Sturgis City Manager’s Insurance Fraud Trial Begins

The City Manager of Sturgis, South Dakota has had a rough six months.

David Boone was indicted on one count of insurance fraud back in October, for what the prosecution said was either knowingly misleading insurance adjusters or failing to correct false information.

According to the Rapid City Journal, the defense states that it was not anything Boone did, but the insurance company that failed to do its job.

Boone is charged with grand theft by fraudulent insurance act or an alternate charge of grand theft by deception. After jury selection and afternoon opening arguments Monday, Jamie McVay, a Sturgis City Councilman and friend of Boone’s, was among those who took the stand. The charges claim Boone included pre-existing damage along with claims for hail damage to his vehicle.

The spotlight in this case is on the 2002 Honda CRV, which McVay testified that many of Boone’s neighbors already knew about the damage. Boone was awarded over $7,300 after filing a hail damage claim in August of 2009, after purchasing it in 2008.

McVay also noted that Boon was teased by his friends before 2009 about the damage to the car, stating that different neighbors discussed their claims during a party in Mid-August of 2009. This was where he said he learned of the amount that Boone received from his claim.

“I would say he boasted about it,” McVay said. “I told him it wasn’t right.”

McVay, who is a drywall contractor, said he believes Boone is responsible for the call from Sturgis Community Development Director Rick Bush who inspected his licenses. He called this an abuse of power in his testimony, after being interviewed by Lawrence County State Attorney John Fitzgerald.

McVay also said that is was difficult for him to testify against Boone, since he considered him to be a friend. He said that he asked Boone to resign from his position as City Manager, but that Boone just said he had done nothing wrong. He also noted that Boone told him that if he weren’t in the position he‘s in, the charge would never have come to light.

“This is an attempt by a neighbor to bring charges against the city manager,” defense attorney Matt Kinney said in his opening remarks. “This originates not with an attorney or law enforcement but with an enemy of the current regime of the city.”

According to Kinney, the enemies are Leo and Pokey Jacobsen. Kinney said that Leo Jacobsen brought the matter to Jesse Sondreal, Meade County State Attorney. He states that the reasons for this were new city policies which caused his business to lose about $41,000 in contracts. Pokey Jacobsen was on the city council, but she lost her seat to McVay in the same 2007 election that brought in the city manager form of government. Boone was then hired in December of 2007. McVay and Scott Sabers, the Farmers Union insurance agent with whom Boone is insured were on the hiring committee.

Kinney also stated that Marc Bishop, who sold Boone the vehicle in question, improperly filled out the title to the vehicle upon selling it.

Both attorneys questioned Farmers Union insurance adjustor Mike Garrett about the claim, about which Garrett stated “I know it was an obvious total loss.”

After he used Kelly Blue Book to determine the value of the vehicle, Garrett set it at $9,785.16. Boone held a $500 deductible on the vehicle and then bought the car back for the salvage value of $1,957.03. He was then cut a check for remaining balance of $7,328.

Kinney did question some of Garrett’s testimony, especially when Garrett said that he remembered Boone due to the fact that he was the only claimant that day that asked for more money. Garrett said that Boone told him he thought the vehicle was worth more because it was clean and well-maintained prior to the hail damage. There was also no discussion of previous damage, which Garrett stated that if he were aware of any, Boone would not have received as high of a payment.

As an earlier article from the Rapid City Journal reads,

The evidence includes statements from insurance company officials that indicate the vehicle in question would not have been granted full coverage if the company had been aware of the previously existing damage. A questionnaire that must be filled out for policy changes indicated that Boone answered “no” when asked about previous damage.

Boone pled not guilty to grand theft by insurance fraud and to the alternate charge of grand theft by deception. Although he can only be found guilty of one charge or the other, each is a Class 4 felony and punishable by up to 10 years in prison, and/or a fine of $20,000.