High-profile insurance investigation has Fort Smith connection (Updated)

Editor’s note: See updated comments from Steve Standridge Insurance at the end of the story.

An investigation by Arkansas officials against insurance company owner Steve Standridge could reach JMR/PFP Insurance in Fort Smith.

Standridge owns Mount Ida-based SSI, which has a majority interest in JMR/PFP Insurance.

JMR/PFP, now located in the headquarters building of Golden Living (former Beverly Enterprises), recently purchased the 18,000-square-foot building at 1120 Garrison Ave. The plan is for the insurance company’s 30 employees to move downtown by June 2010. The company will occupy both floors of the building and the project will cost around $2 million, he said. The upper floor of the building houses the law firm of Smith Cohen & Horan. The law firm is moving across the parking lot to 1206 Garrison Ave.

On Mar. 2, Standridge was hit with two orders from the Arkansas Insurance Department. One order temporarily suspended his license. The second order — “Order of Supervision” — restricts the ability of SSI and its officers to conduct business during an investigation into past business practices. Standridge claims to have more than 170 employees in Arkansas, and the AID notes that Standridge owns 11 insurance agencies in Arkansas.

The allegations by the Arkansas Insurance Department are broad and complex, but revolve around several issues, including misrepresenting $4 million in loans with First Arkansas Bank and Trust as free and clear capital to cover the acquisition of Gibraltar, an insurance company. Also, Standridge is charged with not returning portions of $846,311 to the Bank of Star City that were part of a premium financing arrangement for an insurance policy that was cancelled. Furthermore, Standridge is alleged to have forged the signatures of corporate officers for documents submitted to the Arkansas Insurance Department.

“Repondents misrepresentations under oath and presentation of inaccurate hearing exhibits regarding his family’s owners interest in Steve Standridge Insurance, Inc. constitute dishonest practices and demonstrate incompetence, untrustworthiness, and a lack of good personal and business reputation, all of which are grounds for probation, suspension, or revocation of an insurance producer’s license (under Arkansas law),” noted the Emergency Suspension Order for the Arkansas Insurance Department.

An insurance industry insider familiar with the situation said the two orders are “incredible” in their reach and in the allegations.

“This is huge. I’ve never seen this kind of order go out on an insurance operation that is so prominent statewide,” the insider noted. “If the investigation yields further information, there is a good possibility it will impact the ability of Steve Standridge’s insurance agencies to operate.”

However, the insider said it should be noted that JMR/PFP is allowed to conduct normal operations — with the exception of premium financing — during the investigation.

Jim Russell, with JMR/PFP, would not comment on the situation. He referred questions to lawyers handing the case.

Updated info: Jared Standridge, vice president of Steve Standridge Insurance, told The City Wire that the issues with the Arkansas Insurance Department will "absolutely not" have any impact on JMR/PFP or any other agencies owned by SSI. He said the downtown Fort Smith move will not be delayed or postponed.

"It’s business as usual at Steve Standridge Insurance," Jared said. He said he and sister Alisha Pollock are now the majority owners of the company. Jared said Steve, his father, retired Wednesday (Mar. 3), partially because of the investigation and partially because of doctor’s orders.

Jared said the company is complying with all orders and requests from the AID, but would not venture a guess as to when the process will be complete.

Link here for the Order of Supervision, and link here for Emergency Suspension Order filed against Standridge by the Arkansas Insurance Department.