Indictment: Former Insurance Agent Swindled Policy Holders, Retired Teacher
WICHITA, KAN. – A former insurance agent has been charged in a federal indictment unsealed here today with stealing almost $2 million from policy holders, including a retired teacher known for her philanthropy, U.S. Attorney Barry Grissom said today.
Jason Matthew Pennington, 41, Bel Aire, Kan., is charged in a 51-count indictment alleging the former State Farm Insurance agent defrauded his customers and lied to beneficiaries to cover up the thefts. The counts include wire fraud and attempted wire fraud, money laundering, attempted bank fraud and making false statements to a financial institution. Pennington’s father, James L. Pennington, 65, Wichita, also is charged with four counts of filing false tax returns.
The indictment alleges that one of Pennington’s victims was Marlene Brown, who retired in 1994 following a 37-year career with the Wichita Public Schools where she served as teacher, coach and school administrator. She endowed the Marlene M. Brown Fund for the Department of Counseling, Leadership, Educational and School Psychology in the College of Education at Wichita State University.
The indictment alleges that before she died in October 2009 Brown purchased a life insurance policy from State Farm through Jason Pennington worth more than $1.3 million. She designated the Marlene M. Brown Revocable Trust as the owner and beneficiary of the policy.
In November 2008 Pennington processed a request to obtain more than $99,484 in cash from the policy. He deposited the money into his State Farm account at Home Bank & Trust Company in Wichita, and used the money to pay his personal expenses. In March 2009 Pennington entered into a contract to build a $590,000 home at 7972 E. Caribou Place in Bel Aire. By the time the house was completed in 2010, it cost approximately $650,000.
In loan application papers, Pennington failed to disclose that he was required to make monthly child support and alimony payments and that he had a line of credit and a mortgage. He also claimed as an asset an Individual Retirement Account that in fact belonged to Brown.
In June 2009, Personal Property Memoranda were purportedly created and signed by Brown allocating the percentages her charitable beneficiaries would receive and another bequeathing the remaining money to Pennington and his family and associates. Included was a bequeath of more than $1 million to Pennington.
In the following months, Pennington took money from Brown’s policy and changed the address on Brown’s insurance policy from Brown’s address to his own business address at 11040 W. Central, #108 in Wichita.
After Brown died in October 2009, Pennington collected several bags of documents from her home. He later lied to trust beneficiaries and provided them with false documents to cover up the fact he had taken the bulk of her estate for himself. He told beneficiaries that Brown’s 2002 Lincoln LS automobile had been given to a single mother. In fact, he gave the car to his father, James Pennington. He told beneficiaries that two television sets belonging to Brown were given to a young family. In fact, he planned to give the TVs to his father. He told beneficiaries that a baseball autographed by members of the New York Yankees would be given to Brown’s physician. In fact, he planned to keep the ball. He told beneficiaries that some of Brown’s estate was going to the Kansas Humane Society. In fact, the organization received no money. He told beneficiaries that part of Brown’s estate was going to Wichita State University. In fact, WSU did not receive the money.
Other victims included a couple from Garden Plain, Kan., who purchased a life insurance policy valued at more than $3.4 million through Pennington. Pennington fraudulently processed more than $1 million worth of loan requests even though the Hills were not aware the loans were being applied for in their names.
Upon conviction, the alleged crimes carry the following penalties:
Wire fraud and attempted wire fraud: A maximum penalty of 20 years and a fine up to $250,000 on each count.
Mail fraud and attempted mail fraud: A maximum penalty of 20 years and a fine up to $250,000 on each count.
Money laundering: A maximum penalty of 10 years and a fine up to $250,000 on each count.
Bank fraud: A maximum penalty of 30 years and a fine up to $1 million on each count.
Making a false statement to a financial institution: A maximum penalty of 30 years and a fine up to $250,000.
Filing false tax returns: A maximum penalty of three years and a fine up to $100,000 on each count.
The FBI and IRS - Criminal Investigation investigated. Assistant U.S. Attorney Lanny Welch and Assistant U.S. Attorney Aaron Smith are prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.