Farmington Woman Pleads Guilty to Committing Wire Fraud to Facilitate Scheme to Defraud Insurance Companies
ALBUQUERQUE—Michelle Smith, 33, of Farmington, N.M., pleaded guilty this morning in federal court in Albuquerque, N.M., to committing wire fraud in furtherance of a scheme to defraud insurance companies. Under the terms of her plea agreement, Smith will be sentenced to a prison term within the range of 18 to 24 months. The plea agreement also provides for the entry of an order requiring Smith to pay restitution to the victims of her criminal conduct as well as the entry of a money judgment against Smith in the amount of $128,371.00, which represents a portion of the profit she derived from her criminal activity.
Smith was charged in Feb. 2014 in an indictment that included 14 counts of wire fraud and four counts of aggravated identity theft. The charges arose out of Smith’s scheme to defraud Allstate Workplace Division and American Heritage Life Insurance (Allstate) of approximately $224,000.00 in advance commissions by submitting fraudulent policy enrollments. At the time of the offenses charged in the indictment, Smith was employed by Wells Insurance Agencies (Wells), exclusive brokers for Allstate with offices in Farmington, as an insurance agent to sell Allstate insurance policies.
According to the indictment, Allstate paid its brokers a commission for each Allstate insurance policy the broker sold. When Allstate received a new policy enrollment, Allstate paid the broker an advance commission amounting to a percentage of six months’ work of premiums on the policy. If the enrollee canceled the policy or fails to pay premiums for six months, the broker was required to return the advance commission to Allstate. When Smith was employed by Wells, Wells paid Smith 70% of the advance commissions she generated by submitting Allstate insurance policy enrollments.
The indictment alleged that from Aug. 2009 through May 2010, Smith devised and engaged in a scheme to defraud Allstate and Wells by submitting fraudulent policy enrollments and obtaining advance commissions to which she was not entitled. During the ten month period, Smith submitted enrollments in the names of approximately 150 different enrollees for a total of approximately 505 Allstate insurance policy enrollments. The enrollment forms transmitted electronically to Allstate by Smith were in the names of individuals who had not purchased insurance from Allstate and had forged signatures. Between Nov. 2009 and April 2010, Smith received approximately $224,000.00 in advance commissions based on the fraudulent enrollments she submitted to Allstate.
Today Smith pled guilty to Count 13, a wire fraud charge, of the Indictment and admitted that between Nov. 2009 and April 2010, she devised a scheme to fraudulently obtain advance commission payments from Allstate and Wells. She further admitted facilitating the scheme by submitting 505 insurance policy enrollments to Allstate, all of which were fraudulent because none of the persons listed on the enrollment forms had agreed to purchase insurance policies from Allstate. Smith acknowledged that as a result of her fraudulent scheme, Allstate issued approximately $324,239.00 in advance commission payments and that she personally received at least $128,371.00 of those payments.
A sentencing hearing for Smith has yet to be scheduled.
This case was investigated by the Farmington office of the FBI and is being prosecuted by Assistant U.S. Attorney Jeremy Peña.