The former founder and chairman of the board of The Legacy Network, an insurance brokerage agency in Rexburg, Idaho, and his son were sentenced in October in United States District Court in Pocatello.
The sentencing was announced by U.S. Attorney Wendy J. Olson.
Adrian Rand Robison, 67, of Rigby, Idaho, was sentenced to four months in prison and ordered to pay restitution of $1.3 million for mail fraud. Chief U.S. District Judge B. Lynn Winmill also sentenced Robison to 18 months of supervised released with eight months of home detention, and fined him $20,000.
Adrian Russell Robison, 38, of Idaho Falls, Idaho, the former CEO of the company, was also sentenced to four months in prison for making and subscribing false tax returns. He was also sentenced to 12 months of supervised release, the first eight months on home detention, fined $10,000, and ordered to pay restitution to the IRS of $270,631.
The defendants were charged in May, and pleaded guilty in June.
According to the plea agreement, Rand Robison, a licensed insurance agent, owned a majority interest in The Legacy Network, a company that brokered the sale of life insurance policies between the carriers that offered the policies and the independent insurance agents that marketed the policies to clients.
In return for its services, The Legacy Network received a commission paid by the carriers for each policy sold. According to the plea agreement, Rand Robison admitted that he encouraged some high net-worth clients to apply for high face-value life insurance policies with the promise of rebating all or part of the first-year premiums back to the customer. Robison further admitted that he misrepresented in agent reports and other contractual documents that he would not rebate, or otherwise finance, the premium payments of his clients.
The Legacy Network received commission payments from the insurance carriers of roughly 105 to 138 percent of the first-year premium, and Robison admitted that with those funds he rebated some of the premiums to some high net-worth clients and kept the remainder. From 2006 to 2009, the Legacy Network received roughly $1.3 million in commissions from life insurance carriers on the policies of a group of their high net-worth clients; they rebated approximately $923,497 to the clients and kept approximately $448,137, according to the charges.
According to the plea agreement, Russell Robison was aware that agents of The Legacy Network rebated all or part of the premium payments to some of their high net-worth clients, and had signed rebate checks to the clients. Neither Robison nor The Legacy Network issued IRS Forms 1099-MISC recording the rebates as income to the high net-worth clients. The company’s internal books and records recorded the rebates as deductible business expenses. After some clients’ policies lapsed due to non-payment of premiums – which occurred typically in the second year of the policies – some policies were replaced with policies issued by different insurance carriers.
According to the plea agreement, Robison admitted that for tax years 2007, 2008 and 2009, he filed a partnership income tax return for The Legacy Network, knowing that the returns contained false information by improperly overstating expenses for rebates paid.
The cases were the result of a joint investigation by IRS, the FBI, and Idaho Department of Insurance.
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