KC Man Pleads Guilty to $1.2 Million Arson, Insurance Fraud Conspiracy

KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man who was injured while setting a house on fire and forced to shed his burning pants in the street, pleaded guilty in federal court today to his role in a nearly $1.2 million arson and insurance fraud conspiracy.

John S. Wayne, 31, of Kansas City, pleaded guilty before U.S. District Judge Dean Whipple to one count of conspiracy to commit arson, use of a fire to commit a federal crime, mail fraud and wire fraud. In addition to the conspiracy, Wayne pleaded guilty to one count of arson.

Wayne is among six co-conspirators – all of whom have pleaded guilty – who bought, over-insured and burned five houses in Kansas City. The total actual loss to insurance companies in the scheme was $434,938, while the total intended loss was $1,196,840.

On April 23, 2011, the house at 4901 Agnes partially burned, and the fire was determined to be arson. Two days later, on April 25, 2011, Wayne and co-defendant Joshua Stamps, 28, of Independence, Mo., burned the house in another arson fire. This time the house was a total loss.

A witness saw Wayne running from the house with his pants on fire. Wayne took his pants off and left them in the street. Kansas City police detectives recovered burned sweatpants and boots from the street; DNA recovered from the pants confirmed that Wayne wore the burned pants discarded in the street. A chemical analysis established that the pants and boots had evaporated gasoline on them.

Wayne was admitted to Research Medical Center with severe burns to his legs later that day. Wayne told investigators that Stamps, who was driving, refused to take him to a hospital and instead took him home and bought him some burn cream. Wayne said the burn cream wasn’t going to work so he went to the hospital.

On June 22, 2011, as a result of false and fraudulent claims, American Family Insurance issued a check for $29,881 to Kansas City Missouri Treasurer. (This is standard procedure in event of a total loss. When the insured/owner can prove the property has been cleared of debris, the check is then refunded to the owner.) Also on June 22, 2011, American Family Insurance issued a check for $88,645 to Area Contractors, which was owned by Stamps’s mother and co-defendant, Randy Stamps, 57, of Kansas City, Mo. Area Contractors issued a purported invoice and contract for $53,000, supposedly for work done at the property. However, Area Contractors did no work.

Joshua Stamps was the leader of the conspiracy. Beginning in July 2007, Joshua Stamps bought houses costing from $6,500 to $15,000. He used co-conspirators as straw owners for three of the houses, while other co-conspirators helped commit the arsons and/or acted as tenants so the properties could be classified as rentals.

In the conspiracy that lasted until 2013, Joshua Stamps and his co-conspirators insured the houses for much more than the purchase price, in amounts from $88,000 to $307,000. Joshua Stamps and his co-conspirators made false statements on the insurance applications, such as that the houses were rented and/or occupied, that there were valuable contents in the houses, and that the houses had been renovated.

Joshua Stamps and his co-conspirators set fire to the houses. The listed owner of the house that burned would then claim a total loss with the applicable insurance company and would falsely claim they had no knowledge of, or involvement in, the fire.

Under the terms of today’s plea agreement, Wayne must pay a money judgment of $434,938, which represents the proceeds of the conspiracy. Wayne is subject to a mandatory minimum sentence of five years in federal prison without parole, up to 25 years in federal prison without parole, plus a fine up to $500,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney. It was investigated by the Kansas City, Mo., Police Department.