Arkansas Insurance Department closes fraud case against former Prairie Grove funeral home employee

Northwest Arkansas Democrat Gazette, By Lynn Kutter, October 11, 2026

PRAIRIE GROVE – The Arkansas Insurance Department in June closed a fraud case against a former funeral home employee after "insufficient evidence" was found to determine insurance fraud, according to department documents.

The department opened a case against J.C. Dobbs, who formerly worked for Luginbuel Funeral Home in Prairie Grove for about 30 years, after the funeral home accused Dobbs of forgery, fraud and theft of funds.

Dobbs resigned from Luginbuel last year and began working Dec. 1 for the city of Prairie Grove as planning and zoning director, along with continuing in his role of fire chief. Mayor David Faulk placed Dobbs on paid administrative leave Jan. 19 after he was informed of a pending criminal investigation against Dobbs. Dobbs retired as fire chief and resigned as planning director March 16.

The Insurance Department provided the case file after the Washington County Enterprise-Leader submitted a Freedom of Information Act request. The file shows criminal investigator Dylan Hawkins requested the file be closed "pending further developments and evidence to detail fraudulent insurance acts."

Dobbs and his attorney, Bob Estes of Fayetteville, both declined to comment last week on the closed case.

Hawkins was assigned the case Jan. 20 as a fraud referral from the Prairie Grove Police Department after the police received a letter from attorney John Everett, who was representing Loyd Luginbuel and Stacey Luginbuel with the funeral home. The letter accused Dobbs of committing forgery, fraud and theft of funds from the business by forging the business owner's name to manipulate insurance commissions and divert commission payments to himself, dating back to the 1990s, according to the police narrative.

In its conclusion, the Police Department said evidence "suggests a deliberate scheme to divert more than $111,000 in insurance commissions through manipulation of policy documentation, destruction of mail and falsification of signatures."

According to Hawkins' case file, Luginbuel said Dobbs received commissions from Selected Funeral & Life Insurance Co. for selling pre-need products for funeral services that should have gone to the funeral home. Pre-need funeral planning insurance sets aside money to help cover the cost of funeral home services before the need arises, according to Selected's website.

Dobbs was accused of changing the agent account number so the commission would go directly to him, instead of to Loyd Luginbuel, who was the general agent, according to the case file.

Hawkins' 10-page report shows Hawkins talked to numerous people and organizations during his six-month investigation. The file includes multiple pages of financial information from Luginbuel, information about Dobbs' finances and information about commissions and bonuses paid over the years.

The FBI on Feb. 6 said it was taking over the case and documents should be transferred to an FBI agent. Three months later, the agent confirmed the FBI was no longer investigating the case and was turning the file back over to the state level.

The funeral home sold pre-need policies through Selected Funeral & Life Insurance Co., and commissions were paid based on these sales. According to the investigation, Tara Arthur, a representative of the insurance company, told Hawkins that Dobbs was the primary person Selected Funeral & Life interacted with at Luginbuel.

Arthur said she believed Loyd Luginbuel did not know how he had the payment schedule and commissions set up, according to the case file.

Buddy Courtney, CEO with Selected Funeral & Life, told Hawkins that Dobbs was authorized to sell pre-need policies for the insurance company in the late 1990s. Courtney said that in 90% of the situations with their agents selling pre-need policies for a funeral home, the agent gets the commission. For Dobbs' case, Courtney said there was not anything on file to show Luginbuel would only get the commission.

Hawkins interviewed Dobbs on June 24. During that interview, Dobbs said he was always getting the commission value of his pre-need policy sales from 1999 through 2025, according to the case file.

Dobbs said he did not sign a contract with Selected that he would not get any commission, according to the case file. Dobbs told Hawkins he left the funeral home for a "dream job" with the city of Prairie Grove and believed those at Luginbuel were upset with him leaving because they had to "step up and complete tasks" he had been doing for many years, according to the case file.

"Dobbs really had nothing further to provide other than that he did not commit fraud and believes they had known he was getting commission and are only upset due to him leaving as well as seeing the financial figures he was obtaining selling pre-need polices," the report states. "He is extremely upset because this has tarnished his legacy in the city."

Hawkins closed the case two days after his interview with Dobbs.

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