Billings, Mont. Man Sentenced for Insurance Fraud

A Billings, Mont., insurance agent who pleaded guilty to fraud was sentenced to three years in prison.

Michael D. Hutton, 59, was also ordered to pay $185,000 in restitution. U.S. District Judge Jack Shanstrom said Hutton could remain free until he is assigned to a prison.

Hutton pleaded guilty in September to wire fraud, mail fraud and money laundering for issuing construction bonds on behalf of two insurance companies and keeping the premiums. He cooperated with prosecutors.

Hutton was the principal of M.D. Hutton Insurance in Billings. As part of the wire fraud scheme, Hutton issued 38 performance bonds from May 1999 until May 2004 on behalf of St. Paul Mercury Insurance Co. and St. Paul Fire and Marine Co. to S.E. Inc. in Deaver, Wyo. SEI paid Hutton $160,152 for the bonds.

First Assistant U.S. Attorney Kurt Alme said Hutton kept the premiums paid by SEI and did not notify the St. Paul insurance companies he had issued the bonds.

In the mail fraud, Hutton submitted 28 premium financing agreements to Provident Financial Inc. from 2002 to 2004 for 12 customers to obtain loans purportedly to pay the customers’ insurance premiums.

Hutton forged the names of customers on the agreements and sent them to Provident, which would pay loan proceeds to Hutton or to the insurance company issuing the customers’ policies. When Provident provided loan proceeds to Hutton, he kept the money. When Provident provided the loan proceeds to the insurance company, Hutton kept some or all of the premiums paid to him by the customer. Hutton used some or all of these loan proceeds and premiums to make payments on the loans to Provident.

Hutton’s attorney, Jack Sands, said his client tried to help people, got into financial trouble and began cutting corners.

Sands asked for a probationary sentence, saying Hutton would be better able to pay restitution.

Alme called for a prison term in the low end of the sentencing range, saying that while Hutton cooperated with authorities, Congress considers white-collar crimes serious and punishable with prison time.