St. Charles Insurance Agent Sentenced for Misusing Client Premiums

St. Louis, Missouri: Pamela W. Schaefer was sentenced to 21 months in prison for taking over $159,000 of client insurance premiums and depositing the money into her own account, United States Attorney Catherine L. Hanaway announced today.

"In addition to the usual business relationship between an insurance agent and client, this couple chose Ms. Schaefer to act as their trustee under the terms of their insurance trust. They relied on her to handle their insurance matters and gave her broad discretion to do so under the terms of the trust," said Hanaway. "Instead, she took advantage of the good faith they placed in her to steal money from their estate to fund her own greed."

In 1986 Schaefer began working as an insurance agent for Metropolitan Life Insurance (MetLife). In 1990, when Schaefer was working as a MetLife agent in St. Charles, she met a couple who purchased several life insurance policies, including one in 1992 with a face value of $1 million when fully paid up. Under the terms of the policy, the clients were to make payments of approximately $18,000 per year for ten years to fund the policy, so they created a trust to hold this insurance policy and named Schaefer as the trustee. As trustee, Schaefer received the premium payments from the policy owners and remitted the payments to MetLife. Because she was the trustee of this trust, Schaefer had the ability to conduct transactions on this policy without notifying the owners of the policy.

Beginning in 1995, Schaefer began diverting the insurance premium payments to herself by first depositing the premium check into a trust bank account at U.S. Bank and then transferring the funds to her own U.S. Bank account. From May 1995 through June 2001, she stole a total of $113,225 of these premium payments. She also took $1,387 of dividends earned on the policy from November 2000 through December 2004. Schaefer also admitted with her plea that she took out two loans against this insurance policy: $8,500 in March of 2002 and $9,800 in September of 2002. In February 2003, Schaefer sold shares of MetLife stock, which had been issued on the insurance policy at the time when MetLife converted to a stock company. As a result of this sale, she received a sale proceeds check in the amount of $14,682. The policy owners had no knowledge of this sale.

Schaefer also diverted $11,656 from a Prudential policy which she handled for them in 2000. The total amount diverted from all policies was $159,251.

PAMELA W. SCHAEFER, St. Charles, Missouri, pled guilty to one felony count of mail fraud in November and appeared this morning for sentencing before United States District Judge Carol E. Jackson.

Hanaway commended the work performed on the case by the St. Charles Police Department, the Federal Bureau of Investigation, and Assistant United States Attorney Rosemary Meyers, who handled the case for the U.S. Attorney’s Office.

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