SANTA FE — The Financial Institutions Division (FID) of the New Mexico Regulation and Licensing Department announced Thursday that funds have been received on a $1.1 million settlement agreement with Cincinnati Insurance and the Evanston Insurance Company, to provide compensation to victims of criminal activity that took place at the former Desert State Life Management trust company.
The settlement is part of the on-going fight that the FID has been pursuing for over five years on behalf of the victims of CEO/owner Paul Donisthorpe of Desert State Life Management.
The fraud perpetrated by Donisthorpe was discovered by the FID in early 2017. Donisthorpe pleaded guilty Nov. 27, 2017, to wire fraud and money laundering charges for embezzling more than $4.8 million from financial trust accounts of medically and mentally vulnerable clients managed by his company, Desert State Life Management. Donisthorpe was sentenced Feb. 22, 2019 to 12 years in federal prison; the longest available sentence pursuant to his plea agreement. According to the plea agreement, Donisthorpe admitted to using clients’ funds for personal purposes, including business ventures, a home mortgage, a vacation home in Angel Fire, vehicles, credit card expenditures, and paying off debts to the Internal Revenue Service.
“The perpetrator of this crime chose to prey upon our society’s most vulnerable, and I cannot think of a more heinous monetary crime. These individuals relied on these funds to provide for medical bills, mobility devices, and special care facilities in order to simply survive. While these funds do not make the victims whole, we hope the settlement will provide some much-needed relief for them and their families,” Superintendent Linda Trujillo said.
“The FID continues to be committed to overseeing the financial institutions in New Mexico and pursuing justice for any individuals who would fail at their duty of care entrusted to them by New Mexican citizens,” Director Mark Sadowski said.