RALEIGH - Agents at family-owned insurance agencies in Clayton, Selma, Smithfield, and Wendell face monetary penalties and the suspension of their licenses if they cannot disprove allegations of fraud found by state regulators, according to N.C. Department of Insurance letters released Friday.

Will Honaker and his wife, Tiffany, who own Smithfield Insurance; Heather Richardson, who owns Clayton Insurance; and Holly Cooper, who owns Selma Insurance and Affordable Choice Insurance & Tax Service in Wendell with her husband, Arthur "Brad" Cooper, are scheduled to meet with state regulators at the DOI office in Raleigh Thursday and Friday to discuss the department's findings, according to DOI letters sent to their attorney, N.C. Rep. Leo Daughtry.

The meetings are not open to the public.

According to the letters, the Coopers, the Honakers, and the Richardsons, "knowingly" quoted and charged insurance premiums to policyholders in excess of the actual premiums, by a total of $131,261. Brad Cooper and Heather Richardson also were found to have forged customers' signatures, DOI audits show.

"In the event no resolution of these very serious apparent violations can be accomplished at this conference, the (DOI) will ask the Attorney General's Office to institute a public administrative hearing," the letters read. "If these apparent violations are shown to be true after a hearing, the Hearing Officer may suspend or revoke your client's license or impose a monetary penalty."

DOI spokeswoman Kerry Hall said the department could not comment on the cases because of the ongoing investigations.

Will Honaker, Heather Richardson, and Holly Cooper are the children of Bill and Karen Honaker, who own Premium Service of Smithfield, which the four agencies use to finance their policies for their customers.

None of the agents returned calls seeking comment. Daughtry declined to comment for this report.

Brad Cooper's firing of two employees during the course of the DOI audit also drew scrutiny from state regulators. But the firings were not mentioned in the DOI letters to Daughtry.