The owner of a Gloucester, Massachusetts insurance agency has been indicted and arraigned in connection with an alleged embezzlement scheme that left client companies uninsured. The scheme included the agent transferring ownership of her agency to a family member after her own license was suspended as part of a previous settlement, according to prosecutors.
Attorney General Andrea Joy Campbell reported that Phyllis Palazzola was arraigned this week in Essex Superior Court on charges of larceny, forgery and unlicensed insurance practice. Her business, Palazzola Insurance Agency (PIA), was also arraigned on similar charges.
In total, the AG’s office alleges that Palazzola stole $39,010 in premiums from business customers.
Prosecutors allege that Palazzola embezzled the funds from customers while working as an insurance producer at Palazzola Insurance Agency between May 2017 and September 2018. Palazzola allegedly took one or more payments, after suspension of her insurance broker’s license, from eight individuals, who paid her for their workers’ compensation insurance. However, Palazzola never bound the insurance policies and she issued fraudulent certificates of insurance to six of the eight affected businesses.
As a result of a complaint by one of the customers, the Massachusetts Division of Insurance investigated and revoked the insurance producer licenses for both Palazzola and PIA on June 11, 2018, as part of a settlement agreement signed by Palazzola. After the settlement, prosecutors say Palazzola informally transferred ownership of PIA to a family member and continued to work at the business for another 14 months. During that time, prosecutors allege that she forged the signatures of customers on two separate occasions, binding them to insurance premium financing agreements to cover up her previous embezzlement.
Judge Kristen Buxton ordered Palazzola released on her personal recognizance.
This case was investigated with assistance from the Massachusetts Insurance Fraud Bureau.
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