U.S. Attorney: Owner of Montana insurer admits to defrauding customers

Kileen Moria Hagadone, 57, pleaded guilty to wire fraud and to aggravated identity theft. Hagadone faces a maximum of 20 years in prison, $250,000 fine and three years of supervised release on the wire fraud crime and a mandatory minimum of two years in prison, consecutive to any other punishment, a $250,000 fine and one year of supervised release on the aggravated identity theft crime.

U.S. Magistrate Judge Timothy J. Cavan presided. A sentencing date will be set before U.S. District Judge Susan P. Watters. The court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Hagadone was released pending further proceedings.

The government alleged in court documents that Hagadone owned and operated Rosebud County Insurance Inc., an insurance brokerage business that acted as an intermediary between customers and national insurance companies. Hagadone was supposed to help negotiate insurance contracts for her customers and then receive and transmit payments from the customers to the companies for the negotiated policies. Hagadone received these payments from customers but failed to send the funds to the insurance companies. Instead, Hagadone misappropriated the money for personal expenses. The scheme ran from about 2020 until April 2023.

The government further alleged that one of the victims was the Chief Dull Knife College of Lame Deer, which engaged Hagadone to find an insurance policy for the college. Hagadone did so, and the negotiated premium for the policy in November 2021 was $91,883. The college paid Hagadone the full amount at that time. Instead of sending the premium to the insurance company, Hagadone fraudulently contracted to finance the college's insurance premium with a premium financing company and forged the signature of a college representative on the contract. The agreement enabled Hagadone to keep most of the payment without immediately cancelling the insurance policy. Eventually, Hagadone embezzled too much money from her business trust account and could not pay the financing payments she fraudulently created. As a result, by April 2022, the college's insurance had been terminated. Hagadone concealed this from the college and falsely represented that the college was insured when it was not.

In addition, the government alleged that in November 2022, Hagadone falsely told the college that the insurance policy needed to be renewed, even though it had been cancelled and did not exist. Hagadone then created a false insurance contract for a policy that did not exist and induced the college to pay $98,893 for the fictious policy. Hagadone embezzled the entire payment, and the college was uninsured from April 2022 until April 2023. Hagadone cheated other customers in a similar way, although the amounts paid were typically smaller.

Assistant U.S. Attorney Colin M. Rubich is prosecuting the case. The Montana State Auditor, Commissioner of Securities and Insurance, FBI and Rosebud County Sheriff's Office conducted the investigation.

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Original text here: https://www.justice.gov/usao-mt/pr/owner-insurance-company-rosebud-county-admits-defrauding-customers