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A former Dumas insurance agent is facing 52 felony charges in Desha County Circuit Court, accused of keeping premium money clients paid for policies that never existed.
Joshua Jackson Smith, 40, was charged Oct. 5 with 49 felony counts of a fraudulent insurance act, which includes selling insurance without a license and issuing fake insurance identification cards; two counts of theft of property; and one count of second-degree forgery.
Smith worked as an agent with Desha Insurance Inc., also known as First Arkansas Insurance of Dumas. Desha Insurance was operated by Smith’s father, David A. Smith, who has not been charged.
Desha Insurance closed its office in mid-September after selling its assets to Everett Cash Mutual Insurance Co. of Everett, Pennsylvania, according to the Arkansas Insurance Department.
Prosecutors say the charges against Josh Smith involve five victims, all farmers, although not all of the charges apply to each victim.
More: Tips for avoiding premium diversion schemes.
In one case, Danny Day Jr. and his son, C. Bradley Day, both of Desha County, bought insurance from Smith in 2020 for coverage on the farms, according to a report by James Kulesa, an investigator with the Arkansas Insurance Department, that was filed in Smith’s criminal case.
Between July 2020 and March 2021, the Days paid Smith nearly $100,000 in premiums for their policies, the prosecution says.
But when the Days filed five claims that totaled about $60,000, the claims were not honored, Kulesa said “Additionally, they have two pending lawsuits that should have been covered under the policy had it existed,” Kulesa wrote.
Smith also provided Danny Day with two proof of insurance cards for a tractor and trailer, but those were fake, Kulesa wrote.
Kulesa said that he interviewed Smith in November 2021. “During the interview, Smith admitted he accepted insurance premiums from Danny Day when there was not an insurance policy in place.
“Smith admitted the insurance identification cards he issued Danny Day were fraudulent.”
Smith didn’t return messages from Arkansas Business left on his cellphone. He pleaded not guilty to the charges on Nov. 7. Smith’s criminal defense attorney, Matthew Flemister of Nelson & Marks of Bentonville, didn’t return a call for comment.
But court filings provide a glimpse into the legal troubles surrounding Josh Smith.
He began working for Desha Insurance in 2011, earning $40,000 in 2017 and 2018, according to his bankruptcy filing.
In March 2019, Smith was supposed to renew his insurance license, but he didn’t, Kulesa wrote. And without a valid license, he was not legally allowed to sell insurance.
Couple File for Bankruptcy
Meanwhile, Smith was facing financial trouble. In October 2019, Smith and his wife, Laura Brooke Smith, filed for Chapter 13 bankruptcy reorganization.
The couple listed $182,500 in assets and $210,700 in debt, with $100,000 debt stemming from student loans.
Soon after the bankruptcy filing, allegations of wrongdoing surfaced in his handling of insurance policies.
Freddie Bartlett of Dumas thought he had bought insurance from Smith in November 2020 for his farm and equipment.
After one of Bartlett’s buildings collapsed during a winter snowstorm, he filed claims through Smith for about $100,000. But the claims were never paid.
“I would keep asking why we haven’t been paid,” Bartlett told Arkansas Business. “He always had some excuse.”
Eventually, Bartlett contacted the Insurance Department. “It wasn’t about the money at that point,” he said.
In December 2021, Arkansas Insurance Commissioner Alan McClain issued a cease-and-desist order against Smith to stop him from selling insurance.
Smith “held himself out as an active licensed insurance producer” when he wasn’t, McClain wrote in the order.
Meanwhile, the Days were also having trouble with Smith.
In November 2021, the Days filed a lawsuit against Smith, his father, David Smith, and Desha Insurance, seeking damages and alleging breach of contract and breach of fiduciary duty. The defendants have denied the allegations of wrongdoing.
The criminal file said that the Days received two proof of insurance cards. But one turned out to have an invalid policy number, according to the report from Kulesa, the investigator. The other had a valid policy number, but it was in another state for another policyholder.
In a Nov. 18, 2022, affidavit filed in the civil case, David Smith said that he learned through discovery that there were insurance cards “that appear to have come from Joshua Smith’s computer.”
David Smith said that his son “was not authorized to do this, and the information in those cards is not correct.”
The civil case is pending.
Josh Smith was arrested on Oct. 7 and released on a $50,000 bond.
Smith’s jury trial is set to start April 4 in the Desha County courtroom in front of Circuit Judge Robert Gibson III.
— to news.google.com
