Colorado Agent Pleads Guilty to Fraud, Money Laundering

A Billings, Mont., insurance agent has pleaded guilty to issuing $160,000 in construction bonds on behalf of two insurance companies and keeping the premiums.

Michael D. Hutton, 59, also acknowledged that he forged customers’ names on premium financing agreements to obtain loans purportedly to pay the customers’ insurance premiums.

Hutton, the principal of M.D. Hutton Insurance in Billings, pleaded guilty at his arraignment to wire fraud, mail fraud and money laundering.

Senior U.S. District Judge Jack Shanstrom scheduled Hutton’s sentencing for Dec. 20. He remains free on conditions.

Prosecutors said the bond fraud occurred over a five-year period from May 1999 to May 2004. Hutton told investigators he kept the money because he was broke and had suffered business losses.

Assistant U.S. Attorney Kurt Alme said S.E. Inc. of Deaver, Wyo., a power line substation construction company, paid Hutton $160,152 for 38 performance and payment bonds. Hutton issued the bonds on behalf of St. Paul Mercury Insurance Co. and St. Paul Fire and Marine Co., but kept the money. Performance bonds promise the bonding company will pay if a contractor fails to perform promised work. Payment bonds guarantee subcontractors will be paid.

In the mail fraud scheme, which ran from September 2002 to May 2004, Hutton forged and submitted 28 premium financing agreements to Provident Financial Inc., on behalf of 12 customers.

Provident would then pay loan proceeds to Hutton or directly to the insurance company issuing the customers’ policies. When Provident provided the loan proceeds to Hutton, he kept them. When Provident provided them to the insurance company, he kept some or all of the premiums paid to him by the customer.

Hutton used some of the loan proceeds and premiums to make payments on loans to Provident.

The money laundering count charged that Hutton sent Provident a check for $7,067, using money he had obtained in the mail fraud scheme, to make a loan payment.