Life Insurance Agents Con

SAN FRANCISCOThre - three former Bay Area life insurance agents will serve time behind bars for their roles in an elaborate scheme to collect millions of dollars by submitting fraudulent life insurance policies, according to the U.S. Department of Justice.

Last year, a jury convicted, Ernesto Magat, 35, of Hayward, and 32-year-old San Jose residents Behnam Halali and Karen Gagarin of conspiracy to commit wire fraud, wire fraud and aggravated identity theft.

U.S. District Judge Susan Illston sentenced Halali to five years in prison, Magat to four years and Gagarin to three years. The defendants also were ordered to pay about $2.8 million in restitution to their former employer, American Income Life Insurance Co.

While working for the company, the trio submitted hundreds of applications for life insurance polices on behalf of people at least some of whom did not know that a policy was applied for or issued in their name, or did not want a life insurance policy, prosecutors said.

They then shared the commissions and bonuses issued by the company in connection with the policies.

Prosecutors said personal information used to apply for the policies was collected through various means, including hiring recruiters to find people to take medical exams and paying people to participate in a fictitious survey of a medical exam company.

The trio opened hundreds of bank accounts to fund the premiums on the policies and typically paid the premiums for a few months before letting the policies lapse, prosecutors said. They also returned verification calls to the company purporting to be the applicants.

In addition to doling out prison sentences, Illston ordered the defendants to serve 140 hours of community service and three years of supervised release. They are scheduled to self-surrender on or before March 30 to begin serving their prison terms.