Calif. Agent Pleads Guilty to Selling Phony Policies

California Department of Insurance (CDI) investigators are seeking additional victims in the case of a West Sacramento insurance agent/broker who sold phony policies to more than two dozen construction firms, bilking them out of approximately $750,000.

Terry Lowell Ballard, 48, pled guilty on March 12 to ten felony counts of grand theft, insurance fraud and forgery. He was sentenced to a six-year suspended prison term and ordered to attend a two-year rehabilitation program. He must also make full restitution to the 26 firms that were victimized by his scam. Investigators believe there may be more victims in the case.

“If there are firms out there with coverage purchased from Terry Ballard they need to contact my Department immediately,” said Insurance Commissioner John Garamendi. “If they encounter a problem at work that requires insurance, their lack of coverage could wipe them out financially. I strongly urge every company to verify their insurance with my Department now, before it’s too late.”

Those who believe they are victims of Ballard’s scheme and would like to submit an application for restitution must call CDI at (916) 492-3400 by the May 11, 2004 deadline.

Ballard, licensed as a broker and agent since 1993, was arrested last October after a joint investigation by the CDI Investigations Division and the San Joaquin County District Attorney’s office. At the time he operated Multi Unit Insurance Services in West Sacramento, specializing in commercial insurance.

According to investigators, Ballard would collect premiums from construction companies across the state, issue the owners certificates of authenticity, but keep the money for himself rather than remit it to the intended insurance carrier.

The scam became evident to victims when an accident or claim occurred and the “insured” company contacted their carrier and learned that they had bogus coverage.

“I am committed to putting people like Terry Ballard out of business for good,” said Commissioner Garamendi. “He, and other criminals like him, who systematically rip businesses off by selling phony insurance must not be allowed to threaten the livelihoods and jobs of hard working Californians.” Commissioner Garamendi signed an order revoking Ballard’s license on March 17.

Most of the 26 companies that were sold the phony policies are small independent construction firms. In the largest case, however, Pacific Bay Construction of Martinez lost more than $488,000.

While working on a project for the Contra Costa Water District, employees of Pacific Bay accidentally ruptured a water main. It was discovered then that the company didn’t have valid general liability coverage. As a result, the water district’s insurance company sued Pacific Bay to cover the cost of repairs.