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4th Circuit Court of Appeals Overturns Money Laundering Convictions in $100 Million Life Insurance Investment Scheme

paying the expensesAdley H. Abdulwahab was convicted of fraud, conspiracy, and money laundering in 2011 in the U.S. District Court for the Eastern District of Virginia relating to a $100 million life insurance settlement scheme which defrauded more than 800 investors.  As reported by the Fort-Worth Star-Telegram, Abdulwahab, a Texas resident, and four other co-conspirators fraudulently marketed life settlements–the purchase of life insurance policies by investors–to his victims, most of whom were elderly, through Abdulwahab’s company,  A&O Resource Management Ltd. The conspirators made misrepresentations to investors regarding A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. Abdulwahab was originally sentenced to 60 years in prison.

Last week, the 4th Circuit Court of Appeals overturned Abdulwahab’s money laundering convictions and ordered that he be re-sentenced, in the case of U.S. v. Abdulwahab, Docket No. 11-5093, the opinion in which may be read here. The convictions were based upon commissions which A&O paid to a sales agent. The Court held that Abdulwahab’s convictions under the money laundering statute, 18 U.S.C. 1956, were barred as a result of “merger.”  Citing the U.S. Supreme Court’s decision in U.S. v. Santos, 553 U.S. 507 (2008), the Court cited the rule that the term “proceeds” in the money laundering statute only refers to the “net profits,” and not the “gross receipts,” of the underlying crime and that an individual therefore cannot be convicted of money laundering for “paying the expenses” of a crime.

“It is the spirit and not the form of law that keeps justice alive.” — Earl Warren

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