Ohio Agent Sentenced to Eight Years, $6.3 Million Restitution for Fraud

A federal judge sentenced a former Ohio insurance agent to more than eight years in prison and ordered him to pay $6.3 million in restitution for defrauding at least 10 victims out of nearly $5 million.

William R. Appleton II's restitution includes payment to the Internal Revenue Service of $1.1 million. He must concurrently serve a five-year term for income tax evasion. Appleton had pleaded guilty to one count of mail fraud and one count of tax evasion.

Posing as an investment adviser, Appleton convinced insurance clients to invest inheritance proceeds and money from insurance products in the financial markets. A joint investigation of the Ohio Department of Insurance, the Federal Bureau of Investigation and the Internal Revenue Service found that Appleton instead transferred the funds into his personal bank accounts. He used the money for living expenses, operating his companies and paying earlier investors who had withdrawn funds from their accounts, according to an ODI statement.

Appleton surrendered his insurance license on May 2, 2008.

In a separate fraud case, the ODI announced that a Franklin County grand jury indicted Luther Watts, Lysandrous Mullins Jr., and Patricia Irene Mullins on eight counts of insurance fraud each.

An investigation by Ohio regulators along with local and state law enforcement agencies in Ohio and West Virginia found the three filed an unusually high number of insurance claims, including for arson, theft, accidents and disability/personal injury claims. They would allegedly buy vehicles from local car dealerships using fraudulent documents and take out credit disability insurance. Not long after obtaining the vehicles, they would report a claim to the insurance carrier.