Insurance Sales Scheme Ring-Leader Gets 6 Years in Prison

A California man has been sent to the slammer for almost six years for defrauding consumers.

Ronald Allen. 58, from North Hollywood, has been found guilty of pretending to be president of "Universal Pacific Insuance Company, Ltd" -- a phoney insurer. Allen then sold worthless policies to consumers. The insurer was not licensed to sell insurance in any U.S. state.

U.S. District Judge Jerome B. Simandle sentenced Allen, following a seven-day trial. Allen was convicted of indictment, conspiracy to commit mail and wire fraud.

According to court records, Allen hired insurance agent Gilbert Morgan to sell commercial general liability policies to restaurants, bars and nightclubs throughout the U.S. from March to December 2004. Allen apparently told Morgan he was authorized to sell insurance and arranged for Morgan to solicit policies on his behalf. Those policies were initially intended to be underwritten by a legitimate carrier.

But that company did not approve any partnership with Allen. Eventually that insurer sent Morgan a cease and desist letter, insisting he stop placing business with the carrier. Allen then instructed Morgan to submit the policies to his ficticious entity, Universal Pacific.

From March to December, 2004, Morgan closed numerous deals that amounted to nearly $700,000 in premium volume. More than half of money was forwarded to Allen, who spent the money himself, leaving no funds available to pay claims.

Judge Simandle sentenced Allen to 70 months in prison, plus three years of supervised release. Allen has also been ordered to fork out almost $700,000 in restitution.

Morgan and others involved in the fraud scheme had already pleased guilty. Morgan is waiting to be sentenced.