A former Simsbury resident, now serving a 36-month federal sentence, has been found guilty of 57 counts of conspiracy, mail and wire fraud, money laundering and illegal monetary transaction offenses stemming from a scheme to defraud insurance companies.
According to federal officials, Daniel Carpenter, 62, devised a scheme to defraud insurance companies into issuing insurance policies on the lives of elderly people for his benefit and other investors. The illegal action is also known as a stranger-originated life insurance scheme.
Carpenter, it was said in court, controlled a series of companies, based in Simsbury and Stamford, that developed the Charter Oak Trust, an employee welfare benefit plan and trust whose primary objective was to secure insurance policies on the lives of elderly individuals that could be held by Carpenter’s companies as investments, or resold on the life settlement market, which is a third-party market for life insurance policies.
Federal officials said insurance agents working with, for, or on behalf of Carpenter and his companies approached elderly individuals (known in legal parlance as the “Straw Insureds”). Based on the false applications that were submitted to the insurance providers, the Charter Oak Trust procured 84 insurance policies that had a total aggregate death benefit of more than $459 million on the lives of 76 different Straw Insureds. In addition, another company controlled by Carpenter received more than $12 million in commissions from the insurance providers, who would not have paid the commissions had they known about the false representations on the insurance applications and the true nature of the Charter Oak Trust.
Carpenter and his agents submitted to several insurance providers numerous insurance applications that contained several material misrepresentations, including falsely denying that third-parties were paying the premiums for the insurance, falsely denying discussions about the resale of the policies, falsely inflating the net worth and/or income of the insured, and falsely claiming that the insurance was being purchased for legitimate estate planning-related needs.
The applications purported that the Charter Oak Trust was a bona fide welfare benefit trust under Internal Revenue Code Section 419(e), where employers would be making contributions to the Charter Oak Trust in order to fund the life insurance policies for the benefit of certain select employees.
The premiums were funded by loans primarily from another company headquartered in Simsbury and controlled by Carpenter. In many cases, those loans were, in turn, financed by another third-party financing company based in Stamford. The loan arrangements were withheld from the insurance providers, who would not have issued policies had they known the true nature of the Charter Oak Trust, and had the insurance applications been filled out truthfully, federal officials said..
Carpenter will be sentenced in August. He is currently serving a 36-month term of imprisonment for a previous mail and wire fraud conviction in Massachusetts.
