This story is reprinted with permission from FC&&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.
The former chief financial officer of Market Finders Insurance Corporation has pleaded guilty in federal district court to embezzling nearly $2,000,000 over a two year period, and tax evasion.
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|Diverted funds to husband's business
Sylvia Rebecca Smith, of Louisville, Kentucky, was charged with one count of wire fraud for devising an embezzlement scheme to obtain money from Market Finders and then diverting those funds to PBS Insurance Underwriting Corporation, and two counts of failing to report embezzled funds as income on her tax returns. Prosecutors said that, at the time, Smith was the bookkeeper for PBS Insurance and her husband was the sole owner.
According to the plea agreement, Smith admitted that from July 2013 through April 2015, while employed as CFO of Market Finders, she generated fraudulent loan checks from her employer and diverted it into the bank account of PBS.
Specifically, during that period, Smith devised a scheme to embezzle funds from Market Finders and Market Finders Insurance Premium Budget Corp., a subsidiary of Market Finders, by creating fraudulent insurance financing contracts between Market Finders Premium Budget and existing PBS insurance clients without the knowledge of those existing clients. Smith admitted to manipulating the records so that her theft of funds would not be detected by Market Finders.
|Personal expenses, gambling
Smith admitted that she and her husband used a portion of the fraudulent loan proceeds to fund her husband's business and to pay for personal expenses for herself and her husband and to pay for gambling activity.
Further, Smith used a portion of the proceeds to make payments on the previous loans she had falsely created from Market Finders Premium Budget. When the scheme was discovered by Market Finders and brought to an end, Smith had not repaid approximately $674,093.
Additionally, Smith admitted to failing to report approximately $258,504 in embezzled funds as income for tax year 2013 and omitting approximately $514,696 in embezzled funds as income for tax year 2014 on Form 1040 of her federal income tax return.
|Up to 26 years in prison
At sentencing, Smith agreed to pay $674,093 restitution and could be sentenced to no more than 26 years in prison. Smith was released from federal custody on a $25,000 bond and is scheduled for sentencing before Chief Judge Joseph H. McKinley, Jr., on February 5, in Louisville.
Steven A. Meyerowitz, Esq., ([email protected]) is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. This story is reprinted with permission from FC&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law.
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