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We are committed to closing California’s $6.5 billion tax gap, defined as the difference between tax that is owed, and tax that is paid. Our special agents work cooperatively with law enforcement agencies throughout California to uncover illegal behaviors that contribute to the tax gap. These behaviors include underreporting income, overstating deductions, failing to file returns, failing to pay taxes due, and making illegal cash payments to employees.

Tax fraud is not a victimless crime. You can report suspected tax fraud on the FTB website at ftb.ca.gov, or by calling FTB at 800.540.3453.

Insurance Agent Sentenced to 10 Years for Defrauding Business Owners Out of More Than $2.5 Million in Insurance Premiums and Failing to File $230,000 in Taxes

Santa Ana – An insurance agent was sentenced today to 10 years in state prison for defrauding 18 business owners by stealing more than $2.5 million they had paid him to take out insurance policies for their businesses. Anthony David Medina, 37, pleaded guilty in court to 152 felony counts including 85 counts of forgery, 33 counts of transacting as an insurance company without a certificate of authority, 19 counts of grand theft, five counts of filing false tax returns, four counts of willfully failing to file a tax return, four counts of identity theft, two counts of insurance fraud, and sentencing enhancement allegations for excessive taking over $50,000, $150,000, and $500,000. Medina will have a restitution hearing November 12, 2008, at 9 a.m. in Department C-50, Central Justice Center, Santa Ana.

Medina’s wife, Vanessa Chaverri, 37, pleaded guilty on June 10, 2008, to one felony count of filing a false return. She was sentenced to 90 days in jail, three years probation, and ordered to pay $486,172 in restitution.

Between June 2003 and November 2007, Medina operated Prompt Insurance Agency in Newport Beach. The defendant collected more than $2.5 million from 18 business owners, including restaurants, plumbing, and painting businesses, and other service-oriented businesses. Medina took money from the businesses under the pretense of securing workers compensation and general liability insurance policies for them.

Medina failed to take out insurance policies for many of the businesses and charged the victims more than the stated premiums. In some instances, he forged documents to finance insurance policy premiums instead of paying the full amount up front to the insurance company, despite the fact that the victims had paid him the total cost of the policy premium.

Medina issued false certificates of insurance to some of his victims. The defendant created false policy numbers or gave companies policy numbers that actually belonged to other businesses.

As a result of Medina’s failure to take out insurance policies for some of the businesses, several business owners and employees suffered losses that should have been covered by insurance. In some cases, employees who had been injured at work did not receive the workers compensation benefits they were due because their employer did not have the workers compensation insurance they had paid Medina to secure. Many of the business owners had to pay for employee workers compensation care that should have been covered by insurance.

Between 2003 and 2006, Medina failed to file any tax returns for Prompt Insurance Agency. Chaverri and Medina failed to report the income from the stolen monies on their personal tax returns. They failed to pay more than $230,000 in taxes, and passed that loss of revenue on to California taxpayers. The defendant was using the stolen money for personal use on his extravagant lifestyle, including cars, homes, and a boat.

The California Department of Insurance (CDI) began investigating this case when an insurance company filed a report after finding a discrepancy in a financed policy taken out through Prompt Insurance Agency.

"The victimized business owners were trying to make an honest living and take out insurance to protect themselves, their employees, and their customers," said Orange County District Attorney Tony Rackauckas. "Insurance agents hold a fiduciary duty of trust to their customers that they will be there to cover the loss when things go bad. This case shows how much damage a single dishonest agent can cause, not only to hardworking business owners, but to taxpayers who are forced to absorb the cost of fraud."

“It is unconscionable to expose employers and potentially injured workers to severe liability,” said Insurance Commissioner Steve Poizner. “Insurance fraud cannot be tolerated and we will continue working with our local law enforcement partners to bring these alleged perpetrators to justice.” 

This case was jointly investigated by the California Franchise Tax Board, CDI, and the Orange County District Attorney’s Office. Deputy District Attorney Andrea Burke of the Insurance Fraud Unit prosecuted this case.