Charges Dropped In Insurance Scam State Or Civil Action Still Possible Against Treasurer Of Pro-Militia Group
Federal prosecutors in New York are dropping criminal charges against a former Spokane man who is the national finance director of the pro-militia Constitution Rangers.
Michael Duane Smith, 34, was arrested by the FBI in Denver in April on charges of conspiracy to commit mail and wire fraud.
He was one of two national marketing directors for Personal Choice Opportunities, a California-based company promoting the purchase of life insurance policies from terminally ill people.
Personal Choice Opportunities raised $100 million from 1,100 investors during a nine-month period, but didn’t buy any life insurance policies, authorities said.
David W. Laing, the president of Personal Choice, and Valerie E. Jenkins, both of Palm Springs, Calif., also were arrested.
Jenkins operated an escrow company, Escrow Plus Inc., where the investors’ money was held, a criminal complaint filed in U.S. District Court in New York alleges.
Smith and Dennis V. Rinner, the East Coast marketing director, were both accused of involvement in the fraud scheme.
“The complaint against Smith was dismissed Monday in a manner that won’t bar the refiling of a complaint or indictment in the future,” Assistant U.S. Attorney Richard Owens said Wednesday.
The federal prosecutor wouldn’t say why charges against Smith and Rinner were dismissed, or whether they will be refiled.
“The federal investigation is still very active,” Owens said, declining to elaborate.
Securities investigators in the states of California, Idaho, Washington, South Dakota and Colorado also are scrutinizing the investment scheme.
Civil actions against Personal Choice have been initiated by the states of Idaho and California.
Smith, reached at his home in Denver, said Wednesday he believes the charges were dropped because the Justice Department can’t prove he broke the law.
He said he believes the charges were filed simply to give the FBI an opportunity to raid his office.
“I think they used this as an excuse to come in and search because they knew I was associated with the Rangers,” Smith said.
Smith is the treasurer for the United States Constitution Rangers, a “constitutional police” group. Its members recently hand-delivered letters to every member of Congress, promising to bring to justice those officials who violate the Constitution.
The Constitution Rangers, founded in Arizona in 1977, recently moved its headquarters to Hayden Lake, Idaho.
Rangers commander Jack Dean Yoos said the group is committed to non-violence and ensuring that federal officials and agencies don’t stray from the Constitution.
Smith said he is “yet another victim of the totally abusive, Gestapo-tactics” of the FBI.
“I’ve been ridiculed and crucified by them, and they never had a case,” the businessman said.
Smith said his involvement with Yoos and the Rangers had nothing to do with his business relationship with Laing and Personal Choice Opportunities.
He made an estimated $300,000 to $400,000 in commissions for convincing people to invest in Personal Choice, Smith said, but none of that money went to the Rangers.
“I wasn’t involved in this scam in any way, shape for form,” Smith said. “We were simply the marketing company - nothing more.”
Smith said his company, MD Smith Inc., helped raise investor capital that was to be used by Laing to purchase discounted life-insurance policies from terminally ill people.
Smith said he “had no idea” that Laing wasn’t buying the policies. “He just took the investors’ money and put it in his pocket.”
Smith said he agreed to be a government witness against Laing, but said that’s not why he’s escaping prosecution.
“The evidence I presented to the FBI showed I had no knowledge or involvement in this scheme,” he said.
When he was arrested April 4, Smith said he was preparing to leave Denver in a chartered jet for a business meeting in Maryland. Two women with him at the time were interior designers, redecorating his office, not female escorts as investigators alleged, he said.