BOTHELL — A former insurance salesman is facing criminal charges after an investigation by the state Office of Insurance Commissioner turned up dozens of customers whose premiums went unpaid despite them cutting checks to the man.
The investigation showed more than $50,000 in missing payments. Nearly 80 people had their premiums siphoned away and many were unaware their policies weren’t current. The man sold the policies for American Family Mutual Insurance Company, which has reimbursed some of those customers, according to court documents.
Levi Watson, 44, has been charged with first-degree theft and money laundering in Snohomish County Superior Court. Prosecutors allege the crimes were particularly egregious because there were multiple victims and the defendant misused his position of trust and fiduciary responsibility.
Additionally, the crimes “involved a high degree of sophistication and planning or occurred over a long period of time,” according to court papers.
Watson, of Bothell, is scheduled to answer to the charges at an arraignment hearing next month. He reportedly told investigators last year that he didn’t intend to take people’s money but lost track of the policies and money, Washington State Patrol detective Joshua Merritt wrote in court papers.
Merritt is assigned to the criminal investigations unit with the state insurance commissioner. He interviewed Watson in June 2016. The state Attorney General’s Office filed the charges earlier this month.
An insurance investigator repeatedly tried to contact Watson in 2015. He reportedly failed to return calls or email messages. American Family Insurance also repeatedly tried to reach the defendant about the missing payments.
“He admitted he did not open his mail and avoided phone calls about the missing money because he could not handle it,” Merritt wrote. “He said he intentionally did not contact the insurance company or anyone to identify how much was owed or try to establish any kind of payment plan.”
Watson was an insurance producer who sold policies to homeowners and business owners. He resigned in December 2014 from American Family Insurance and closed his business. His insurance license was revoked in the summer of 2015.
The missing payments came to the attention of authorities in early 2015 when American Family Insurance started transferring Watson’s clients to other producers. At that time, it was discovered that nine of his clients had made payments but those hadn’t been forwarded to American Family.
An investigation was launched and records showed Watson had received the payments from the customers but the insurance company had no record of the premiums being forwarded, according to court records.
Some of the customers had written personal checks and other payments were made as part of mortgage through lending companies.
American Family turned up more victims as the investigation continued, Merritt wrote.
One man told investigators he learned of his missing premium payment when he filed a claim with American Family. He said the error was corrected and the insurance company reimbursed the missing amount.
Detectives obtained search warrants to scour Watson’s personal and business bank accounts. The records showed 554 checks deposited in his accounts between April 2013 and December 2014. Of those, 483 were verified as being valid payments forwarded to American Family accounts.
Watson allegedly told investigators he made mistakes on how the accounts were paid and how the money was moved around.
“Watson stated he knew he was behind in the accounts and had not created all of the policies that had been paid for,” Merritt wrote.
The detective showed Watson emails where the defendant provided proof of policies for policies that didn’t exist, according to court papers. “Watson admitted in those cases he was hiding the fact that the money was gone.”
Diana Hefley: 425-339-3463; hefley@heraldnet.com.
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