The Pension Company's $7.96 million theft from injured children's annuity funds
Joseph Edward Gargan, CEO of The Pension Company in Arlington, Virginia, was hired by the federal government and by a New York hospital to purchase annuities for 13 children harmed by medical malpractice or the loss of a parent to medical negligence. Between 2015 and 2019, Gargan embezzled $6,925,000 of nearly $16 million the government provided for that purpose, plus a further $1,032,750 entrusted to him by St. John's Riverside Hospital for a severely disabled child's trust, a combined $7,957,750. He created false documents purporting to show annuities had been purchased when the money had instead been converted to his own use. Gargan pleaded guilty in June 2020 and was sentenced in September 2020 to 70 months in federal prison and $9,117,165 in restitution.
- Year
- 2020
- Where
- United States
- Outcome
- Sentenced
- Reported loss
- $8.0 million
- Victims
- 13
- Schemes
- Structured settlement purchase fraud
- Last reviewed
- 2026-10-15
The facts, as recorded
- Joseph Gargan, 59 at his plea and 60 by sentencing, of Round Hill, Virginia, was CEO and owner of The Pension Company, Inc., an Arlington, Virginia firm hired to execute settlement agreements between civil litigants and to purchase annuities for minor plaintiffs.
- Between December 2015 and August 2019, the US government transferred a total of $15,925,000 to The Pension Company to purchase annuities and execute six settlement agreements for children harmed by medical malpractice or negligence at federally insured or operated facilities; Gargan embezzled $6,925,000 of that money.
- Gargan separately embezzled $1,032,750 entrusted to him by the self-insured St. John's Riverside Hospital in Yonkers, New York, meant to establish a trust fund for a severely disabled child; court documents say that money is now gone, with nothing available to pay for the child's care.
- The combined amount embezzled was $7,957,750, described in press coverage as approximately $8 million.
- Prosecutors said Gargan concealed the theft by creating false documents purporting to show he had purchased the annuities, and by making payments to some plaintiffs that he falsely represented as annuity proceeds, when they were in fact only meant to conceal his ongoing fraud; by the end of 2018 he stopped producing false annuity contracts and shifted to 'lies, misdirection and stall tactics' instead, according to the government's sentencing memorandum.
- Gargan pleaded guilty in June 2020 to one felony count of wire fraud and one felony count of embezzlement of government funds, facing up to 30 years at sentencing.
- Gargan was sentenced on September 23, 2020 to 70 months in federal prison, the minimum under federal sentencing guidelines, which allowed up to 87 months, and was ordered to pay $9,117,165 in restitution, covering the embezzled funds plus the added cost of the replacement annuities the government had to purchase.
- In his own letter to the sentencing judge, Gargan said the scheme began after an employee failed to lock in an annuity purchase in a case called Whitney v. U.S.A. before interest rates dropped, raising the cost by $100,000 and ultimately requiring $1.2 million more than had been deposited; he said he then 'continued to shift money from one government settlement to the next to make up for the previous losses,' calling it a 'slippery slope.'
- Several members of the Kennedy family, to whom Gargan is related, wrote letters asking for leniency, including Edward M. Kennedy Jr. and Ethel Kennedy; Washington attorney Kenneth Feinberg, who oversaw the September 11 Victim Compensation Fund, said he had turned to Gargan for structured-settlement advice.
Why this case matters
Every other case on this page involves a company buying someone else’s existing settlement at an unfair price. This one is the opposite failure mode: Gargan’s firm was not buying anyone’s payment rights, it was trusted, by the federal government and by a hospital, to actually purchase the annuities that would become those payment rights in the first place, and simply kept the money instead.
A scheme that grew by feeding on itself
Gargan’s own account, in his letter to the sentencing judge, describes the embezzlement starting from a single missed deadline, an employee who let interest rates move against one annuity purchase, and then compounding: each new settlement’s funds covered the shortfall from the one before it. Whether or not that account minimizes his culpability, it describes a mechanism distinct from a one-time theft, a trust account used to plug a hole that kept reopening for four years.
The child with nothing left
The St. John’s Riverside Hospital trust, meant to fund a severely disabled child’s care for life, is the single starkest fact in this case: court documents say the $1,032,750 entrusted for that purpose is gone, with nothing available to pay for the child’s care, a direct, named consequence rather than an abstract dollar figure.
The caveat
Gargan pleaded guilty and was sentenced; both the plea and the 70-month sentence, plus the $9,117,165 restitution order, are matters of court record reported directly by the sources cited here, not allegations. This page has not located and does not rely on any report of the sentence being later modified; it describes the sentence as originally imposed in September 2020.
People named in the public record
- Joseph Edward Gargan · convicted
Sources
- Virginia executive admits embezzling from children's funds. NBC4 Washington / The Associated Press. Accessed 2026-10-15. Supports: Gargan's June 2020 guilty plea, his age, his role as CEO of The Pension Company, the roughly $7 million taken from nearly $16 million in government funds between 2015 and 2019, and the additional roughly $1 million taken from the New York hospital settlement.
- Structured Settlement Swindler With Kennedy Ties Sentenced to Prison. Claims Journal. Accessed 2026-10-15. Supports: The September 23, 2020 sentence of 70 months, the $9,117,165 restitution order, the exact $6,925,000 and $1,032,750 embezzled figures, the false annuity contracts and concealment tactics, the disabled child's now-empty trust, Gargan's own sentencing letter, the Kennedy family's leniency letters, and Kenneth Feinberg's statement.