Missouri Insurance Agent Pleads Guilty In $1.4M Fraud

March 16--ST. LOUIS -- A St. Louis County insurance agent and broker pleaded guilty to a wire fraud charge Wednesday and admitted taking at least $1.4 million from a mentally impaired man for whom he was handling money.

The victim, who was identified only by initials in court documents, lived a simple, modest life, even after his father died and left him more than $2 million, court documents say. He lacked the capacity to understand financial concepts and transactions, the plea says.

Donald Novak, the insurance agent, began managing the man's assets in July of 2011. Less than three months later, Novak obtained the man's power of attorney.

Novak liquidated some of the man's assets and used the money to buy annuities, for which Novak earned a commission, according to the plea agreement.

He then began withdrawing the money, typically without his client's knowledge, the plea says. Novak lied when he told the insurance company that money was going to the victim and that the withdrawal was authorized by his client, the plea says.

Novak used the money to buy vehicles, boats and a lake house, as well as to pay his personal expenses and those of his family without his client's knowledge, his plea says. The early withdrawals cost the victim $275,000 or more in taxes and penalties.

Under federal sentencing guidelines, Novak, 51, could face 63 to 78 months in prison. He will also have to repay the money.

"He's been cooperative with the government and accepted responsibility. . . and regrets his actions and will pay a price," said Novak lawyer Joel Schwartz.

A photo of Novak was not immediately available.

Robert Patrick --314-621-5154

@rxpatrick on Twitter

[email protected]

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