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Life Health > Annuities

Former Oklahoma agent gets prison for annuities fraud

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A former Oklahoma insurance agent was sentenced to 27 months in federal prison for annuities-related fraud, according to the Oklahoma Insurance Department.

Following an investigation, Gary Edward Hibbing, former owner of Grand Lake Investments and Insurance in Grove, Oklahoma, pleaded guilty to two counts of wire fraud and two counts of money laundering.

Hibbing was accused of lying to his clients to convince them to surrender their existing annuities and immediately purchase new ones while failing to notify those clients of early termination penalties. Hibbing also provided fraudulent information to insurance companies in the “twisting” scheme.

Twisting is a fraudulent practice that allows agents to generate a new commission by convincing clients to exchange old annuity contracts for new ones without notifying them of surrender charges. The investigation found that one of Hibbing’s clients lost nearly $14,000 for surrendering a policy while he earned a commission of more than $17,000 on the new contract. 

Investigators found evidence of twisting in 80 different annuity policies between October 2007 and March 2013. Further, Hibbing continued selling annuities by forging another agent’s name after his license was revoked in March 2013, the department said.

In addition to his prison sentence, Hibbing was ordered to pay $505,126.43 in restitution, and his prison term will be followed by three years of supervised release.

“He took advantage of his clients’ trust,” Oklahoma Insurance Commissioner John D. Doak said in a statement. “While cases like this are rare, my office will continue to pursue criminal charges against any insurance agent or broker disregarding the law for their own benefit.”

The U.S. Attorney for the Northern District of Oklahoma, the IRS and the Arkansas Insurance Department assisted in the investigation.

See also:

Twisting and Rescission: How to Avoid 2 Insurance Policy Pitfalls

Massive health insurance scheme earns inclusion in latest class of Insurance Fraud Hall of Shame

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