The Associated Press March 18, 2011, 10:07AM ET

http://www.businessweek.com/ap/financialnews/D9M1ME8G1.htm

A Virginia investor who lost $100,000 testified Thursday that he was led to believe his money was safe in the hands of a business run by a Texas man charged with fraud, conspiracy and money laundering.

Philip Kersey, 68, of Mechanicsville said he was told his investment would be held in escrow and that he was guaranteed a 10 percent gain. But when the time came to cash in, he got nothing and learned that the company was in bankruptcy.

Kersey testified in the trial of Christian Allmendinger of Houston, one of the founders of A&O Life Funds. Prosecutors claim A&O bilked about 800 investors in three dozen states and Canada out of more than $100 million. A&O bought life insurance policies from insured people at less than face value, then collected the benefits when those people died and paid off investors.

According to prosecutors, Allmendinger and his associates illegally portrayed investments as risk-free and misrepresented many aspects of their business.

"I thought it was safe," Kersey said of his investment with A&O. He said he probably would not have invested in the company had he known his money would not be held in escrow.

Five other people have pleaded guilty to roles in the scheme. Another alleged co-conspirator, Adley Abdulwahab of Spring, Texas, is scheduled for trial in July.