An insurance agent was sentenced to two years in federal prison Monday for his role in the ghoulish schemes of S.C. Irish Travelers to make up to $33 million off the deaths of elderly or sick people.
Leonard New, 69, who sold insurance in the North Augusta area, received a lighter sentence than federal prosecutors requested. That was because he cooperated with FBI agents after being confronted with evidence of his crimes, was remorseful, is needed by his family, is elderly and is undergoing treatment for eye cancer, said U.S. District Court Judge Michelle Childs.
But Childs rejected a claim by defense lawyer August "Tav" Swarat that New had no prior record.
"If you have done years of fraud, that essentially is a prior record," Childs told Swarat and the courtroom audience, which included a dozen of New's family members and friends.
New, who pleaded guilty to racketeering conspiracy, could have faced eight years and a month in prison.
His two-year sentence is lighter than the punishment given two other ex-insurance agents who also sold fraudulent insurance contracts to dozens of Travelers. One was sentenced to five years in prison; the other to 27 months.
Several thousand Travelers live in the Aiken County area, claiming to be the descendents of Irish immigrants. Many live in an unincorporated area called Murphy Village, their base for white-collar frauds and other crimes, according to prosecutors.
New is one of about 50 defendants -- Irish Travelers and their associates -- charged in a four-year federal investigation into white-collar fraud schemes that cheated life insurers, financial firms, credit agencies, car dealerships, and the state and federal governments out of millions of dollars.
Swarat told Judge Childs that only companies were victimized, not individuals. "He is not a person like Bernie Madoff, who was taking peoples' funds."
New sold hundreds of fraudulent term life insurance policies to Irish Travelers over the years, Assistant U.S. Attorney Jim May told the judge Monday.
"Once he showed them he would violate the law, they started approaching him and kept on approaching him," May told Childs. "Hundreds of these policies violated the law."
New and other insurance agents were essential to the fraud, May said, who asked the insurance agent get a three-year sentence.
The life insurance policies were fraudulent because, at the request of Travelers, New grossly inflated the net worth and income of the person being insured, according to evidence in the case.. The value of the life insurance policies was, in large part, based on the supposed wealth and income of the person being insured. When that person died, the insurance company would pay out a large sum, based on those inflated sums, to the Travelers who had convinced New to falsify the insurance contracts, according to evidence in the case.
New made money by collecting the insurance premiums due on the insurance policies. Various Irish Travelers would pay the premiums and profit when the insured person died.
One policy New wrote paid off $150,000; another, paid off $250,000, May said. It was not possible to get a total on the payouts that insurers made because various insurers had refinanced the policies.
"I've been in the business a long time, and I knew what I was doing, and I was wrong," New told Judge Childs. "I own up to everything. ... I just stand before you very sorry for my actions."
Judge Childs has held dozens of hearings concerning the Travelers' crimes. Still, she expressed amazement at the group's frauds Monday.
In the insurance scams, Childs noted, the Travelers grossly inflated claims of income and wealth to get big insurance payouts. In other frauds -- to get food stamps and government services -- members of the group would "deflate" their income, she noted.
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