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Federal Courthouse - Peoria, Illinois
Case Number: 2:16-cr-20063-JES-JEH
Judge: James E. Shadid
Court: United States District Court for the Central District of Illinois
Plaintiff's Attorney: Eugene L. Miller
Defendant's Attorney: Robert A. Alvardo - FPD
Description: Peoria, IL - Decatur Insurance Agent Sentenced for Fraud Scheme, Money Laundering
Chief U.S. District Judge James E. Shadid on July 20, 2017 sentenced James P. Smith, an independent insurance agent, to 63 months in federal prison for defrauding his clients from February 2011 to July 2016. Smith, 61, of the 5400 block of Traughber Road, Decatur, Ill., was also ordered to pay $349,777 in restitution to victims of his crime. Upon release from prison, the court ordered that Smith remain on supervised release for three years. A condition of release is that Smith cannot work in insurance or other financial-related business.
On Mar. 23, 2017, Smith pled guilty to wire fraud (one count); mail fraud (two counts); and money laundering (one count.). Smith remains in law enforcement custody. Smith was previously charged in Macon County.
The Federal Bureau of Investigation and the Macon County Sheriff’s Office conducted the investigation. Supervisory Assistant U.S. Attorney Eugene L. Miller is prosecuting the case with the cooperation of the Macon County State’s Attorney’s Office.
Smith worked as an independent agent at the Prairie State Insurance Agency in Decatur. According to court documents and statements made in court, from at least February 2011 through July 2016, Smith solicited clients to purchase insurance, including whole life insurance, and financial products, including annuities. As part of the scheme, Smith admitted that he falsely represented the minimum rate of return the annuities could obtain for his clients. Instead of investing clients’ money in insurance, annuities, or other financial products, as promised, Smith used the money for his own benefit.
Smith requested that clients make payment 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., that Smith owned. Rather than use clients’ funds as represented, Smith used the money to finance the gas station and to make mortgage payments on his personal residence.
Smith also admitted he cancelled or cashed out clients’ insurance policies or annuities without their knowledge or permission, and then used the cash value and / or future premiums or payments for personal expenses. Smith admitted he used the money to pay his attorney’s fees, personal bankruptcy fees, and to make purported annuity payments to other clients to prevent them from discovering that he had not purchased their annuities as promised.
Outcome: Defendant was sentenced to 63 months in federal prison, to pay $349,777 in restitution to victims of his crime and to remain on supervised release for three years.