A former insurance agent will spend six years in prison for bilking clients out of more than $1.4 million.
Brent Kitzan, 53, pleaded guilty on Tuesday to 14 counts of Class B felony theft of property, eight counts of Class C felony insurance fraud and five counts of Class B felony registration of securities.
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South Central District Judge Tom Schneider sentenced him to 10 years with all but one year suspended on all of the Class B felonies, along with five years of supervised probation. Schneider sentenced Kitzan to five years in prison on all of the Class C felonies. Burleigh County Assistant State’s Attorney Jeff Ubben said the Class B felony sentences will run consecutive to the Class C felony sentences, giving Kitzan six years to serve.
Kitzan also was ordered to repay $747,118.28 to victims. Ubben said the restitution amount does not include some money already returned and other amounts covered in a related civil judgement one of the victims has against Kitzan.
Kitzan was an insurance agent in Bismarck. In December, both the North Dakota Insurance Department and the North Dakota Securities Department issued cease-and-desist orders against Kitzan and his company, Kitzan and Associates, for alleged misappropriation of client funds.
According to affidavits from Kelly Wayne Mathias, supervisor of investigations and examinations with the securities department, and Joe Dale Pittman, a special investigator with the insurance department’s fraud unit, Kitzan was accused of defrauding 21 clients, many of them elderly.
The court documents say Kitzan was collecting insurance premiums from clients but never remitting the payments to insurance companies, taking out personal loans from clients and collecting money for investments from clients but never investing the money.
The charges filed in June relate to 21 alleged victims for conduct dating back to 2003. In all, Kitzan was accused of taking $1,455,129.20 from the 21 clients. A married couple, identified as victims 12 and 13, took the biggest hit, with investment losses of $100,650 and fraudulent insurance payments of $257,264.04.
Mathias’ affidavit said Kitzan was never registered as a securities agent or as a broker/dealer in North Dakota or elsewhere, and there was no record of him registering for the sale of securities in the companies in which he purportedly invested clients’ money. North Dakota Insurance Commissioner Adam Hamm revoked his license to sell insurance in August.
Ubben said the sentence handed down by Schneider “strikes a balance” between punishing Kitzan and giving him the opportunity to repay the victims. Kitzan holds mineral rights “on the edge of oil exploration” and has a legitimate chance to pay back all of the money owed, Ubben said.
“If he doesn’t pay, he’s looking at 171 additional years in prison,” he said. “His freedom is going to be contingent on paying the victims back.”
