Judge tosses out insurance fraud suit against Parsons

A judge Thursday threw out a Kansas Attorney General's case against Charles Parsons, saying he can't find probable cause that Parsons committed insurance fraud.

The case against Parsons, as a result, has been dismissed.

Sixth Judicial District Chief Judge Richard Smith denied the attorney general's request to bind Parsons over for trial on one count of felony fraudulent insurance act. The ruling was the conclusion of Parsons' preliminary examination held Aug. 24. Smith declined to make a decision at that time, saying he needed to look over the evidence and then make a ruling.

Smith wrote the following in a journal entry that explained his decision:

The evidence at the preliminary hearing established that Parsons had an insurance policy with Farmers Alliance Mutual Insurance. That policy provided coverage to multiple properties, one of which, located at 113. S. Main St., was damaged as a result of the March 11, 2005, downtown fire. Evidence revealed the policy had been canceled prior to the fire as a result of non-payment of premiums.

Parsons was in the process of discussing reinstatement of the policy but failed to do so on the date when the fire began. The evidence established the fire began some distance or "a few doors down" from the building. Parsons claim for the property loss was for smoke and water damage.

While the fire was raging downtown, Parsons wrote out a check to his insurance agent in an amount necessary to re-establish coverage on the building. There was no evidence pointing out whether or not the building had been damaged at the time the check was being written. However, the fire was burning and the situation, in Parson's mind, must have been urgent since he had no insurance on his building.

The only evidence at the hearing indicated that Parsons delivered the check to Gross Insurance Agency, which was made payable to Farmers Alliance, but the date was left blank. Tim Allison, the insurance agent for Gross, wrote in the date "March, 10,2005," and then forwarded the check to Farmers Alliance.

The insurance company, therefore, reinstated the policy effective through a time-period that would've covered damages to the structure because of the company's belief that the check was dated prior to the fire. However, the company denied payment based on the defense that a "materially false misrepresentation had been made."

Smith wrote the "burden of proof" at a preliminary hearing is somewhat low. The court has to determine whether there's probable cause to believe a felony had been committed.

The statute that Parsons was accused of violating requires him to knowingly, with an intent to defraud, present a written statement as part of a claim for an insurance policy known to contain materially false information.

Parsons' attorney, Pat Bishop, argued his client's actions failed to rise to a level of wrongdoing under the statute because Parsons had only delivered the check without any date. It was Allison who inserted the false information and caused that information to be presented to Farmers Alliance.

But prosecutors argued that common sense would indicate, based on the defendant's actions, that he "clearly knew a false information would be present to the insurance company." Therefore, he is accountable under the statute.

The court could presume that Parsons intended all of the consequences of his actions, including his failure to write in an appropriate date on the check, which should've been March 11, 2005. But the court is not a position to presume that, or what Smith referred to as a "evidentiary vacuum."

Also key was a statement by Allison saying Parsons' first knowledge that he wrote in the date was March 31, 2005. An insurance investigator, Glen Hagerman, talked with Allison on March 31 and Allison said the check was written on March 10. A couple of days later, Hagerman spoke to Allison again. It was conversation after Hagerman talked with Parsons about the matter. Allison, during the interview, admitted to the fraud. When asked about the time when he told Parsons about what he did, Allison said "yesterday," which indicated Allison must've contacted Parsons sometime immediately after his first conversation with the investigator.

When Parsons spoke to Hagerman on March 31, Parsons said the check was dated March 10. However, he relented the statement and admitted he delivered the check after the fire started. Parsons also said the date on the check was blank and he didn't know who wrote the date.

Allison, meanwhile, waived his right to preliminary hearing on Aug. 24 and was bound over for trial on felony fraudulent insurance act.

There was no evidence that suggested whether Parsons' building was damaged by smoke, water or fire at the time he submitted the check.

To meet the statute, he must "prepare or present a written statement containing a falsehood. "The only evidence before the court at this preliminary hearing is that Allison committed these acts and Parsons did not know about it until well after the fact," Smith wrote.

The charges against Allison, Parsons and a third co-defendant, Cindy Moyers, stemmed from a Bourbon County Grand Jury investigation last year. Moyers entered into a pretrial diversion agreement with prosecutors that ended criminal proceedings against her. She was originally charged with making false information because she allegedly entered the back-dated check into the books.