Independently owned State Farm agency sentenced for embezzling nearly $200K

[marindependent]

"Anna Gabriela Garcia, also known as Anna Nuno-Garcia, 48, of Capistrano Beach, Calif., was sentenced in Orange County Superior Court in Santa Ana after pleading guilty to two felony counts of embezzlement and grand theft for collecting premium payments from clients and diverting over $195,000 in funds for her personal use....

An investigation by the California Department of Insurance reportedly found Garcia, a former licensed insurance agent, while working for an independently owned State Farm agency from September 2011 to November 2014, embezzled more than 300 checks totaling $195,626 by altering, endorsing or depositing them into her personal bank accounts. These checks were intended to be payment for her clients’ insurance premiums or were premium refunds for the policyholders.

Garcia reportedly failed to place coverage for personal and commercial automobile insurance causing cancellation of DMV registrations and exposing her clients and others on the road to financial risk. Garcia also failed to place a life insurance policy and at least 17 homeowners and renters policies.

To conceal the embezzlement, Garcia reportedly made 57 unauthorized ACH debits from one client’s bank account to pay the premiums of other clients. She also made unauthorized charges to multiple clients’ credit cards to pay the premiums of other State Farm policies...." There is more to the article.

I am pretty surprised that this could happen with State Farm.

Insurance Journal Article this Embezzlement

 

[DHK]

Not hard to do. State Farm agents set up a trust account in the name of the agent for the purposes of paying premiums for policyholders. That's standard for them. Not hard to divert elsewhere.

 

[Allen Trent]

Swift justice....wait, how in the world did it take 7-10 years. Sure looks to be more that the people that wanted certificates didnt care about the actual policy. Otherwise, wouldnt clients have complained sooner about paying money that didnt get applied to their policy? This can happen alot in the high risk auto markets where people just want a proof of insurance.

Wowza

 

[marindependent]

There are all sorts of red flags that I cant understand that were not noticed.

1.If this "Agent" cashed checks in their personal accounts - Wouldn't that name appear on the back of the check when it was cashed? Were these clients making the checks out in the name of the agent?

2. Didnt any of the clients recognize that they were not getting policies direct from State Farm insurance?

3. No one, not one person called in to speak with a 1800 State Farm phone number to learn that there was no policy? Even a mortgage company or another AI?

4. None of these clients noticed that they could not find their policies online?

5. And State Farm Managment, ehemmmm, come on. WTF are you guys doing?

I totally see how this can happen in a smaller specialized agency that deals with very odd risks. But a National Franchise Insurer? The largest in the country? Just crazy.

 

[Allen Trent]

There are all sorts of red flags that I cant understand that were not noticed.

1.If this "Agent" cashed checks in their personal accounts - Wouldn't that name appear on the back of the check when it was cashed? Were these clients making the checks out in the name of the agent?

2. Didnt any of the clients recognize that they were not getting policies direct from State Farm insurance?

3. No one, not one person called in to speak with a 1800 State Farm phone number to learn that there was no policy? Even a mortgage company or another AI?

4. None of these clients noticed that they could not find their policies online?

5. And State Farm Managment, ehemmmm, come on. WTF are you guys doing?

I totally see how this can happen in a smaller specialized agency that deals with very odd risks. But a National Franchise Insurer? The largest in the country? Just crazy.

Same way the fraudulent insurance certificate scams work. Michigan has been trying to catch the criminals making fake certs for years & at one point an audit at DMV showed 16% of certificates were fraud. Many times just bought from someone off the street or online that is good with photo shop

So, my guess is most of this solicitor or staff person's fraud was selling certificates to people that didn't care if there was coverage or not. Otherwise, like you said, the customer would have been calling headquarters, etc

Rampant auto insurance fraud leads Michigan Secretary of State to establish task force

 

[somarco]

This type of fraud (cashing checks, issuing certs) has been around for some time in the self funded health plans. A guy I used to work with embezzled close to $2m as I recall. He split to an island in the Caribbean and was never heard from again.

He ran an association health plan but also had an arrangement with LINA for group term life insurance.

 

[Markthebroker]

"Anna Gabriela Garcia, also known as Anna Nuno-Garcia, 48, of Capistrano Beach, Calif., was sentenced in Orange County Superior Court in Santa Ana after pleading guilty to two felony counts of embezzlement and grand theft for collecting premium payments from clients and diverting over $195,000 in funds for her personal use....

An investigation by the California Department of Insurance reportedly found Garcia, a former licensed insurance agent, while working for an independently owned State Farm agency from September 2011 to November 2014, embezzled more than 300 checks totaling $195,626 by altering, endorsing or depositing them into her personal bank accounts. These checks were intended to be payment for her clients’ insurance premiums or were premium refunds for the policyholders.

Garcia reportedly failed to place coverage for personal and commercial automobile insurance causing cancellation of DMV registrations and exposing her clients and others on the road to financial risk. Garcia also failed to place a life insurance policy and at least 17 homeowners and renters policies.

To conceal the embezzlement, Garcia reportedly made 57 unauthorized ACH debits from one client’s bank account to pay the premiums of other clients. She also made unauthorized charges to multiple clients’ credit cards to pay the premiums of other State Farm policies...." There is more to the article.

I am pretty surprised that this could happen with State Farm.

Insurance Journal Article this Embezzlement

 

[Edwardfin]

This is not good our business deserves people that are ethical. This is a sad day for our industry.

 

[BibH]

This makes no sense . Took 7 yrs to uncover it ?

 

[rousemark]

This makes no sense . Took 7 yrs to uncover it ?

This makes no sense . Took 7 yrs to uncover it ?

Maybe - maybe not. Could have been discovered and then took 4-5 years for it to get to court.