ARLINGTON, Va. — Academy Life Insurance Company has agreed to pay the U.S. government and servicemembers $160 million to resolve charges of fraud, prosecutors said Thursday.

The company, headquartered in Frazer, Pa., “engaged in a sophisticated scheme to defraud military servicemembers who purchased life insurance policies from the company between 1991 and 1998,” according to a civil complaint filed by United States Attorney Patrick Meehan.

Academy Life has agreed to pay $160 million in penalties, as well as costs and restitution, including a $1 million civil penalty and $505,000 to the government to cover the investigation.

For policyholders, the company has agreed to increase the face value of all in-force coverage by 6.5 percent, which means a policyholder with a $100,000 life insurance policy will get $106,500 at death. The value of this increase is about $160 million, Justice Department officials said.

Meanwhile, Academy Life will pay $2.7 million to all policyholders who canceled their policies between 1991 and 1998 — about 110,000 people.

The company also agreed to never sell another insurance policy in the United States.

In 1991, Academy Life signed an agreement with the Non Commissioned Officer Association (NCOA). In return for its exclusive endorsement of Academy Life, NCOA received $700,000 each year, plus 1 percent of sales. NCOA also got some stock benefits from the company.

NCOA President David Sommers said in a telephone interview Thursday that endorsement deals are not illegal or uncommon between nonprofit organizations and commercial vendors.

“With any big organization, you can’t survive on membership dues alone,” said Sommers. NCOA currently has 65,000 members.

But the government’s allegations of “secret agreements,” between Academy and NCOA, Sommers said, “is so much crap I cannot believe it.”

“Secret this and secret that — they are making it sound like we had some kind of conspiracy,” Sommers said. “That’s not true.”

Sign Up for Daily Headlines

Sign up to receive a daily email of today's top military news stories from Stars and Stripes and top news outlets from around the world.

Sign Up Now