Former Orange County resident arraigned in $1.4 million workers’ compensation insurance fraud scheme that preyed on local businesses
News: 2021 Press Release
ORANGE, Calif. — Unlicensed insurance agent Karyl Lynn Reed, 57, formerly of Costa Mesa, was arraigned today on multiple felony counts of grand theft, forgery, embezzlement, and aggravated white-collar crime after allegedly defrauding three victims of over $1.4 million. Earlier this month, Reed was arrested in Seabrook, Texas, and extradited to Orange County.
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.
“Local businesses are the lifeblood of our recovering economy. Ms. Reed’s alleged actions put these businesses owners’ livelihoods at risk by stealing their money and leaving them uninsured,” said Insurance Commissioner Ricardo Lara. “My department is dedicated to investigating and stopping unlicensed agents to protect California’s consumers and businesses who help keep our economy strong.”
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 is being prosecuted by the Major Fraud Unit of the Orange County District Attorney’s Office.
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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.