Santa Clara Man Sentenced In Bogus Insurance Company Scheme

October 11, 2006

Insurance Commissioner John Garamendi announced a Santa Clara man who operated an unlicensed automobile insurance company will serve five years formal probation and pay restitution to his victims. The charges resulted from a two-year investigation by the California Department of Insurance’s (CDI) Investigation Division and the Alameda County District Attorney’s Office.

On August 17, in a 14 count felony complaint, Walter James Burhans, 51, was charged by the Alameda County District Attorney’s Office with two felony counts of grand theft of personal property and 12 felony counts of transacting insurance without authorization.

The investigation revealed between approximately September 28, 2004 and January 31, 2005, Burhans operated an unlicensed automobile insurance company, Flat Rate Insurance Company, appealing to high risk California insurance consumers by advertising very low automobile insurance rates on the Internet. Some policyholders had automobile accidents and presented claims for their damages but, Burhans failed to pay all the claims submitted while leaving some consumers with liability exposures and with out a vehicle.

“What makes this case especially troubling is that Mr. Burhans preyed on people who could least afford these losses,” said Commissioner Garamendi. “Thanks to the combined efforts of CDI investigators and the Alameda County District Attorney’s Office, these consumers will be getting their money back.”

Source: California Department of Insurance

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