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Trusting Boss May Have Been Victim of Former Employee

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Times Staff Writer

In the old days, a handshake did it.

Forget the lawyers and the contracts and all that. When Bernard O’Neal looked you in the eye and shook your hand, you had a deal.

That’s what employees and customers said they liked about O’Neal and his San Pedro insurance agency.

Honesty, loyalty and trust helped O’Neal, now 86, build a thriving business, but authorities say those old-fashioned values left him vulnerable.

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In Long Beach Superior Court last week, O’Neal’s former office manager and her husband faced one charge each of grand theft for allegedly embezzling $34,000 from Harbor Insurance Agency.

Authorities say that O’Neal left much of the operation of his agency to office manager Georgia Mulchahey, 58, and that she used her position to divert money from the business to her own use. At least $9,000 was used to buy equipment and office supplies to help her 64-year-old husband, James Mulchahey, start a competing insurance firm in San Pedro, according to charges filed by the district attorney’s office.

The Mulchaheys, who pleaded innocent, would face up to four years in prison if convicted. The couple, ordered earlier this month to stand trial by a San Pedro Municipal Court judge, has declined to comment, and their lawyer did not return several phone calls.

Another $150,000 of O’Neal’s money is missing, but there is no evidence of where it went, said Los Angeles Police Detective Steve Wynn. Documents also indicate that Georgia Mulchahey may have sent dozens of customers away from O’Neal to her husband’s firm, Marina General Insurance Agency, Wynn said.

The state Department of Insurance is investigating the allegations, a spokesman said.

“Basically, Mr. O’Neal was too trusting,” said Barbara Niro, the octogenarian’s assistant. “He does business on people’s word. . . . Maybe you can’t do it that way anymore. It’s too bad.”

Following the alleged losses last year, O’Neal sold his 55-year-old business and went into semi-retirement. His name is still on the outside of the Gaffey Street agency and the new owner has kept him on as a consultant. Two business-phone lines ring directly to his home across the street, so O’Neal can take calls from customers--who he calls “Sir” and “Ma’am”--on nights and weekends.

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O’Neal brought that homespun approach with him from Texarkana, Tex.

He was a lanky farm boy of 20 when he and two buddies drove to Southern California in 1922 in search of adventure “and a job, anything to make a dollar,” O’Neal recalled recently in an interview at his house. “We didn’t know we were going to stay.”

O’Neal drove a mule team at a construction site in El Segundo, before landing a job as a longshoreman in San Pedro. But after seven years, 90 cents an hour just wasn’t enough money.

And O’Neal wanted to wear a suit and tie.

People Trust Him

He got his wish when he took a job as a salesman with Pacific Mutual Life Insurance Co. O’Neal said he isn’t sure what made people trust him--maybe it was his farm upbringing or his own years as a working man.

His first boss could see it.

“He said, ‘People will believe you,’ ” O’Neal recalled. “ ‘They’ll believe what you say. You’ll do well.’ ”

In 1933, O’Neal opened his own firm, Harbor Insurance Agency on Gaffey Street. He has been selling insurance there ever since, building a base of customers who are not shy about praising him.

Fred Heilig, 93, said he has stayed with O’Neal for more than 40 years because the insurance man takes a personal interest in his problems.

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Customer Support

When a roadster crashed into his home in the 1950s, Heilig recalled, O’Neal was there before Heilig was. Heilig, sounding like a television testimonial, said that a contractor arrived soon after and O’Neal promptly wrote a check to pay for the damages.

“I had never heard of anything like that before,” Heilig said.

Mike Good, owner of a Wilmington car dealership, has similar praise.

Over the years there were “a lot of times when we were short on cash,” Good said. “He would advance us the money to take care of things. He would always look out for our interests.”

In the old days, O’Neal sometimes would loan his second car to clients whose cars were in the shop, Niro said. “He takes it very, very personally when something happens to his clients,” she said.

Over the past decade, O’Neal said he gradually turned over more responsibility to his employees. He hired Georgia Mulchahey about four years ago as a bookkeeper and promoted her two years later to office manager.

He said he had no idea that Mulchahey’s husband was opening Marina General Insurance Agency on Western Avenue, just two miles away.

Money Problems

O’Neal said he authorized Georgia Mulchahey to write checks, but became disturbed in 1987 when she began asking him to withdraw money from his personal bank account to cover the agency’s operating expenses. It was something he had never done before, O’Neal said.

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He hired an accountant to audit his business and was told that money was missing, he said.

According to testimony at the Mulchaheys’ preliminary hearing:

Georgia Mulchahey wrote checks from Harbor Insurance totaling $9,000 to buy office supplies, a computer system and a street sign for her husband’s business. She wrote another check for $10,000 to her husband’s company and deposited O’Neal’s personal draft for $15,000 into her own account.

O’Neal said it was only after he spoke with authorities that he learned the Mulchaheys had their insurance licenses taken away several years earlier for diverting premiums for their personal use.

According to Barry Nelson, a senior investigator with the state Department of Insurance, James Mulchahey had his license revoked and Georgia Mulchahey had her license suspended for 90 days in 1978 after an administrative law judge ruled that the two had improperly diverted $8,000 in premiums.

The violations occurred at the All Service Insurance Corp. in Torrance, Nelson said.

In August, 1987, the state agency ruled that James Mulchahey had been “rehabilitated” and reissued him a license to sell insurance. Five months later, he opened Marina General Insurance Agency.

O’Neal said the thought that someone may have gained an unfair advantage bothers him as much as the money he lost. He said he is determined to see the criminal case through to its conclusion.

“It wouldn’t be just, to let (the Mulchaheys) keep going on like that against all the other fair insurance agencies out there,” he said.

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Despite the trauma of the case, O’Neal said he doesn’t plan to change his ways.

“I have trusted people, over many, many years,” he said. “In spite of this, I still will trust people.”

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