Insurance Agent Charged with Defrauding Clients, Money Laundering

Insurance Agent Charged with Defrauding Clients, Money Laundering

A federal grand jury had indicted a Decatur, IL., man who worked as an independent insurance agent. The indictment, returned Sept. 7, charges James P. Smith, 60, with a fraud scheme that allegedly exposed clients to a potential loss of more then $250,000 from February 2011 to July 2016.

According to the indictment, from at least February 2011 through July 2016, Smith represented that he was employed by or owned the Prairie State Insurance Agency in Decatur, Ill., and he acted as an independent agent. Smith solicited clients to purchase insurance, including whole life insurance, and financial products, including annuities. As part of the alleged scheme, Smith falsely represented the minimum rate of return the annuities could obtain for his clients. Instead of investing clients’ money in insurance, annuities, or financial products, Smith allegedly used the money for his own benefit.

As alleged in the indictment, Smith requested payments be made payable to “MSM, Inc.,” which he represented was the insurance company or the investment company for the annuity the clients were purchasing. In fact, as Smith knew, MSM, Inc, was actually “Main Street Marathon,” a gas station in Mt. Zion, Ill., owned by Smith. Rather than use the clients’ funds as represented, Smith used the money to finance the gas station without his clients’ knowledge. Smith also used his clients’ money to make mortgage payments on his personal residence.

Further, Smith allegedly cancelled or cashed out clients’ insurance policies or annuities without their knowledge or permission, and used the cash value and / or future premiums or payments for his personal benefit, including to pay his personal attorney’s fees, his personal bankruptcy fees, and as purported annuity payments to other clients to prevent them from discovering that he had not purchased their annuities as promised.