Arkansas Agent Sentenced In $1.6M Fraud

Fort Smith, Arkansas - Kenneth Elser, United States Attorney for the Western District of Arkansas, announced that Samuel Bowron Phillips, age 41 of Fort Smith, Arkansas, was sentenced yesterday to 60 months in federal prison followed by three years of supervised release on one count each of Mail Fraud, Wire Fraud, and Money Laundering; the sentences are to run concurrent with each other. Phillips was ordered to pay approximately $1,600,000 in restitution to his victims. The Honorable Chief Judge P. K. Holmes, III presided over the sentencing hearing in the United States District Court in Fort Smith.

According to court records, Phillips devised and executed a scheme to defraud customers of his insurance business by withdrawing funds from their annuity and insurance policies without their consent and knowledge. He then used that money for his own personal benefit and gain. The investigation began after a complaint was filed in October, 2015, with the Arkansas Insurance Commission by business owners and residents after discovering the annuities Phillips sold them were nonexistent, statements he had given them were fabricated, and the money they had given him to invest for their retirement was gone. Evidence gathered by investigators revealed that from March, 2013, through November, 2015, twenty-one (21) of Phillip's customers lost a total of over $1,600,000 they had invested in annuity contracts and insurance policies purchased from him.

Phillips admitted that he had created two sham companies, Stevens Financial Asset Management and Paradigm Financial Partners LLC, and opened accounts for those entities. He used a fake name to conceal his connection to the fraudulent transactions and admitted he rented post office boxes in Fort Smith and Barling to receive mail for the two bogus companies he created to steal his customer's money. Phillips was indicted by a federal grand jury in March, 2016 and pleaded guilty in June, 2016.

"Illegal activity involving the investment industry has brought financial ruin to many Americans," stated Tracey D. Montano, Special Agent in Charge. "IRS Criminal Investigation is committed to using our forensic accounting skills to help unravel complex fraud and money laundering schemes. We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means, and to help put a stop to this and other types of white collar crime."

"Today's sentencing of Phillips reflects a fitting punishment for an individual who committed wire fraud, mail fraud and money laundering. Phillips deceived and stole from his customers who trusted him and believed in him," stated L. Diane Upchurch, Special Agent in Charge of the FBI's Little Rock Field Office. "We appreciate the hard work that brings about successful outcomes and the commitment of our partners at the United States Attorney's Office for the Western District of Arkansas, the IRS, the Postal Inspection Service, the Arkansas Department of Insurance, and the Fayetteville Police Department."

This case was investigated by the FBI, the IRS Criminal Investigation Division, the Postal Inspection Service, the Arkansas Department of Insurance, and the Fayetteville Police Department. Assistant United States Attorney Kyra Jenner prosecuted the case for the United States.

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