A Santa Barbara insurance agent has been arrested on 13 felony counts involving grand theft, embezzlement and money laundering, according to the California Department of Insurance.
Mark Lynch, 40, was taken into custody Tuesday, accused of collecting a total of more than $72,425 in insurance-premium payments from five clients while leaving them uninsured.
One client in Montecito was uninsured during the debris flows in January 2018.
That client did not suffer damage in the deadly debris flows that killed 23 people, according to a news release from the California Department of Insurance.
Lynch allegedly pocketed the premium payments and used those funds for his personal benefit.
Three clients were Santa Barbara homeowners, and two were small-business owners left uninsured against potential liability claims, according to the California Department of Insurance, which launched an investigation after receiving complaints from Lynch’s clients.
The alleged misappropriation of premium payments took place between January 2016 and January 2017.
“Leaving homeowners without insurance during the Montecito Mudslides could have been devastating for these families and businesses,” Insurance Commissioner Ricardo Lara said in a statement. “The arrest of this agent should be a warning to anyone who puts consumers at risk to seek personal benefit.
“The Department of Insurance will continue to use every resource available to stop unscrupulous agents from preying on customers.”
The agency has filed an accusation against Lynch, and is seeking to revoke his insurance license.
He was released from Santa Barbara County Jail after posting $100,000 bail.
The Santa Barbara County District Attorney’s Office is prosecuting the case.
Lynch, who worked for Miramar Insurance Services, was charged with five counts of grand theft, five counts of embezzlement and three counts of money laundering, according to the criminal complaint filed in Santa Barbara County Superior Court.
“Rather than depositing these fiduciary funds into a trust account and then remitting the net premium due to the insurance company (as required by law), Lynch converted the payments for his own personal use via his business checking account,” investigator Thomas Johnson wrote in a declaration for the case.
“As a result of Lynch’s actions, the victims were unknowingly uninsured and exposed to the danger of uninsured losses.”
Lynch allegedly wired the funds to a website where people can buy, sell and manage cryptocurrency accounts, and made purchases from companies such as Ralphs, 7-Eleven, Amazon and Uber, according to the complaint.
North County Editor Janene Scully contributed reporting to this story.