Farmington Woman Arraigned on Federal Wire Fraud and Identity Theft Charges
ALBUQUERQUE –Michelle Smith, 31, of Farmington, N.M., was arraigned this morning in federal court on an 18-count indictment charging her with wire fraud and aggravated identity theft charges. Smith entered a not guilty plea to the indictment and was released on her own recognizance pending trial, which has yet to be scheduled.
The indictment, which was filed on Feb. 26, 2014, includes 14 counts of wire fraud and four counts of aggravated identity theft arising from Smith’s alleged scheme to defraud Allstate Workplace Division and American Heritage Life Insurance (Allstate) of approximately $224,000 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 pays its brokers a commission for each Allstate insurance policy the broker sells. When Allstate receives a new policy enrollment, Allstate pays the broker an advance commission amounting to a percentage of six months’ work of premiums on the policy. If the enrollee cancels the policy or fails to pay premiums for six months, the broker is required to return the advance commission to Allstate. When Smith was employed by Wells, Wells paid Smith 70% of the advance commissions she allegedly generated by submitting Allstate insurance policy enrollments.
The indictment alleges that from Aug. 1, 2009 through May 3, 2010, Smith devised a scheme to defraud Allstate and Wells by submitting fraudulent policy enrollments and obtaining advance commissions to which she was not entitled. During this ten month period, Smith allegedly submitted enrollments in the names of approximately 150 different enrollees for a total of approximately 505 Allstate insurance policy enrollments. The enrollment forms allegedly transmitted electronically to Allstate by Smith were in the names of individuals who had not purchased insurance from Allstate and had forged signatures. According to the indictment, between Nov. 2009 and April 2010, Smith allegedly received approximately $224,000 in advance commissions based on the fraudulent enrollments she submitted to Allstate.
Smith also is charged with unlawfully using the identification of others, including their names, addresses, telephone numbers, Social Security numbers, dates of birth and driver’s license numbers, to facilitate four of the fraudulent enrollments. The indictment includes forfeiture allegations that seek forfeiture of assets constituting or derived from the proceeds of Smith’s alleged criminal activity.
If convicted, Smith faces a maximum penalty of 20 years in prison on each of the 14 wire fraud counts. Smith also faces a mandatory two year prison sentence on each of the four identity theft counts that must be served consecutive to any prison sentence imposed on the wire fraud charges.
The charges in the indictment are merely accusations, and Smith is presumed innocent unless proven guilty beyond a reasonable doubt.
This case was investigated by the Farmington office of the FBI and is being prosecuted by Assistant U.S. Attorney Jeremey Peña.