Crime & Courts

Former insurance agent sentenced to more than three years in prison in fraud case

A former insurance agent was sentenced in federal court on Monday to more than three years in prison and ordered to forfeit nearly $400,000 after he admitted to stealing nearly $2 million from policyholders.

Jason Matthew Pennington, 43, must serve 42 months in prison and then will have three years of supervised release under the plea agreement approved by U.S. District Judge J. Thomas Marten. Pennington’s victims included Marlene Brown, a Wichita teacher and philanthropist who died in 2009 at the age of 75.

Pennington never looked at the more than two dozen people gathered to witness the sentencing. Nor did he offer an apology when given the opportunity to make a statement prior to sentencing.

The former State Farm insurance agent acknowledged he devised a scheme whereby he would forge signatures of policyholders and change addresses of their policies. He would then fraudulently take withdrawals against the policies and cash the money for himself. He also admitted lying to State Farm when questioned about a check being mailed to his Wichita office.

In 2000, Wendell and Marita Hill, who had purchased insurance policies from State Farm, became clients of Pennington after their former State Farm agent retired, according to a statement issued by U.S. District Attorney Barry Grissom. Four years later, the Hills purchased a life insurance policy through Pennington valued at more than $3.4 million. The policy was issued by Phoenix Life Insurance Company, an insurance provider affiliated with State Farm Insurance.

On Feb. 29, 2008, he sent a fax to Phoenix Life Insurance Co. requesting a loan of $105,000 on the Hills’ life insurance policy. The loan contained the forged signature of Brent Hill, who was trustee of the Hill Family Trust. Brent Hill did not make the request for the loan.

Brown retired in 1994 following 37 years with Wichita public schools. She endowed the Marlene M. Brown Fund for the Department of Counseling, Leadership, Educational and School Psychology in the College of Education at Wichita State University.

Before she died, Brown purchased a life insurance policy from State Farm through Pennington worth more than $1.3 million. She designated the Marlene M. Brown Revocable Trust as the owner and beneficiary of the policy.

In November 2008 Pennington processed a request to obtain more than $99,484 in cash from the policy. He used the money to pay his personal expenses. In March 2009 Pennington contracted to build a $590,000 home at in Bel Aire. In loan application papers, Pennington failed to disclose that he had to make monthly child support and alimony payments. He also claimed as an asset an Individual Retirement Account belonging to Brown.

In September 2009, Pennington contacted State Farm and changed the address for Marlene Brown’s insurance policy to his business address, Grissom said. He then sent a fax to State Farm making a withdrawal of $278,250 on the policy. Pennington forged Brown’s signature and requested the withdrawal without her knowledge

After Brown died in October 2009, Pennington collected several bags of documents from her home. He later lied to trust beneficiaries and gave them false documents to cover up that he had taken much of her estate for himself. He told beneficiaries that part of Brown’s estate was going to WSU, but the federal indictment stated WSU didn’t receive the money.

In February 2010, Pennington applied for a line of credit from State Farm Bank, Grissom said. In order to qualify for the credit, he did not report to the bank that he was required to pay $5,000 a month in child support and alimony to his first wife. He also falsely reported that his second wife was receiving an annual salary as an employee of his insurance office, Grissom said.

Denise Wren, a longtime friend of Brown’s and a beneficiary in her estate, read a statement prior to the pronouncement of sentence.

She called Pennington’s actions “callous, evil, horrific crimes.”

In hindsight, she said, they should have been suspicious when Pennington was collecting Brown’s personal papers from her home the very day she died.

Brown wasn’t afraid to hold her friends’ “feet to the fire” if they weren’t doing what she believed they should, Wren said, so she would take particular satisfaction in Pennington being held accountable for his crimes.

To her knowledge, Wren said, Brown never knew she was the victim of fraud.

“She’d be thrilled” at Monday’s court action, Wren said.

Reach Stan Finger at 316-268-6437 or Follow him on Twitter: @StanFinger.