A northwest Indiana man has been sentenced to five years in prison after he pleaded guilty to securities fraud charges. Acting U.S. Attorney Tina Nommay’s office says Richard Gearhart of St. John bilked insurance clients out of more than $5 million over a five-year period.
Court documents say Gearhart, a licensed insurance agent at Gearhart & Associates in Schererville, conducted a scheme to defraud his insurance clients from 2008 to 1023. Gearhart and others promoted and sold unregistered securities to his clients, promising no risk to their initial deposit and a return of 6% to 8% on their investment. The clients were also told that their initial investment would be returned within 30 days upon request.
Nommay’s office says neither Gearhart nor his co-conspirators were licensed to promote or sell securities. Instead of investing the money, Gearhart and his co-conspirators used it to repay other investors or for their own personal use.
The victims of the scheme were between 50 and 90 years-old. They were given fraudulent financial statements showing gains and didn’t learn they had lost their savings until Gearhart filed for bankruptcy and listed them as creditors instead of investors.
In addition to his prison term, Gearhart was sentenced to three years of supervised release and must pay more than $5.3 million in restitution to his victims.