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HomeNewsCity News$1.4 Million in False Workers’ Comp Insurance Premiums Collected by Unlicensed OC...

$1.4 Million in False Workers’ Comp Insurance Premiums Collected by Unlicensed OC Agent

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Former Costa Mesa resident and unlicensed insurance agent Karyl Lynn Reed allegedly defrauded three victims of over $1.4 million by using fraudulent insurance certificates to make her clients believe they had workers’ compensation coverage. 

Reed, 57, was arrested in Seabrook, Texas and extradited to Orange County on Oct. 7. She was arraigned on Oct. 27 on multiple felony counts of grand theft, forgery, embezzlement and aggravated white collar crime. She has pleaded not guilty to the charges. Lynn is believed to have stolen over $500,000.

An investigation by the California Department of Insurance (CDI) uncovered Reed’s collection of insurance payments for workers’ compensation through her businesses, Envoy Business Partners and Allenn Specialty Group, as well as her issuance of fraudulent Certificates of Insurance to unsuspecting customers from 2012 to 2019 as an unlicensed agent. 

Both companies were established on April 3, 2014, and are still listed as active. A third business, Cultivate HR, Inc., is reportedly in operation from a residence on Monte Vista Avenue in Costa Mesa. 

“Local businesses are the lifeblood of our recovering economy. Ms. Reed’s alleged actions put these businesses owners’ livelihoods at risk by stealing their money and leaving them uninsured,” Insurance Commissioner Ricardo Lara said. “My department is dedicated to investigating and stopping unlicensed agents to protect California’s consumers and businesses who help keep our economy strong.”

Reed had also been operating a staffing company without valid workers’ compensation coverage, and was personally adjusting and administering employee injury claims. 

The case is now being prosecuted by the Orange County District Attorney’s Major Fraud Unit, which identified at least five businesses reportedly victimized by Reed’s fraudulent actions in a June 22 criminal complaint.

Among the victims were a property management company and an autism therapy business in Los Angeles, as well as a Santa Ana wholesale bakery and a Long Beach assisted living facility.  

CDI officials reported that one of the companies allegedly defrauded by Reed discovered their lack of coverage when an employee was injured on the job. Another found that they were uninsured and given a different company’s policy number. The investigation also showed another company that learned that the money they had been paying Reed for her staffing service was not being transferred to the insurance company. 

Prosecutors have charged Reed with a felony enhancement that may prolong any prison statement she may receive if convicted. Reed is due back in court in December.

Consumers are encouraged to check the license status of their agent or contact the Department of Insurance at 800-927-4357 to determine if they are victims of insurance fraud.

Veronica Garza is a City News Intern for the fall 2021 quarter. She can be reached at