Grove insurance agent sentenced to prison after defrauding clients
A federal judge has sentenced a former Grove insurance agent to 27 months in prison for fraud after he cheated clients out of money in a type of annuity scheme known as "twisting."
Gary Edward Hibbing, 53, of Grove, pleaded guilty to two counts of wire fraud and two counts of money laundering.
"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."
Hibbing, former owner of Grand Lake Investments and Insurance in Grove, was also ordered to pay $505,126.43 in restitution. His federal prison term will be followed by three years of supervised release.
A joint state and federal investigation found that Hibbing defrauded his victims through a scheme the insurance industry calls "twisting."
In a twisting scheme, an insurance agent will convince a client to surrender an existing annuity in exchange for a new one. Because there is a penalty for early termination of an annuity, the client loses money while the agent makes money on a new commission.
In this case, Hibbing lied to his clients to convince them to surrender their existing annuities and immediately purchase new ones. He never mentioned the early termination penalty, according to the Oklahoma Insurance Department.
Hibbing also provided fraudulent information to insurance companies to facilitate the twisting, the agency said.
The investigation found that one of Hibbing's clients lost nearly $14,000 for surrendering one policy while Hibbing's commission on the client's new annuity was more than $17,000. Investigators found twisting tied to 80 different annuity policies between 2007 and 2013, the agency said.
Although the state Insurance Department revoked Hibbing's license on March 4, 2013, he continued to sell annuities by forging another agent's name to transact business, the agency said.
The U.S. attorney's office and Oklahoma Insurance Department led a joint investigation into Hibbing's scheme.
The Internal Revenue Service and the Arkansas Insurance Department also assisted in the case.