A former insurance agent has been sentenced to 27 months in prison for fraud. Gary Edward Hibbing, 53, pleaded guilty to two counts of wire fraud and two counts of money laundering.
“He took advantage of his clients’ trust,” said Oklahoma Insurance Commissioner John D. Doak. “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. I want to thank the U.S. Attorney for the Northern District of Oklahoma, the IRS and the Arkansas Insurance Department for their assistance in this case.”
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.
Through a joint investigation with the U.S. Attorney’s Office, Oklahoma Insurance Department investigators found that Hibbing defrauded his victims through a scheme called “twisting.” It’s an insurance industry term that refers to the fraudulent practice by an agent of convincing his client to surrender his 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. Hibbing also provided fraudulent information to insurance companies to facilitate the twisting.
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 from Oct. 17, 2007 to March 4, 2013.
Although the Oklahoma Insurance Department revoked Hibbing’s license on March 4, 2013, he continued to sell annuities by forging another agent’s name to transact business.