Former Controller for Texas Insurer Sentenced for Wire Fraud Scheme

The former controller for a Houston-based property/casualty insurance company has been sentenced to 120 months in federal prison for her conviction of conspiracy to commit wire fraud involving almost $1 million in loss to the victim company, according to the U.S. attorney’s office.

U.S. Attorney José Angel Moreno announced that Carla Jean Johnson, 40, of Houston, was sentenced by U.S. District Judge Melinda Harmon. The announcement noted that Johnson abused a position of trust, using her leadership role to involve 13 other to assist her in the theft which took place over a two-year period.

Johnson, the former controller for Columbia Lloyd’s, will be required to serve a three-year-term of supervised release upon completion of her prison sentence and was ordered to pay $977,418.38 in restitution. The court stated that the defendant’s actions “substantially affected the company and individuals to a great degree.”

The one-count indictment, returned Dec. 14, 2010, alleged that Johnson worked as controller of a Houston insurance company beginning in 2005. On or about, July 11, 2007, through July 11, 2009, Johnson began sending money from the company’s account to her friends, family and at least one co-worker, who would then return some of the money to Johnson.

On April 21, 2011, Johnson pleaded guilty to the wire fraud.

The fraud was discovered July 11, 2009, when Johnson and co-defendant Donnie Smith, 33, of Houston and Atlanta, Ga., tried to cash a Columbia Lloyd’s check for $180,000 made out to Smith at a local Wachovia branch. Johnson was fired from her position as controller July 13, 2009, when company officials confirmed to Wachovia that the check was fraudulently issued.

Upon a close examination of their accounts, the company, along with the FBI, discovered additional fraudulent withdrawals by Johnson. She had disguised her theft in some instances by listing the payee as an insurance company or by listing a claim or policy number on the document authorizing the transfer of money to a co-conspirator.

Johnson has been in federal custody without bond since her Dec. 20, 2010, arrest. She will remain in custody pending transfer to a Bureau of Prisons facility to be designated in the near future where she will serve her sentence.

Smith previously pleaded guilty and was sentenced on Sept. 2, 2011, to 41 months in federal prison followed by three years of supervised release and ordered to pay $199,914 in restitution.

Another co-defendant, Royce Lamar Smith, 38, of Houston, pleaded guilty in April 2011 and was sentenced on Aug. 26, 2011, to 60 months imprisonment followed by a three-year-term of supervised release and ordered to pay $168,474.91 in restitution. Royce Smith was on state felony shock probation along with Johnson for a theft from Johnson’s prior employer in 2004.

The conviction is the result of an investigation conducted by the FBI and prosecution by Assistant U.S. Attorney Martha Minnis.

Source: U.S. Attorney’s Office