Image: Billi Smallwood
AP
Billi Jo Smallwood, 35, is charged with setting a fire that killed her two young children at her Fort Campbell, Ky., home.
updated 11/22/2008 9:20:01 PM ET 2008-11-23T02:20:01

An Army wife accused of setting her apartment on fire botched an attempt to collect on her husband's $400,000 insurance policy when he survived and her two children died instead, a federal prosecutor said.

Billi Jo Smallwood, 35, was denied bond at a Friday hearing in northeast Georgia, where she appeared on federal charges of damaging government property by fire.

"She set fire to her own home in hopes of killing her husband and wound up killing her kids," Assistant U.S. Attorney Stephanie Gabay-Smith said.

The May 2007 fire at the Fort Campbell Army post on the Tennessee-Kentucky border killed 9-year-old Sam Fagan, and 2-year-old Rebekah Smallwood.

Smallwood's husband, Army Spc. Wayne Smallwood, crawled out of a second-level window and suffered a leg injury when he jumped. Their toddler daughter, Nevaeh, was not injured.

U.S. Magistrate Susan Cole said she denied bond mostly because Smallwood was a flight risk. The indictment against her was released Tuesday and she appeared in court in northeastern Georgia, where she has family. She will likely be transferred to Kentucky next week for a Dec. 10 arraignment.

"At this point the evidence appears strong against Mrs. Smallwood," the judge said. "It's a heinous crime that's alleged."

Troubled relationship
Matthew Cummings, a special agent with U.S. Army Criminal Investigations Division, testified that investigators determined gasoline was poured on the floor in the living room of their apartment.

He said Billi Jo Smallwood suffered second- and third-degree burns, but they were consistent with someone who set a fire. He said doors in the home had been locked from the inside and smoke detectors had been removed.

Cummings said the husband had a $400,000 life insurance policy and the investigation showed the couple's relationship was "rocky" and she was "concerned with his abuse of alcohol and drugs."

Just before the fire was set, the couple had returned from a trip to Georgia and had only $17, the agent said. She was aggravated that her husband had gone out earlier in the evening to a VFW club bar.

'Here to support my wife'
Smallwood's family members stood and identified themselves to the judge in support of her release on bond. Her husband, accompanied by friends in Army uniforms, stood and said, "My name is Wayne Smallwood and I am here to support my wife."

The prosecutor said Friday that Wayne Smallwood was just released from a county jail where he was in custody on a domestic abuse complaint by his wife.

The accused woman's mother testified that her daughter has been living in Brunswick recently and is active in the church. Her husband and other family members declined comment outside the courtroom but told the accused woman, "We love you, Billi," as she was led away in shackles, sobbing.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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