Pyramid-like scheme used commissions to feed new policy purchases; earn new commissions
LOS ANGELES, Calif.- California Department of Insurance alleges Angel Estrada, 22, a formerly licensed insurance producer and owner of Angel Estrada Agency, swindled a national insurer out of more than $140,000 in commissions by writing bogus commercial insurance policies to earn large commissions.
According to department investigators, between 2016 and 2017, Estrada submitted 74 applications for commercial insurance policies and was rewarded for the new business with large commissions. Estrada then used a portion of his commission money to fund initial premium payments on new bogus policy applications to secure additional commissions. Investigators allege Estrada continued this practice until the insurer audited his business and revealed the alleged scam.
Internal auditing and underwriting by the national carrier revealed only one of the 74 policies Estrada submitted had an actual premium payment.
“Estrada's fraudulent activity degrades consumers' trust of professional agents," Insurance Commissioner Ricardo Lara. "These types of crimes are costly to California's consumers, businesses and economy."
Based on the evidence, department investigators secured an arrest warrant and Estrada surrendered in Los Angeles Superior Court Friday, April 19 and was released on his own recognizance.
The case is being prosecuted by the Los Angeles County District Attorney’s Office.
The department suspended Estrada was charged with grand theft, California Penal Code 487.
License suspension documents are located on the department's Formal Enforcement Actions section, including the criminal filing.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.