Whitesburg KY
Sunny
Sunny
57°F
 

Local insurance agents may lose licenses after pleas




Two Whitesburg area insurance agents are expected to lose their licenses to sell insurance after pleading guilty to helping a client defraud a workers’ compensation insurance carrier.

The Kentucky Department of Insurance said it will take administrative action against Thomas J. Childers, 60, of Hazard, and Karen Lynetta Fox-Burns, 56, of Whitesburg, who were sentenced on felony charges in federal court earlier this month.

Childers and Fox-Burns originally were indicted in May 2008 on charges of mail fraud. Childers is the owner of CS&W Insurance Services Inc. in Whitesburg and Fox- Burns is a licensed agent. Childers, Fox-Burns and a CS&W customer services representative, Shannon Ranee Hogg, a resident of Whitesburg and the daughter of Fox-Burns, each pleaded guilty to a count of misprision of a felony (including the act of concealing a felony) in U.S. District Court in Lexington.

According to court documents, Childers, Fox-Burns and Hogg helped CS&W clients John and Tena Pennington defraud workers’ compensation insurance carrier Kentucky Employers’ Mutual Insurance (KEMI). The group misrepresented the number of employees and the amount of payroll in John Pennington’s company, ZAG Resources Inc., and its connection to another Pennington company, JZ Trucking Inc. This resulted in lower workers’ comp premiums for Pennington’s company.

Childers, Fox-Burns and Hogg each received a two-year probation, 100 hours of community service and a fine of $100. Childers was fined an additional $10,000 to be paid immediately or in monthly installments of $400.

“While we take all cases of insurance fraud very seriously, it’s always a major concern when our licensees are involved. We know others in the agent community join us in our disappointment over the actions taken by these individuals,” said Sharon P. Clark, DOI Commissioner.

Tena Pennington, 44, pleaded guilty this week to a felony count of mail fraud in federal court in Lexington in connection with the case.

Mrs. Pennington will report to prison on June 30 and will serve a 15-month sentence. In addition, she must pay $272,362 in restitution to Kentucky Employers’ Mutual Insurance.

The cases were investigated by the Kentucky Department of Insurance (DOI) Fraud Investigation Division, the United States Postal Inspection Service and the Internal Revenue Service Criminal Investigation Division.

John Pennington is scheduled to appear in court in November.

“This case was significant in the number of people and amount of money involved,” said DOI Commissioner Clark. “We are very pleased that the court sent a message that this type of fraud, which cheats the insurer and endangers employees, will not be tolerated.”


Leave a Reply