Former Alfa agent agrees to plead in $5.5 million fraud
BIRMINGHAM (AP) — A longtime Alfa Corp. insurance agent from northeast Alabama agreed to plead guilty in a fraud scheme involving loans with nearly $5.5 million in outstanding balances.
Prosecutors said James A. Maddox, 60, of Fyffe could receive 20 years imprisonment and a fine of $250,000 for the crime, which began in 1991 and continued until it was uncovered last year.
Maddox is due in court on Thursday for a hearing, but no sentencing date has been set. Prosecutors filed papers outlining the plea agreement on Friday.
Maddox had worked as an agent for the company since 1973.
Alfa filed suit against Maddox last year alleging he used fictitious collateral to obtain loans for himself and for customers and then pocketed the money.
Documents in the criminal case show the scheme involved a series of loans that had balances of $5.49 million when it was uncovered last year.
During the fraud, Maddox would get people to sign loan applications and other documents and then submit them to Alfa accompanied by bogus proof of collateral, court records show. In some cases, officials said, he would increase the amount of loans sought by applicants and keep the difference.
Maddox agreed to plead guilty to a single charge of mail fraud. Besides the possible sentence and fine, Maddox could be ordered to pay restitution up to $5.49 million, documents show.
The former agent has a month to pay Alfa under a settlement of the civil suit reached last week, records show. If he doesn't, he must forfeit $964,375 to the court.
In its lawsuit, Alfa said representatives tried to talk to Maddox during a meeting last July but he got up and left, claiming his wife had a doctor's appointment. He failed to show up for a second meeting, according to the suit.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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