ROOSEVELT He's seen two of his agents plead guilty to felony charges related to criminal activity at his Vernal insurance agency, and now Philip J. Timothy is facing charges of his own.
The 56-year-old was charged Thursday by the Utah Attorney General's Office in 3rd District Court with 15 felonies. The charges against the majority-owner of Service Insurance Agency of Vernal include one count each of racketeering, conspiracy and obstruction of justice; two counts each of filing a false or fraudulent insurance claim, forgery and communications fraud; and three counts each of unlawful dealing with property by a fiduciary and theft by deception.
In court records, state investigators claim that Timothy used insurance premium refunds owed to clients to buy two trailers totaling more than $20,000 and a Harley-Davidson motorcycle worth more than $30,000. Court records state that Timothy bought one of the trailers from a company with its own premium refund.
Timothy is also accused of failing to return over $44,000 in premium refund monies to an oil field service company after it canceled its policy.
"(The) defendant placed numerous commercial clients at risk for substantial loss by failing to return premium refunds in his capacity as a licensed insurance agent, the exact amount of which is still being calculated," Utah Department of Insurance investigator Rick Angel wrote in a probable cause statement.
Court records show that Timothy may have failed to return at least $300,000 in refunds.
Timothy also conspired with fellow insurance agent Mark Foley to create fraudulent bonds worth more than $1.5 million for two construction companies, according to investigators, that put not only their clients but the insurance companies involved at risk.
Foley pleaded guilty in November in 8th District Court to reduced charges for his role in the scheme and agreed to cooperate fully with the investigation into Timothy's conduct. He is awaiting sentencing.
A third agent from Timothy's office, Bart Winterton, pleaded guilty to forgery in October for signing a client's name to an insurance policy application. The charges against Winterton sprang from a separate state investigation. He has never been tied to any of Timothy's alleged activities.
In addition to keeping clients' refunds and creating phony bonds, authorities say that Timothy ordered the shredding of 114 boxes of records from the Vernal and Roosevelt Service Insurance offices in July 2007, one month after a search warrant was executed on the Vernal office.
Timothy, during two telephone calls Friday night, denied or offered explanations for most of the charges against him. He confirmed that office records had been shredded but said it was 12 boxes, not 114, and they were from 1992, making them irrelevant to the state's investigation.
As for the money he's accused of keeping from clients, Timothy said it's been repaid in full. He said state investigators are overreaching with their estimate of $300,000.
"The money that you have in (the court records) is so far off, it's unreal," Timothy told the Deseret Morning News.
Timothy said an audit of Service Insurance's books, conducted over the past several months, revealed that only about $75,000 was ever mishandled.
"I'm just trying to be decent with everyone," he said. "Everything's been done, everything's taken care of, no one's lost anything at this point nothing. I can tell you that honestly."
Paul Murphy, spokesman for the Utah Attorney General's Office, said investigators presented prosecutors with enough evidence to pursue more than 150 felony charges against Timothy. He said the case was filed in Salt Lake City because the two district court judges in Uintah County recused themselves due to past personal and professional dealings with Timothy.
Murphy said after negotiations with the state, Timothy has agreed to plead guilty to the 15 counts filed against him in exchange for the state's promise not to file the additional felony charges. As part of the proposed plea bargain, Timothy also agreed to put money into a state-managed trust account to repay any additional victims, Murphy said.
"It is possible that there are victims that are unaware of the issues," he said.
Murphy did not offer comment on whether the state would be pursuing charges against other individuals in Timothy's office.
Anyone who suspects he or she may have a claim against Timothy can contact state insurance investigator Rick Angel at 801- 526-4559.Timothy is scheduled to make his initial court appearance March 17.