Raleigh, N.C. — Two retired insurance agents have been convicted in a massive insurance scheme that claimed 81 victims in 14 different North Carolina counties.
According to officials, two men preyed on senior citizens and defrauded them of nearly $11 million.
The scam involved the reallocation of money people had in savings and insurance policies.
“Preying on our senior citizens is wrong,” Insurance Commissioner Mike Causey said. “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.”
The scheme unraveled because of one man whose parents were victimized, according to officials from the North Carolina Department of Insurance. In 2008, he realized something was strange and called the Department of Insurance.
The inquiry led to a seven-year investigation and the arrests of Milton Hooks, 72, of Rocky Mount, and James Mangum, 69, of Tarboro. Both were retired insurance agents.
Investigators said for the vast majority of the victims, they used the same scheme. They would advise the seniors to remove money from their 401-K or life insurance policies and put it into annuity accounts known as “Fixed Indexed Annuity.” The agents would then cash in on commission for the sale of the products, amounting to $620,000 in commission payments, under false pretense to their clients.
In a few other cases, officials said the men influenced victims to make individual $316,000 investments, which they directly diverted into their own bank accounts.
Seth Edwards, District Attorney of the second prosecutorial district, said all of the victims got their money back with interest, amounting to about $11 million.
“To be able to not only reimburse the victims, but do it with interest is unheard of. I’ve been doing this job since 2003 and I don’t ever recall such a successful outcome, at least as far as the victims’ standpoint is concerned,” he said.
The two men will not face any jail time. Investigators said they had to prioritize getting the money back, so they’re happy with that outcome.
WRAL spoke with several victims. Sue Gibson said she gave the men $163,000 nearly a decade ago and has not seen the money since.
“Part of this was my mother and dad’s inheritance to me,” she said. “This has impacted me quite a good deal. Not having that money to depend on for the last seven years has made quite a change in my life.”
Department of Insurance officials said Milton Hooks and James Mangum tricked Gibson. They claimed to be re-investing the hard-earned retirement money, or life insurance money. The pocketed money went towards cars, homes and vacations.
“It was the same pattern,” Causey said. “Same pattern. Same lie that they were told. Same deceit. Everything that was told was the exact same.”
One victim, who did not want to be identified, said she is ecstatic the money will be returned.
“It’s been a wonderful relief,” she said. “At least I can sleep not worrying about it.”
But she said the scam will always affect her.
“It’s made me very suspicious of any and everybody. I won’t buy any more insurance.”
Causey said he hopes to investigate more cases like this. He will be asking the general assembly to increase its investigation team from 20 officers to 50.