Children's Miracle Network CEO accused of fraud

The CEO of the nation's second largest hospital charity network has been charged with multiple felonies accusing him of stealing and misusing funds while he managed an insurance agency.

James Larry Hall II, 37, is scheduled to appear today in 3rd District Court on six felonies, including communications fraud, wrongful dealing of property by a fiduciary and wrongful appropriation.

A court docket entry indicates he has pleaded not guilty to the charges. His attorney of record, Max Wheeler, did not return phone calls.

Hall is president and chief executive officer of the Utah-based Children's Miracle Network founded by the Osmond family and actor John Schneider. Mario Pilozzi, the network's chairman of the board of trustees, released a statement Thursday in response to the charges.

"The issue concerning Mr. Hall significantly predates his employment with Children's Miracle Network. The Board of Trustees is reviewing the situation in compliance with our policies and procedures."

It was while Hall worked at the National Benefit Partners Insurance Agency in 2003 that the Utah Department of Insurance and prosecutors with the Attorney General's Office allege he took trust money and put the funds at risk for his "own personal gain," according to the charges.

The agency sells insurance policies to hospital employees, collects the premiums for deposit into a trust account and forwards them to insurance carriers. The agency's trust account is the repository for those premiums before they are paid to the carriers, while the agency's operating account receives the advance commissions from the carriers.

The charges say Hall diverted without authorization $400,000 from the trust account into his own personal account to deceive a mortgage lender and obtain $1 million in financing for a home. He replaced the money a few days later, but the charges say his actions put the fund at risk. Additionally, he took $10,000 from the trust account and put it into the operating account to make payroll and used trust funds to pay the balance on a loan for a company jet, the charges say.

The airplane loan was paid with the diversion of $325,000 Hall is accused of taking from the trust fund and putting into the operating account, the charges say. Approximately $265,000 paid the loan, while $50,000 was used to pay builders for Hall's home and another $10,000 went into his personal account, the charges say.