

United States Announces $8 Million Penalty and Non-Prosecution Agreement with Florida-Based Imperial Holdings Inc.

CONCORD, NH—Imperial Holdings Inc., a publicly traded specialty finance corporation headquartered in Boca Raton, Florida, has entered into a non-prosecution agreement (NPA) with the U.S. Attorney’s Office for the District of New Hampshire to pay an $8 million penalty to resolve fraud allegations related to Imperial’s involvement in making misrepresentations on life insurance applications in connection with its premium finance business, U.S. Attorney for the District of New Hampshire John P. Kacavas announced today.

According to the NPA, from December 2006 through January 2009, as part of its premium finance business, certain Imperial employees, who were licensed insurance agents, worked with external general agents and brokers, to obtain life insurance policies on individuals over 65 years of age for which Imperial would offer premium finance loans. These Imperial employees had direct contact with the prospective insureds and worked with the insureds and external general agents and brokers to complete life insurance applications for submission to various life insurance companies.

While Imperial employees were engaged in this business, many life insurance applications required the insured and the agent to disclose information about whether premium payments would be funded by a premium finance loan. An insured was typically required to disclose if he or she intended to seek such a loan to pay premiums, and often, the agent was also required to disclose if he or she was aware of an intent by the insured to obtain such a loan. When applications were submitted to insurance companies that likely would not have issued a policy if the application accurately described the insured’s intent to obtain premium financing, the Imperial employees, who were acting as life insurance agents on the policies, made and/or facilitated misrepresentations on the applications that concealed the insured’s intent to seek a premium finance loan from Imperial.

The U.S. Attorney’s Office for the District of New Hampshire entered into the NPA with Imperial based, in part, on Imperial’s decision to terminate its premium finance business and separate the employees who are known at this time to have been primarily involved in the misconduct identified above; Imperial’s substantial cooperation to date in the investigation into its premium finance business; and the U.S. Attorney’s Office for the District of New Hampshire’s desire to limit the negative impact and adverse consequences to the non-premium finance aspects of Imperial’s business and the company’s employees and shareholders that would result from a prosecution of Imperial. In addition to the monetary penalty, Imperial has agreed, among other things, to provide cooperation to the U.S. Attorney’s Office for the District of New Hampshire and investigatory agencies, including providing documents and the assistance of its officers, agents, and employees.

U.S. Attorney Kacavas praised the agreement saying, “This NPA ensures the end of Imperial’s life insurance premium finance line of business while allowing it to carry on its legitimate lines of business. Importantly, Imperial has provided and will continue to provide substantial assistance in the investigation of those individuals whose fraudulent conduct was at the root of the illegal business practices.”

This case is being investigated by the FBI, U.S. Secret Service, U.S. Postal Inspection Service, and the Office of the Special Inspector General for the Troubled Asset Relief Program. Assistant U.S. Attorneys Arnold H. Huftalen and Seth R. Aframe are handling the case for the U.S. Attorney’s Office for the District of New Hampshire.

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