California Woman Given To 8 Years In Prison For $1.4M Insurance Fraud

A former Costa Mesa resident was sentenced last week to serve eight years in prison for defrauding businesses of more than $1.4 million by collecting insurance premiums on nonexistent policies, court records indicate.

Karyl Lynn Reed, 58, was arrested in Texas on Oct. 7 and extradited to Orange County, where she faced 10 felony charges — including grand theft, forgery and embezzlement — and multiple felony enhancements for criminal activities that took place between 2012 and 2019, according to the California Department of Insurance.

During an Oct. 27 arraignment, Reed pleaded not guilty on all charges but did admit to felony enhancements related to white collar crimes amounting to more than $500, 000, according to court records. But while appearing in a Santa Ana courtroom Feb. 1, she took a plea deal.

A judge sentenced her to pay restitution and serve eight consecutive years in prison, with two more two- year terms intended to run concurrently. By that time, Reed had already spent 118 days in police custody.

Officials say Reed acted as an unlicensed insurance agent, collecting premiums for workers ' compensation insurance through Envoy Business Partners and Allenn Specialty Group, both run out of a Huntington Beach office suite. A third business, Cultivate HR, Inc., was listed as operating from a Costa Mesa residence.

Reed offered fraudulent insurance certificates, making clients believe they had insurance coverage. She also ran a staffing company without providing workers ' compensation coverage and personally administered employees ' injury claims, the state agency reported.

The case against Reed was prosecuted by the Orange County district attorney 's Major Fraud Unit, which identified at least five businesses victimized by her fraudulent acts. Three of her victims reportedly lost more than $1.4 million.

Reed is next scheduled to appear in court on Feb. 15 for a firearms relinquishment hearing.

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