Santa Clara Insurance Broker Pleads Guilty To Wire Fraud And Mail Fraud In Theft From Widow’s Insurance Policy
SAN JOSE – Gary Thornhill pleaded guilty today to wire fraud and mail fraud in connection with a scheme to steal more than a million dollars from a client’s trust account, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The plea was accepted by the Honorable Lucy M. Koh, U.S. District Judge.
On March 24, 2016, a federal grand jury indicted Thornhill, 64, of Santa Clara, on charges that he used his position in a boutique insurance brokerage to withdraw funds from a widow’s client trust account. During today’s plea proceedings, Thornhill admitted he is a licensed insurance broker who owned and operated a boutique insurance brokerage in Santa Clara. In 1998, he sold an insurance policy to a married couple and, after the husband passed away in 2005, the widow became the sole insured of the plan. In or about February 2008, Thornhill became the trustee of the entity that was the legal owner of the policy. Thornhill acknowledged that he owed a fiduciary duty to the widow both as his client and as the trustee for the entity that managed the insurance policy. Thornhill admitted that instead of acting in his client’s best interest, he transmitted written requests for funds to be drawn against the cash value of the widow’s insurance policy—he did so without the widow’s prior knowledge, consent, or authorization.
Specifically, on October 27, 2011, Thornhill faxed a request for disbursement from the existing cash value of the policy in the net amount of $800,000. After receiving the check in the mail, Thornhill deposited it into a bank account of which he was the only authorized signatory; he thereafter transferred all of the funds into a personal bank account that he controlled. Further, Thornhill admitted he spent all of the funds he had obtained from the policy on personal expenses that were unrelated to his client. In sum, as a result of his scheme, the defendant obtained nearly $1.5 million in unauthorized funds from his client’s policy that he used for his own personal benefit and purposes.
The grand jury charged Thornhill with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of mail fraud, in violation of 18 U.S.C. § 1341. Pursuant to today’s plea agreement, Thornhill pleaded guilty to both counts without a written agreement. Judge Koh has set sentencing for September 14, 2017, at 10:00 a.m. The defendant remains free on bond.
The defendant faces a maximum sentence of 20 years’ imprisonment, a fine of $250,000, plus restitution for each of the two counts with which he was charged. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation the by the Federal Bureau of Investigation.