Even After License Revocation, Massachusetts Insurance Agent Now Indicted for Continuing to Steal Insurance Premiums
Phyllis Palazzola, 56, of Gloucester, and her insurance agency, Palazzola Insurance Agency, LLC, lost their producer licenses in 2018 for stealing premiums from insureds. Under their settlement agreement with the Division of Insurance (DOI), their licenses were permanently revoked, and they were barred from any further business activities in the Massachusetts insurance industry. Instead of adhering to their settlement agreement with the DOI, they continued to convert premiums paid for policies they never placed.
Indictments for premium theft and unlicensed insurance advising
On June 1, 2023, Attorney General Angela Joy Campbell announced that Ms. Palazzola and her Gloucester insurance agency had been indicted and arraigned in connection with an embezzlement scheme that left their client companies uninsured for workers’ compensation insurance.
Ten felonies and one misdemeanor charge arising out of premium theft and forgery
Phyllis Palazzola, 56, of Gloucester, was arraigned on May 30, 2022, in Essex Superior Court on eleven indictments. These indictments included:
Eight felony indictments alleging “Larceny over $1200 by a single scheme” in violation of G.L. c. 266, § 30(1), which, if proven, are each punishable by imprisonment in the state prison for not more than five years, or by a fine of not more than twenty-five thousand dollars and imprisonment in jail for not more than two years.
Two felony indictments alleging forgery of documents, in violation of G.L. c. 267, § 1, with each indictment, if proven, are each punishable by imprisonment in the state prison for not more than ten years or in jail for not more than two years; and
One misdemeanor indictment alleging acting as an unlicensed insurance advisor in violation of G.L. c. 175, § 177B, which, if proven, is punishable by a fine of not less than fifty nor more than five hundred dollars or by imprisonment for not more than six months, or both.
At her arraignment, Judge Kristen Buxton allowed Ms. Palazzola to be released on her personal recognizance, with the next event, a pretrial conference, scheduled for July 18, 2023.
Ms. Palazzola surrendered her license in June 2018 after her first set of premium thefts became known
On May 25, 2018, the Division of Insurance enforcement unit sent a letter to Ms. Palazzola and her agency detailing an investigation and asserted to Ms. Palazzola and her agency:
By failing to remit $16,000 in premium to purchase workers’ compensation policies, you improperly withheld, misappropriated, and converted monies received in the course of doing business, which constitutes a violation of M.G.L. c. 175, § 162R(a)(4). Such conduct may result in your insurance license being placed on probation, suspended, or revoked pursuant to M.G.L. c. 175 § 162R(a), as well as the imposition of a fine up to $1,000 for each and every violation as provided under M.G.L. c. 176D, § 7.
By creating two false workers’ compensation certificates, you used fraudulent and dishonest practices in the conduct of business, which constitutes a violation of M.G.L. c. 175 § 162R(a)(8). Such conduct may result in your insurance license being placed on probation, suspended, or revoked pursuant to M.G.L. c. 175 § 162R(a), as well as the imposition of a fine up to $1,000 for each and every violation as provided under M.G.L. c. 176D, § 7.
The DOI gave Ms. Palazzola and her agency the option of either agreeing to a settlement agreement revoking their licenses or proceeding to adjudicatory proceedings to revoke their licenses and impose fines.
Ms. Palazzola’s settlement agreement with the DOI to revoke her license and cease working as an insurance producer.
On June 6, 2018, Ms. Palazzola and her insurance agency, Palazzola Insurance Agency, LLC, entered into a settlement agreement with the DOI, stating, in part:
Palazzola’s insurance producer license is hereby immediately revoked by the Division. If Palazzola is in possession of any Massachusetts insurance licenses, she shall attach them to this agreement. In addition, PIA’s business entity producer license is permanently revoked and cannot be renewed nor refiled with the Division.
Palazzola agrees to immediately cease and desist from conducting the business of insurance, including selling, soliciting, or negotiating insurance, holding herself out as a licensed insurance producer, or otherwise acting as an insurance producer.
PIA agrees to immediately cease and desist from conducting the business of insurance, including selling, soliciting, or negotiating insurance, holding itself out as a licensed business entity, or otherwise acting as a business entity producer.
Post-revocation premium theft and fraudulent certificates of insurance
After the settlement, Palazzola informally transferred ownership of her insurance agency to a family member and continued to work as an insurance producer, notwithstanding her license revocation for another fourteen months.
During that time, the indictments allege that she forged the signatures of two customers, binding them to insurance premium financing agreements to cover up her previous embezzlement.
Also, the indictments allege Ms. Palazzola took premium payments, after suspension of her insurance broker’s license, from eight persons who paid her for workers’ compensation insurance. However, Ms. Palazzola never placed the insurance policies, despite issuing fraudulent “certificates of insurance” to six of the eight affected businesses.
The Attorney General’s Office estimates that after her license revocation, Palazzola stole another $39,010 in premiums from her clients’ companies.
The Prosecution team involved in the investigation and indictment of Ms. Palazzola
This case is being prosecuted by Assistant Attorney General Christopher O’Brien and Investigator Lashauna Craig, both of Attorney General Campbell’s Insurance and Unemployment Fraud Division, with assistance from Victim Witness Advocate Megan Murphy. Investigators from the Massachusetts Insurance Fraud Bureau also aided the investigation.
The Attorney General’s insurance fraud tip line
If any member of the public believes they may have been victimized by this conduct or has any information relating to others who may have been victimized, they are encouraged to contact the Attorney General’s Office Insurance Fraud Tip Line at 617-573-5330.
