Prosecutors in California say that a former licensed insurance agent stole more than $100,000 from small business owners and general contractors by selling them bogus workers' compensation policies. The 31-year-old man faces a raft of felony counts, including insurance fraud, forgery and grand theft. Prosecutors say the man used the money to cover gambling debts and buy luxury items such as designer clothing and sporting equipment. He was released from custody after posting bail in the amount of $100,000.
The man allegedly told small business owners that their workers' compensation policies would be backed by major insurance providers. However, prosecutors from the Orange County District Attorney's Office claim he pocketed the money instead and provided his clients with no coverage whatsoever. Prosecutors say that he was able to avoid suspicion by issuing his clients with fake certificates of insurance.
The alleged scheme came to light when a contractor filed a claim after an employee was injured in an on-the-job accident. The contractor is now said to be negotiating with the injured worker's attorney to resolve the matter. Other former clients face increased workers' compensation premiums and closer scrutiny. The California Contractors State License Board suspended the license of one of the man's clients for not providing workers with adequate insurance coverage according to media reports.
The consequences of not maintaining legally mandated levels of insurance coverage can be severe, and sanctions may even be leveled against the victims of misrepresentation or fraud. An attorney with experience in insurance law may help someone accused of violating state or federal statutes by advocating on their behalf both at the negotiating table and in the courtroom. Legal counsel could also pursue litigation on behalf of policyholders who have had claims rejected or denied for dubious reasons.