Interesting fraud case from California;
Unlicensed insurance agent Karyl Lynn Reed, 58, formerly of Cosa Mesa, was convicted last week on multiple felony counts of embezzlement and white-collar fraud enhancements after defrauding three victims of over $1.4 million. Reed was sentenced to four years in prison and ordered to pay more than $1.4 million in restitution.
Reed was arrested last year in Seabrook, Texas, and was arraigned on October 27, 2021, in Orange County after she was extradited.
An investigation by the Department of Insurance found that between 2012 and 2019, Reed acted as an insurance agent without a license and collected premiums for workers’ compensation insurance through her businesses, Envoy Business Partners and Allenn Specialty Group. She would provide her victims with fraudulent Certificates of Insurance, causing her victims to believe they had valid coverage when there was actually none.
“Reed hoodwinked local businesses by operating without a license to steal their money and leave them uninsured for workers’ compensation,” said Insurance Commissioner Ricardo Lara. “Thanks to the great work by Department of Insurance investigators and the Orange County District Attorney’s Office this sentencing and order to pay restitution will bring some level of justice to the victims while putting others committing insurance fraud on notice.”
The investigation discovered Reed also operated a staffing company without valid workers’ compensation coverage and personally adjusted and administered employee injury claims. She collected workers’ compensation premiums and payroll, employer and employee taxes from victims, and provided them with falsified Certificates of Insurance as well leading them to believe they were covered when they were not.
The Department’s investigation revealed that one victim did not have workers’ compensation coverage for an employee who became injured. Another victim had requested an updated Certificate of Insurance from their insurance company and were told no policy or coverage was in place and found out the policy number Reed had provided them belonged to a policy for another business. The investigation further revealed another victim who discovered the money they were paying Reed to her staffing service was not being remitted to the insurance company.
Consumers can check the license status of their agent or contact the Department of Insurance at 800-927-4357 if they suspect they are victims of insurance fraud.
This case was prosecuted by the Major Fraud Unit of the Orange County District Attorney’s Office.
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