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The former chief financial officer of Market Finders InsuranceCorporation has been sentenced in federal court to 37 months inprison.

Related: 5 warning signs of an embezzler

The former CFO, Sylvia Rebecca Smith, agreed topay $674,093 in restitution, for committing tax evasion andembezzlement.

Wire fraud

Smith, of Louisville, was charged by criminal information withone count of wire fraud for devising an embezzlement scheme toobtain money from Market Finders and then diverting those funds toPBS Insurance Underwriting Corporation, and two counts of failingto report embezzled funds as income on her tax returns.

At the time, Smith was the bookkeeper for PBS Insurance and herhusband was the sole owner.

Smith admitted in a plea agreement that, from July 2013 throughApril 2015, while employed as CFO of Market Finders, she generatedfraudulent loan checks from her employer and diverted them into thebank account of PBS.

Specifically, Smith devised a scheme to embezzle funds fromMarket Finders and Market Finders Insurance Premium Budget Corp., asubsidiary of Market Finders, by creating fraudulent insurancefinancing contracts between Market Finders Premium Budget andexisting insurance clients of PBS Insurance without the knowledgeof those existing clients. Smith admitted to manipulating therecords so that her theft of funds would not be detected by heremployer.

False loans

Smith admitted that she and her husband used a portion of thefraudulent loan proceeds to fund her husband's business and to payfor personal expenses for herself and her husband and to pay forgambling activity.

Further, Smith used a portion of the proceeds to make paymentson the previous loans she had falsely created from Market FindersPremium Budget. When the scheme was discovered by Market Findersand brought to an end, Smith had not repaid approximately$674,093.

Related: Insuring against employee fraud

Additionally, Smith admitted to failing to report approximately$258,504 in embezzled funds as income for tax year 2013 andomitting approximately $514,696 in embezzled funds as income fortax year 2014 on Form 1040 of her U.S. individual income taxreturn.

Steven A. Meyerowitz, Esq., ([email protected])is the director of FC&S Legal, the editor-in-chief of theInsurance Coverage Law Report, and the founder and president ofMeyerowitz Communications Inc. This story is reprinted withpermission from FC&S Legal, the industry's only comprehensivedigital resource designed for insurance coveragelaw.