Former Red Bluff Insurance Agent Gets Prison Term, Fine

November 3, 2000

A Tehama County Superior Court judge sentenced David Michael Chene, a former Red Bluff insurance agent to nine years in state prison on Nov. 1. Chene was also ordered to pay $273,000 in restitution plus 10 percent interest per year.

Chene was charged with four felony counts for allegedly bilking his former insurance clients out of more than $200,000 in fraudulent investment loans following an investigation by the California Department of Insurance (CDI), Department of Justice (DOJ), Bureau of Investigations and the Red Bluff Police Department.

The Attorney General’s Office prosecuted the case. The initial CDI investigation of Chene’s involvement in several suspected fraudulent insurance claims as an insurance agent for State Farm Insurance Company commenced in 1997. Investigators allege that in most of Chene’s investment fraud cases, he would send loan and investment solicitation letters to his State Farm insurance clients using State Farm letterhead.

Chene would promise interest rates of 10 percent to 12 percent on the investments, which usually averaged between $3,000 to $5,000 per client. When the monies became payable to the clients, Chene would either convince the clients to extend the terms of the loan, or pay meager amounts to make it appear as though he intended to repay the funds.

Investigators stated that many of Chene’s clients had been led to believe that they were investing in legitimate investments backed by State Farm. Chene also reportedly collected more than $200,000 from clients for supposed investment into Mountain Valley RV Park, which he owned. DOJ. Investigators learned little, if any, of the money was actually used for that purpose.

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