Massachusetts Man With AIDS Sentenced to More Than Five Years for Insurance Fraud Scheme

U.S. District Judge Nathaniel Gorton on Monday sentenced Darrin Stafford, a Gardner, Mass., resident living with AIDS, to five years and 10 months in prison for attempting to defraud insurance companies and investors of hundreds of thousands of dollars in life and viatical policies, the Worcester Telegram & Gazette reports. Stafford, who was charged with mail fraud and money laundering, was also ordered to forfeit $575,000 to the government, the U.S. attorney's office said. Stafford was diagnosed with AIDS in 1995 but lied about his health condition to obtain life insurance policies valued at $950,000. He then presented the fraudulently obtained policies, along with his correct medical records, to viatical brokers to receive "immediate payment of a percentage of the death benefit," the office said. Under viatical settlements, life insurance policy shares owned by terminally ill patients are sold through brokers to investors. Investors pay a discounted percentage of the policy's face value, part of which goes to the ill patient, and receive the face value of the life insurance policy when the patient dies, plus 12%-40% interest based on the length of time the insured patient lives. In addition to trying to sell his own life policies, Stafford obtained life insurance totalling $7 million in the name of at least one other person not living with AIDS, then substituted his own medical records and gave false identification to viatical brokers to "fraudulently sell the policies" of healthy people and again receive immediate payment of a death benefit percentage, the U.S. attorney's office said (Hill, Worcester, Telegram & Gazette, 10/3).