FORT SMITH -- Samuel Bowron Phillips was sentenced in federal court earlier this month to five years in prison for stealing nearly $1.6 million from insurance and annuity policyholders, which he frittered away in casinos to feed a gambling addiction.
In pronouncing the sentence Jan. 12, U.S. District Judge P.K. Holmes III ordered Phillips to pay back $1,563,380.14 he took from the 20 victims in the case. Holmes said victims' losses ranged from $2,000 to more than $200,000.
Phillips, 41, was charged in a 22-count indictment in March 2016 with mail fraud, wire fraud and money laundering. He pleaded guilty in June to one count of each offense. He has not been held in jail but was ordered to home detention with electronic monitoring.
Several of the 13 victims who attended the sentencing hearing seemed surprised and disappointed at the length of the sentence Phillips received. Some spoke to the government's representative in court, Assistant U.S. Attorney Kyra Jenner, to confirm that five years was all the prison time Phillips would get.
Holmes explained during the hearing that after weighing various factors -- such as the amount of loss, abuse of trust and acceptance of responsibility -- and consulting federal sentencing guidelines, he calculated that Phillips should get a sentence of between 87 and 108 months.
But Holmes said he reduced the sentence to 60 months because Phillips was diagnosed with a gambling addiction that was treated as a mental illness.
Holmes said in court that the illness did not excuse Phillips' conduct but explained it. He said it appeared from the federal probation office's pre-sentence investigation that Phillips' gambling problem started around 2000 and went out of control in 2013 or 2014.
He pointed to other cases where people who fraudulently took other people's money did it out of greed and to lavish the money on themselves.
In this case, Phillips gambled away more than 90 percent of the money he took.
"Virtually all funds illegally obtained by Mr. Phillips went into casinos in Oklahoma," Rex Chronister, Phillips' attorney, wrote in a sentencing memorandum.
The memorandum said Phillips had $33,000 in credit card debt.
Phillips, who took over an insurance practice started by his father, set up false investment plans and persuaded people, many of them longtime family friends and neighbors, to transfer their life savings into those plans.
Some of the victims who testified said Phillips stole their money while carrying on friendly relationships with them.
Jenner said she wrote to insurance and investment companies that had held victims' investments before they were transferred to Phillips. She asked them to honor claims from the victims, but only AIG Insurance agreed. Holmes said the company, which also was listed as a victim of Phillips, agreed to pay $243,199.50 to victims in the case.
Jenner told Holmes that many of the victims were in their 60s and that the money they intended to use for their retirements was gone.
"It took us a lifetime to earn that money," Meredith Roberts said while addressing Phillips, who sat across the room.
Roberts asked Holmes to consider how persuasive Phillips was in using his family's reputation and friendship to steal their money.
Other victims told similar stories.
Robert Frye said he worked all his life to build his retirement fund but is now disabled and unable to replace the money Phillips took. He said he had hoped the money would supplement his income and help his children and grandchildren.
Lawrence Johnson said his brother died eight months ago from a stroke, and he wondered if Phillips' swindle contributed to his brother's death. He said he and his brother talked about the loss every day.
Johnson said his brother "deserves justice, too."
State Desk on 01/24/2017