N.C. Agent Fined $220,000, Sentenced to Six Months in Jail for Embezzlement

February 18, 2005

North Carolina Insurance Commissioner Jim Long has announced the conclusion of an insurance fraud case against Eugenie H. Johnson of Fayetteville, who was accused of embezzling more than $220,000 from an insurance agency where she worked.

Johnson was sentenced to pay more than $220,000 in restitution for the money she stole, plus serve six to eight months active jail time and 60 months of supervised probation. She was charged in Cumberland and Robeson counties with obtaining property by false pretense; Johnson later confessed.

The DoI began its case on Johnson when investigators received a call from Robert McNeely of the Special Investigative Unit of Liberty Life Insurance Company in Greenville, S.C. As the investigation progressed, officers discovered that Johnson forged cash surrender applications and checks in connection with the cash surrender of over 400 lapsed life insurance policies that had been previously issued.

The scheme allegedly generated nearly $250,000 over a seven-year period. Johnson had been an employee of Liberty Life for about years. The company has restored affected policies.

“This case just goes to show you that insurance fraud can occur anytime, anyplace, by anybody. And the Johnson case was particularly large,” Long said. “Unfortunately, every time insurance fraud is committed, we all become victims. Rates go up as a direct result of fraud cases like this one. Some estimates show that up to 10 percent of your premiums go to cover the losses incurred through fraud.

“Thanks to the work of Department of Insurance investigators, investigators with Liberty Life and officers in the Fayetteville and Saint Paul’s police departments, we were able to put a stop to Ms. Johnson’s scheme. Let this be a message to others considering insurance fraud: don’t do it. We are watching.”

Johnson’s sentence is particularly significant because she is required to serve active time even without any prior criminal record.

“This is actually a better resolution than we hoped for,” said Ed Roach, lead investigator on the case. “We hope this will serve as a deterrent to anyone else contemplating such a scheme.”

The DoI employs 19 sworn law enforcement officers dedicated to investigating claims of insurance fraud. In 2004, these investigators saw 26 cases successfully prosecuted with $6.2 million ordered in restitution. In most of those cases, the suspects plead guilty and went on to serve active time.

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