EVERETT — A former insurance salesman is expected to report to jail Nov. 1 after an investigation revealed that he siphoned away his customers’ premiums.
More than $50,000 was missing. Nearly 80 people were affected and many were unaware their policies weren’t current. The man sold the policies for American Family Mutual Insurance Company.
Levi Watson pleaded guilty to first-degree theft and admitted the crime was particularly egregious because there were multiple victims and the defendant misused his position of trust and fiduciary responsibility.
Snohomish County Superior Court Judge David Kurtz sentenced Watson on Tuesday to 50 days in jail. Watson, who didn’t have any criminal history, faced up to three months.
The judge agreed that Watson can serve 40 days of his sentence in work release if he qualifies and can find a facility outside of Snohomish County that will accept him.
The county shut down its work release program earlier this year due to a budget shortfall. Work release was offered to some criminal defendants who had jobs but faced a jail sentence. Defendants were housed in the secure facility near the jail when they weren’t working.
Watson, 45, also was ordered to pay back nearly $40,000.
He wrote the judge a letter, maintaining that the missing payments were a bookkeeping error, not theft. He listed his many volunteer efforts. He also explained the financial and personal pressures he was facing at the time.
“Regardless of what the evidence shows I have never in my life intentionally taken money or tried to hurt anyone,” Watson wrote.
“The reasons this ended up this way was my lack in care and custody of my financial duties in my business. My staff contributed to the issues but that’s due in large part to my poor training and direction,” he added.
Washington State Patrol detective Joshua Merritt investigated the case. He’s assigned to the criminal investigations unit with the state insurance commissioner. He interviewed Watson in June 2016.
An insurance investigator repeatedly tried to contact Watson in 2015. He 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 in his report. “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 that 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 mortgages through lending companies.
American Family turned up more victims as the investigation continued, Merritt wrote.
Detectives obtained search warrants for 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 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 coverage 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; firstname.lastname@example.org.