The former majority owner of Service Insurance of Vernal was escorted out of a Salt Lake City courtroom in handcuffs on Friday.
Philip J. Timothy was sentenced to serve 11 prison terms of one to 15 years and four prison terms of zero to five years for 15 felonies related to his misuse of client funds and his efforts to cover up that misuse once a state investigation began.
But 3rd District Court Judge Judith S. Atherton suspended the consecutive prison sentences for Timothy, ordering him to spend six months in the Salt Lake County Jail instead.
Timothy, 57, will also be required to serve three years on supervised probation, be stripped of his insurance license, reimburse the state $104,000 for investigation costs, cooperate fully with an audit of his former company's books, and leave $300,000 in a state-administered trust fund for one year to pay restitution to his victims.
Atherton, who characterized Timothy's conduct as "very planned, methodical stealing" and "pretty troubling behavior," denied a request by defense attorney Loni DeLand to allow Timothy to serve his time in the Uintah County Jail in Vernal.
DeLand had also asked Atherton to order his client to wear an electronic ankle monitor for one year rather than serve jail time, a sentence the defense attorney said would allow Timothy to continue to care for a 130-acre farm he had recently planted with alfalfa.
"That would essentially keep him and his family out of bankruptcy," DeLand told Atherton, noting that failure to harvest the alfalfa would result in an immediate loss of $50,000 to $60,000 for Timothy.
DeLand said he believed the Utah Attorney General's Office and the state Insurance Department had overstated the number of victims in the case, the number of dollars involved and the number of years Timothy was illegally using money he should have been keeping for or refunding to clients.
"When this is over I don't believe there will be one penny lost by anyone," DeLand told the court.
Timothy pleaded guilty in April to one count each of racketeering, conspiracy, and obstruction of justice; two counts each of filing a false or fraudulent insurance claim, forgery, and communications fraud; and three counts each of unlawful dealing with property by a fiduciary and theft by deception.
According to state investigators, Timothy used insurance premium refunds owed to clients to buy two trailers and a $30,000 Harley-Davidson motorcycle. He also failed to return over $44,000 in premium refund monies to an oil field service company after it canceled its policy, and helped create fraudulent bonds worth more than $1.5 million for two construction companies, court records indicate.
"It's his own damned fault," DeLand said on Friday. "He's his own worst enemy."
Assistant Utah Attorney General Shelley Coudreaut told Atherton that state investigators have been able to identify at least 60 individuals or companies who were defrauded by Timothy some of them on multiple occasions and they still receive phone calls from potential victims weekly. She confirmed that Timothy issued refund checks to some of those victims, but noted that he only did so once the state investigation began.
Coudreaut accused Timothy of trying to minimize the severity and extent of his crimes, adding that the state stopped counting the number of felonies they could charge him with at 156.
Coudreaut also defended deals the state made with other agents at Service Insurance of Vernal.
DeLand had asked Atherton to consider "equality" when sentencing Timothy, noting that agency co-owner Mark Foley received a suspended prison sentence and probation; agent Bart Winterton was allowed to enter into a plea in abeyance; and office manager Debra A. Wilson was not prosecuted under a deal with the attorney general's office.
Foley pleaded guilty in November in 8th District Court to one count each of filing a false or fraudulent insurance claim, forgery, and unlawful dealing with property by a fiduciary. He agreed to cooperate fully with the investigation into Timothy's misconduct.
Winterton pleaded guilty to forgery in October for signing a client's name to a insurance policy application. The charge against Winterton which will be dismissed if he complies with the terms of his plea in abeyance agreement sprang from a separate state investigation. He has never been tied to any of Timothy's activities.
Wilson's attorney claimed that a state investigator offered his client immunity if she agreed to provide prosecutors with information about Timothy and Foley. Coudreaut said that although only a prosecutor can make an offer of immunity, she felt ethically obligated not to charge Wilson based on the defense attorney's claim.
Coudreaut said that Timothy's "level of criminal activity and the number of victims" made his offenses more severe than those of the other defendants and therefore warranted incarceration. She added that Timothy's misconduct had been going on for more than a decade, although state law only allowed her to prosecute him for offenses committed within the past five years.
"I don't believe he's been forthright with investigators," the prosecutor said.
After court, Coudreaut said the state is interested in hearing from anyone who suspects they may have been victimized by Timothy. Those individuals should contact state insurance investigator Rick Angel at 801-526-4559.
For his part, DeLand said state investigators in many cases "just look at the books and assume the worst." He also accused the state of "beating the bushes" in the Uintah Basin "soliciting victims" in the case against Timothy.
E-mail: [email protected]