3rd Defendant in W Financial Group $17M Fraud Sentenced to Prison

January 10, 2013

A man who, along with two others, falsely used the names of two well-known insurance groups in a scheme to swindle elderly people out of millions of dollars has been sentenced to prison in North Texas.

Adley Husni Abdulwahab was sentenced by U.S. District Judge Barbara M. G. Lynn to the statutory maximum sentence of 10 years in federal prison for his role in an investment fraud scheme that he and two other defendants ran from 2006 – 2007 in Dallas, according to U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Abdulwahab, aka Adley H. Wahab, pleaded guilty in March 2012 to one count of engaging in a monetary transaction in property derived from unlawful activity (securities fraud).

In related cases, Michael Wallens, Sr., formerly of Nantucket, Mass., and his son, Michael Wallens, Jr., formerly of Plano, Texas, each pleaded guilty in 2010 to one count of securities fraud.

Wallens, Sr. was sentenced to 54 months in prison and Wallens, Jr. was sentenced to 60 months in prison.

Abdulwahab was ordered to pay nearly $13 million in restitution, jointly and severally with two other defendants who were charged in a related separate case, to the more than 175 victims they had defrauded, and he was ordered to forfeit any proceeds from the crime.

According to documents filed in the case, Abdulwahab and the Wallens’ offered and sold to investors Collateral Secured Debt Obligations (CDSOs), issued by W Financial Group. CDSOs are promissory notes and a type of security also known as an investment contract. Investors contributed money to a common enterprise, and in exchange, they expected to earn investment returns from the entrepreneurial efforts of persons associated with W Financial.

Abdulwahab and the others defrauded investors by deceiving them about the safety of the CSDOs and the ways in which money invested in CSDOs was used, according to the U.S. Attorney’s Office.

Through the printed offering materials and other communications, Abdulwahab, Wallens, Sr. and Wallens, Jr. misrepresented a number of material facts to investors.

For instance, they claimed that the insurers Lloyd’s of London and Republic Group “reinsured” the CSDOs, when in fact the CDSOs were not insured.

Acting personally, and through sales agents, Abdulwahab, Wallens, Sr. and Wallens, Jr. offered and sold CSDOs with a total face value of more than $17 million to approximately 180 investors. Investors received several million dollars in payments from W Financial Group in return for their investments, but ended up losing more than $12 million.

In pronouncing the sentence, Judge Lynn noted that this was a “horrible crime” and “a lot of elderly people lost their life savings.”

Judge Lynn ordered that this sentence be served consecutively to the 60-year federal prison sentence that Abdulwahab is currently serving for his role in another securities fraud scheme out of the Eastern District of Virginia.

The cases were investigated by the FBI and the FDIC Office of Inspector General, with substantial assistance from the Enforcement Division staff of the Securities and Exchange Commission. Assistant U.S. Attorney Alan M. Buie was in charge of the prosecutions.

Source: U.S. Attorney’s Office for the Northern District of Texas

 

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