The suicide of Omaha financial adviser Joe Bonnett will trigger life-insurance payments that will wind up repaying the victims of his fraud.
People close to the case say it's now clear that those who suffered losses in the fraud also are named as beneficiaries on Bonnett's life insurance policies. In other words, he named those he bilked as people who would get paid out in the event of his death.
Clarence Mock, the attorney representing Bonnett's estate and one of the Omaha bar's most experienced civil and criminal litigators - as well other attorneys in the case - say they have never quite seen anything like it: a financial fraud committed strictly against a small circle of people whose losses were recouped only after the death of the perpetrator by his own hand.
"In death, I think anyone has to admit that Joe Bonnett gains a healthy measure of redemption with the provisions he made," Mock said.
With the court papers filed Tuesday by the Nebraska Department of Banking and Finance, the sad saga appears at an end. Nebraska regulators said there is nothing left for them to do in wrapping up the affairs of the Omaha financial adviser who swindled investors out of about $1.3 million, then committed suicide in May after being caught.
One of the life insurance policies is set to pay out $3.2 million to named beneficiaries; the other one is set to pay $4 million. The combined $7 million more than covers the $1.3 million lost by actions related to Bonnett's violations of Nebraska securities laws.
The Department of Banking and Finance asked a Douglas County District Court judge in the Tuesday filing to release the agency from further proceedings, dissolving the receivership formed to look into the matter. A receiver is a court-appointed legal and financial expert retained to investigate such affairs, identify assets and sort through claims for compensation from victims.
But in this case, there just wasn't anything to sort through. Bonnett's BWM Advisers had no assets left, according to the filing. And the roster of victims includes only a handful of people, some of whom are related to Bonnett and all of whom are beneficiaries of life insurance policies that he took out. Even after the suicide, the policies will have to pay because they were taken out more than two years before Bonnett's death.
Among the outsider beneficiaries - those who are not relatives - is Rita Smedra, who with her husband began to offer money to Bonnett to invest 25 years ago. She has had other funds on which to live comfortably as Bonnett's fraud became clear, her son said Wednesday. She has not been "in the soup lines," he said.
Still, the experience has made her wary.
"She really trusted him," Terry Smedra said.
As the case has wended through the court, the wait to recoup the money that Bonnett pilfered has been taxing. Rita Smedra expects to receive $682,000 from Bonnett's insurance, about double what the couple invested with him.
"My mom's going to be 91 years old next month," Terry Smedra said. "I hope it clears up soon so she can ease her mind before she leaves this world."
Bonnett added the would-be victims of his fraud to his life insurance beneficiary list in 2008 and 2013, Mock said. Bonnett also named his wife, Susie, other relatives and a University of Nebraska fraternity as beneficiaries of the life insurance policies.
As for whether there are any victims beyond those who will be paid by the insurance proceeds, Mock said: "There aren't any."
The state attorney general's filing indicates the same thing.
"All victims - persons known, based on reasonable investigative efforts, to have suffered pecuniary losses attributable to the defendant's violations of the Securities Act of Nebraska - have been or will be, by the disbursement of insurance proceeds, made whole," reads the state's court filing made by the Nebraska Attorney General's Office.
And it is those policy proceeds that will compensate the beneficiary-victims of the Bonnett Ponzi scheme, in which he used sums collected from new investors to pay off older ones.
The final decision on whether to end the receivership of the Bonnett estate will be up to the judge, who is expected to approve the request at a hearing next week. If the request is granted, it would terminate the state's legal proceedings against the Bonnett estate and his company.
The tale came to light in May. Bonnett was charged with two felonies by Douglas County prosecutors - first-degree forgery and insurance fraud. He shot himself on the street in late May in Omaha after police were called by Bonnett to a man "casing" the industrial building he was parked behind.
State investigators say Bonnett managed $47.5 million in assets for about 83 clients. His thefts didn't affect the vast majority of his 83 customer accounts.
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