PEORIA – James P. Smith, a former insurance agent who operated out of a Forsyth office, pleaded guilty to four federal criminal counts Thursday morning in U.S. District Court in Peoria for defrauding clients out of more than $310,000 from February 2001 to July 2016.
The sentencing hearing for Smith, a 60-year-old Mount Zion resident, is scheduled for July 20 for guilty pleas on two counts of mail fraud and one count each of wire fraud and money laundering.
According to federal sentencing guidelines, each count is punishable by up to 20 years in federal prison.
Three of the counts each carry a fine of up to $250,000; the money laundering count carries a fine of up to $500,000 or twice the value of transactions involved, whichever is greater.
Smith preyed on elderly clients, including two 87-year-old women. He stole $58,049 from one of the 87-year-old women and $57,875 from an 86-year-old man and his wife.
Smith, who originally was charged with 25 felony counts in Macon County Circuit Court in eight separate cases, is being held in jail on $255,000 bond on the state charges. It is likely the original state charges will be dismissed when all of Smith's victims receive restitution and he begins serving his term in the U.S. Bureau of Prisons.
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The Macon County prosecutors, who routinely meet with federal prosecutors, turned the case over to federal authorities by mutual agreement.
In general, state authorities turn over cases to federal prosecutors because they have more extensive resources and the offenders are more likely to serve longer prison terms if convicted. Federal authorities also have resources available to discover the assets of offenders and liquidate them, which could provide restitution to victims in cases such as this one.
One reason the Macon County State's Attorney's Office did not dismiss the original charges is because federal authorities often release defendants from custody in cases of nonviolent crimes. The state prosecutors wanted him to remain in custody.
Smith was arrested on June 23 after it was reported to authorities that Smith, who was serving as power of attorney to a victim older than 80, wrote checks to himself from the victim's account totaling more than $36,000. He also swindled the 86-year-old man and his wife, while serving as power of attorney for the husband from December 2013 to October 2015.
When the Herald & Review published the account of Smith's arrest, other victims contacted authorities, and the cases began to pile up.
Chief Judge James E. Shadid of the Central Illinois District is presiding in the case. The investigation was conducted by Macon County State's Attorney's Investigator David Cook, the FBI and the Macon County Sheriff’s Office. Supervisory Assistant U.S.Attorney Eugene L. Miller is prosecuting the case, with the assistance of Macon County prosecutors.
As part of his plea agreement, Smith admitted he cashed out insurance policies or annuities of his clients without their knowledge or permission. He used his clients' funds to pay his attorney’s fees, bankruptcy fees and to make annuity payments to other clients, to prevent them from discovering his fraudulent activities.
Smith requested that his clients write checks to “MSM, Inc.,” which he told them would be used for insurance or investment company payments. The intitials actually represented Main Street Marathon, a Mount Zion gas station that Smith owned. Smith also used the funds he stole from clients to make mortgage payments on his residence.