Ex-Insurance Agent Pleads to Stealing Over $39k in Premiums
In 2018, Phyllis Palazzola, 56, the former owner of Palazzola Insurance Agency in Gloucester, Massachusetts, had her insurance producer license revoked by the Massachusetts Division of Insurance after an investigation found that she had stolen over $16,000 in insurance premiums from clients. As part of a settlement agreement, Palazzola surrendered her license and agreed to “immediately cease and desist” conducting any further insurance business in the state. Her agency, Palazzola Insurance Agency, also had its business entity insurance license permanently revoked as a result of her actions.
For details on the license surrender, See Agency Checklists’ June 6, 2023 article, “Even After License Revocation, Massachusetts Insurance Agent Now Indicted for Continuing to Steal Insurance Premiums.”
The license surrender does not stop the thefts
Even after surrendering her license and agreeing to cease participation in the insurance industry, Palazzola continued soliciting small businesses in Gloucester for their workers’ compensation insurance needs. Over a 14-month period, she collected premium payments from various small businesses after telling them she would bind and place their workers’ compensation policies. However, without an active insurance license, Palazzola never secured the promised insurance for these businesses. To conceal her deceit, she created and provided 6 of the 8 companies with fraudulent certificates of insurance bearing policy numbers for non-existent workers’ compensation policies. Through this embezzlement scheme, she stole over $39,000 in policy premiums.
Eleven indictments for larceny, forgery, and unlicensed insurance advice
Upon discovery of these actions, the Attorney General’s State-Wide Grand Jury indicted Palazzola on eight felony counts of larceny over $1200, two counts of forgery of premium finance notes, and one misdemeanor count of acting as a unlicensed insurance advisor.
Guilty pleas to all eleven indictments
On February 21, 2024, Palazzola pleaded guilty to all charges against her related to the embezzlement scheme before Judge Salim R. Tabit in Essex Superior Court under an agreed plea agreement with the Attorney General.
The charges she pleaded guilty to included:
Eight felony counts of larceny over $1200 through a single scheme for stealing insurance premiums.
Two felony counts for forgery of insureds’ names to premium finance agreements.
One misdemeanor count of acting as an unlicensed insurance adviser.
Her former agency, Palazzola Insurance, also pleaded guilty to indictments mirroring the charges against Palazolla based on the company’s legal responsibility for her criminal actions in acting as an agency officer.
Suspended House of Correction sentences, probation, and restitution
A. For the eight larceny felony counts, Palazzola received 3 years of supervised probation on each charge, with the sentences to run concurrently.
B. On the two counts of forgery, she was sentenced to 24 months in the House of Correction, suspended for 3 years pending no violation of her probation. These sentences were concurrent with the larceny charges.
C. For the misdemeanor offense of unlicensed insurance advising, Palazzola was handed six months in the House of Correction, also suspended for 3 years to run concurrently with the forgery sentences.
D. Palazzola was also ordered to pay the balance of the restitution to her victims in the amount of $19,870.70. This amount was due immediately, to be paid through her attorney’s trust account.
E. The guilty pleas of the agency were placed on file except for it having joint and several liability with Palazolla for the order of restitution.
Agency operating under new ownership
Notwithstanding its former owner’s legal problems, the Palazzola Insurance Agency has been operated under the independent ownership of Ms. Palazzola’ daughter for the last six years without any problems and with the support of its loyal customers.
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.
