Unlicensed insurance agent Karyl Lynn Reed, 58, formerly of Cosa Mesa, California, 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 Oct. 27, 2021, in Orange County after she was extradited.
An investigation by the California Department of Insurance reportedly 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.
The investigation reportedly discovered Reed also operated a staffing company without valid workers’ comp coverage and personally adjusted and administered employee injury claims. She collected workers’ comp 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 CDI’s investigation showed that one victim did not have workers’ comp coverage for an employee who became injured. Another victim reportedly 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 CDI 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.
The case was prosecuted by the Orange County District Attorney’s Office.
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