Embezzling Neosho insurance agent sentenced to 10 months

It was only "pure dumb luck" that prevented a tragedy when Neosho insurance agent Joshua Hughes sold non-existent insurance policies to his clients and embezzled thousands of dollars from American Family Insurance, according to a government sentencing memorandum.

For his crimes, Hughes, 45, will spend 10 months in prison.

Judge Douglas Harpool handed down the sentence during a 30-minute hearing this morning in U. S. District Court in Springfield. The sentence was exactly what government prosecutors had recommended.

After Hughes completes his sentenced, he will be on supervised release for three years. Hughes has until August 3 to self-surrender and begin his sentence.

Hughes' crimes were detailed in a sentencing memorandum filed May 23. 

Federal agents with the Federal Bureau of Investigation (“FBI”) were contacted by officials with AFI regarding the embezzlement of insurance premiums by one of its agents, Joshua D. Hughes.

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by a customer, but then manually deletes the transaction after being issued a receipt, to prevent premiums from being withdrawn from their accounts by AFI.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insurance premium payments from his clientele but then manufactured documents that kept those monies from being withdrawn or swept from his account.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 this case, Hughes has demonstrated that he has little respect for the law as his fraud involved numerous acts of embezzlement and fraud that occurred over a period of some 15 months.

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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