Insurance Agent Bilked Old-Timers for $600K

AMARILLO, Texas (CN) - A federal jury convicted an insurance agent of defrauding elderly clients of more than $600,000. Her son has pleaded guilty to money laundering.

The jury convicted 60-year old Janice Edwina Demmitt, of Amarillo, of 20 of the 27 counts: conspiracy to commit money laundering, eight counts of wire fraud and 11 counts of money laundering.

Her son, Timothy Fry, 33, pleaded guilty in July to one count of money laundering.

Prosecutors said Demmitt and her son worked as independent agents in Amarillo, selling Allianz Life Insurance annuities to investors from 2006 to 2009. Most of their clients were elderly.

"Demmitt and Fry represented to their clients that Allianz would match each investment they made, up to $100,000, and encouraged their investors to either cash-in or borrow against their existing Allianz annuities and use those proceeds to reinvest to take advantage of the 'matching' funds," prosecutors said in announcing the verdict. "However, instead of reinvesting their funds as they told their clients they would do, Demmitt and Fry deposited the funds into their personal accounts. In fact, evidence presented showed that they tricked their investors with the promise of the matching investment money so that the clients would liquidate their legitimate investment accounts. More than $600,000 in client funds was transferred into Demmitt's and Fry's personal accounts."

Conspiracy and money laundering are each punishable by up to 20 years in prison and a $250,000 fine. Wire fraud is punishable by up to 10 years in prison and a $250,000 fine. Restitution may also be ordered.

Demmitt and Fry are free on bond. They will be sentenced in October.

Allianz has distanced itself from the independent agents, saying it terminated Fry's contract in May 2008 and Demmitt's contract in January 2009.

"When suspicious activities were discovered, Allianz Life immediately reported the matter to the authorities and assisted in their investigation of the case," Allianz spokesman Jeff Faust said. "Allianz Life also provided full reimbursement to the victims who lost money and, as a result, are being listed by the prosecutors as entitled to restitution, if there is any."

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