Date: 03-11-2014

Case Style: United States of America v. Barbara Eberle

Case Number: 2:07-cr-00366-GEB

Judge: Garland E. Burrell Jr.

Court: United States District Court for the Eastern District of California (Sacramento County)

Plaintiff's Attorney: Lee Bickley and Thomas J. Eme

Defendant's Attorney: David J. Cohen

Description: Barbara Eberle, 66, and Robert Eberle, 75, both of Oxford, Ga. but formerly of Chico, Calif. were sentenced today by United States District Judge Garland E. Burrell Jr. to five years in prison and ordered to pay more than $13.2 million in restitution, United States Attorney Benjamin B. Wagner announced. The Eberles pleaded guilty to securities fraud on July 20, 2012.

The defendants were indicted on August 22, 2007, for a fraud scheme that involved life settlement insurance contracts or viaticals. A “life settlement” or “viatical settlement” was a transaction in which a person sold the death benefit of his or her life insurance policy to a third party in return for a lump sum cash payment, which represented a discounted percentage of the policy’s face value. The insured was usually ill or elderly and would sell his or her interest in the insurance policy to a company. That company would resell the interest to investors, in whole, or as fractional interests. The return on the investment depended on the length of time the ill or elderly person lived, with a greater return the sooner the insured person died. If the insured person did not die, there was no return on the investment. The life expectancy of the insured person was to be estimated by a medical doctor, after a review of the insured person’s medical records.

According to court documents, Donald Neuhaus operated a number of businesses for the purpose of acquiring viaticals and life settlements from insured people and marketing these viaticals and life settlements to investors. He had sales people working on his behalf, including Robert and Barbara Eberle, who sold fractionalized interests in these viaticals. Robert Eberle owned Lexus Financial and later Eagle Investments in Chico with his wife Barbara Eberle. Robert and Barbara Eberle were the primary sales force for Donald Neuhaus. They created marketing materials and sold viaticals and life settlements to investors on behalf of Donald Neuhaus. Robert Eberle also recruited salespeople, such as co-defendant Robert Koppel, to work as independent contractors selling Neuhaus’s policies.

According to court documents, from 2001 until 2006, the Eberles made material misrepresentations and omissions when selling the life settlement insurance contracts to investors. For example, they told investors that the investments were safe, secure, and risk free and that investors were guaranteed high rates of return. As a result of their fraud, investors lost at least $13.2 million.

In February 2003, the California Department of Corporations issued a desist and refrain (D&R) order prohibiting Robert Eberle and Barbara Eberle and Lexus Financial Group from selling viaticals and life settlements in the State of California. The Eberles continued to sell life settlements in the States of California until 2006.

According to court documents, Donald Neuhaus died in November 27, 2007. Other defendants were previously sentenced: Mark Wolok to five years in prison, Kimberly Snowden to nine months in prison, Clifford Palm to one year in prison, and Robert Koppel to three years’ probation.

This case is the product of an investigation by the IRS-Criminal Investigation with assistance from the U.S. Postal Inspection Service. Assistant United States Attorney Lee Bickley prosecuted the case. The defendants were remanded into custody on March 7, 2014.

Outcome: Sentenced to five years in prison and ordered to pay more than $13.2 million in restitution.

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Defendant's Experts:

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