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A former Costa Mesa resident, who was arrested in October on suspicion of collecting over $1.4 million from companies paying for bogus workers’ compensation insurance coverage, made her first court appearance in Orange County last week to face multiple felonies.

Unlicensed insurance agent Karyl Lynn Reed, 57, was arraigned on multiple felony counts of grand theft, forgery, embezzlement, and aggravated white-collar crime after allegedly defrauding three victims. 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. Both companies operated out of facilities located at 16787 Beach Blvd,. Suite 730, Huntington Beach, CA 92647-4848

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 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.

The public defender representing Reed could not immediately be reached for comment. Reed is due back in court in December. The case is being prosecuted by the Major Fraud Unit of the Orange County District Attorney’s Office.

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.