Neosho insurance agent Joshua D. Hughes not only embezzled money from American Family Insurance, but he did not bother to get his customers the polices he promised them, according to a sentencing memorandum filed this morning in U. S. District Court for the Western District of Missouri.
But for the pure dumb luck that none of these clients had a tragedy that would have resulted in their seeking enforcement of their nonexistent AFI insurance policy, the extent of the damage inflicted by Hughes would have been much greater than what it was in this case.
That "pure dumb luck" is the only thing preventing the federal government from asking for a lengthy prison term for Hughes, who is scheduled to be sentenced during a 10:30 a.m. June 23 hearing in Springfield.
The government is asking for a 10-month sentence for Hughes, who pleaded guilty August 23.
He was also aided by his employer's willingness to cover his transgressions, according to the memorandum, which details Hughes' crimes.
Janet Mueller, a compliance administrator for AFI advised that she had become aware of Hughes after she noted that the accounts associated with the defendant were being returned with insufficient funds when the victim would attempt to sweep insurance premiums from a trust account held in Hughes’ name.
Furthermore, Mueller observed that Hughes’ account had a large number of deleted payments, which she advised was caused when an agent enters a payment by a customer, but then manually deletes the transaction after being issued a receipt, to prevent premiums from being withdrawn from their accounts by AFI.
Officials with AFI recognized that Hughes was collecting insurance premium payments from his clientele but then manufactured documents that kept those monies from being withdrawn or swept from his account.
Hughes would then transfer those insurance premiums that should have been paid to AFI into his personal account and used for his personal benefit.
Furthermore, Hughes issued proofs of insurance to clients without putting the policies into effect, while embezzling those funds collected from his unsuspecting clients.
While some of Hughes’ actions involved the stealing of insurance premiums from AFI, his scheme went further to include misleading his unsuspecting clientele into believing that he had purchased essential insurance coverage when the policies were never enacted with the insurer.
Hughes’ actions and scheme not only involved the embezzlement of monies, it also misled people into believing they were receiving coverage from AFI that in reality they were not receiving.
But for the pure dumb luck that none of these clients had an tragedy that would have resulted in their seeking enforcement of their nonexistent AFI insurance policy, the extent of the damage inflicted by Hughes would have been much greater than what it was in this case.
Even though Hughes embezzled funds from AFI, his actions could have further victimized 16 other individuals and policy holders but for the willingness of the victim to cover the criminal acts of one of its agents.
While initially denying that he took payment for insurance policies that were never put into effect, Hughes also did ultimately admit to committing these acts as well, which was in concert with his larger embezzlement scheme.
While AFI has been able to recover its losses from this embezzlement through others means, this fact in no way diminishes the fact that but for the diligent efforts of company officials, Hughes’ embezzlement scheme would have continued uninterrupted as this criminal scheme only stopped after being detected by the victim themselves and he was fired from his position.
Hughes used his insurance clienteles’ premiums as his own personal piggy and left those same people at considerable and unforeseen risk. Thus, in light of the aforementioned facts, when weighed with the other factors, including deterrence and likelihood to re-offend, the Government asserts that Hughes’ criminal conduct warrants a sentence of 10 months imprisonment, followed by 3 years of post-release supervision.
In the sentencing memorandum, the government noted Hughes' lack of a criminal history (only one bad check charge), his cooperation with the investigation and his ability to make restitution as reasons for the lesser sentence.
On the other hand, and to his credit, Hughes was cooperative, and when confronted, ultimately admitted to all of his crimes against AFI and its customers.
Furthermore, when the United States Attorney’s Office approached Hughes, he opted to waive his right to indictment, and entered a guilty plea to an information.
Ultimately, it is necessary to balance Hughes’ embezzlement against his subsequent actions.
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This is a Terrible Situation - where his Policy Holders Entrusted Joshua D. Hughes - to do the Right Thing with their Hard Earned Money - Thank Goodness that these Policy Holders did not have any Major Claims, Loss, or Issues - - The Company - American Family Insurance - Should have better Methods - to Audit and Provide - Checks and Balances - so that their Agents cannot run these Type of Schemes - on their Unknowing Clients - - They need to Provide acknowledgement Directly from the Corporate American Family Insurance Office - Not just the Franchised Agent -
ReplyDeleteTen Months seems like a relatively short period of Time to Pay for these Crimes - - He has Caused - Trust Issues for his Clients the Rest of their Lives - - where they will always be Leary of having a Valid Insurance Policy in Place and being a Victim of another Insurance Fraud. Plus, he will be out in six-months - He should never be allowed to have an Insurance License or anything to do with any type of Insurance Policy.
Again - Feel Sorry for the Victims not the Criminals.