James Larry Hall

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.

Documents say it appeared Hall was taking money from the trust account as "advance commissions," which at one point left the trust fund unable to cover what was owed to insurance carriers. When confronted, Hall told a co-worker the deficits would be caught up in the future, according to the documents.

The charges were filed in February this year and span the time frame of March 23, 2003, to Sept. 29, 2003. They include two second-degree felony counts of wrongful dealing of property by a fiduciary, two counts of second-degree felony communications fraud, a second-degree felony count of theft and one third-degree felony count of wrongful appropriation.

The communication fraud charges stem from Hall's efforts to acquire the $1 million home loan in which he is accused of deceiving the lender, as well as making false representations on HUD settlement statements, charges say.

Hall's record of address on court documents matches that of a home in Emigration Canyon — which according to public records at the Salt Lake County Assessor's Office — puts the value at just under $2.5 million.

The Children's Miracle Network turned 25 years old this year and has expanded to Canada, Ireland and the United Kingdom. It serves 170 hospitals and raises about $237 million for them through telethons, corporate fundraising and other events. About 37 percent of the foundation's operating money comes from fees paid by the hospitals to participate in the network, which was co-founded by Mick Shannon with the backing of entertainer Marie Osmond and Schneider.

Hall replaced Shannon in 2006, and in 2008, according to the organization's IRS Form 990, was paid $333,404 by the charity.

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