(CN) - Three owners of Nebraska-based First Americans Insurance Services were sentenced to years in federal prison Thursday for a $16.6 million investment scam, federal prosecutors said.
Stella Levea, 55, and James Masat, 67, both of Grand Island, Neb., were sentenced to 97 months and Kenneth Mottin, 56, of St. Libory, to 60 months.
U.S. District Judge Richard G. Kopf, of Lincoln, also ordered them to pay $16.6 million in restitution. All three were convicted of mail fraud.
First Americans Insurance Services borrowed money from people from 2003 through 2008.
"The lenders were told that a portion of the loaned money would be used to buy collateral in the form of an annuity which would grow in value, thereby insuring the lender would be able to recoup at least the principal loaned to FAIS," prosecutors said in a statement. "During this period of time, the defendants failed to purchase annuities as promised, using the money instead for other business and personal purposes."
The defendants borrowed more than $27 million, and repaid only some of it.
Masat and Levea agreed in 2007 to a moratorium with the Nebraska Department of Banking and Finance that banned them borrowing "new money" from lenders.
"The moratorium remained in effect until FAIS ceased operations when it filed for bankruptcy on January 12, 2009," prosecutors said. "Between August 17, 2007 and January 12, 2009, while prohibited from borrowing by the moratorium, FAIS continued to borrow an additional $31.68 million in 'new money' loans from private lenders. FAIS filed for bankruptcy on January 12, 2009, and no longer operates."