Loan Firm Made Clients Get Life Insurance, Police Say

A Huntington Beach finance company under police scrutiny in connection with a series of violent crimes demanded that delinquent borrowers buy life insurance policies naming the company as sole beneficiary, and collected about $2.5 million after the shooting death of a Hollywood record executive, according to sources close to the investigation.

Three Long Beach-area businessmen have told police that Coleman Allen, the late president of Premium Commercial Services Corp., threatened their lives over unpaid loans and used strong-arm tactics to make them take out life insurance policies naming the company as the sole beneficiary, according a court affidavit filed by a Signal Hill police detective.

The firm also collected on the policy taken out by Barry Skolnick, the 30-year-old general manager of Hollywood Recording Services who was found dead in January, police sources said Thursday.

One man--whom Allen admitted beating with a pipe wrench--told detectives that the company took over payments on the $500,000 policy when he could no longer pay, the court records show. Another business owner told detectives he abandoned his Signal Hill condominium and moved out of state, fearing for his life.

The borrowers told detectives they bought policies for three to five times the amount of their debt, according to court records. When asked why, business owner Sandip Sengupta told detectives, “Because that’s how much Mr. Allen told me I had to buy.”

Fountain Valley police said Thursday that the company’s current ownership is cooperating with investigators and seems to be distanced from any possible illegal dealings.

A spokesman for the finance company, Beverly Hills attorney Lawrence H. Nagler, said Thursday that the 13-year-old firm has been maligned by unfair speculation.

“Police investigators have themselves confirmed that Premium operates a legitimate finance company and that there is absolutely no evidence or any connection between any of the alleged criminal activity under investigation and any current owner, officer or director or employee of Premium,” Nagler wrote in a statement.

At the center of the mystery is the company’s former president: Allen, the towering Tarzana man who died last month of heart disease.

Earlier this week, investigators identified the company under Allen’s leadership as the common element in suspected contract hits that claimed the life of a Fountain Valley flight attendant and left a San Clemente man wounded. Los Angles police also are looking a possible ties to Skolnick’s shooting.

Allen himself led to much of the scrutiny with his attack on Sengupta last year, which piqued the interest of Signal Hill police. Those detectives, intrigued by the unusual business practices Sengupta described, later searched the Premium Commercial storefront offices.

During that search, police turned up more than half a dozen term life insurance policies on several borrowers, including the San Clemente man shot last month, court records show. Such policies are not unusual in the field of lending to small, risky businesses, said Candysse Miller of the California Department of Insurance. But, she noted, those policies typically are for the same amount as the loan.

Signal Hill Police Sgt. James Peterson, himself a licensed insurance broker, noticed the company’s unconventional practice of demanding large insurance policies.

“I said, ‘Wait a minute,’ ” Peterson said. “We have a problem here. Unless you’re attuned to how the insurance world operates, it wouldn’t send a red flag up.”

The high amounts on the policies, combined with the fact that Premium Commercial maintained full control of the policies as the sole beneficiary, “paints a very clear picture” that something was awry, Peterson said. Because they were term policies, however, the company could not borrow against them.

“The company is paying on a policy . . . that can never be changed or lapsed without their OK and collecting on death,” the detective said. “It raised some questions to me.”

Businessman Brian Baker, the former Signal Hill resident who fled the state after Allen’s alleged threats, is “in absolute fear for his life,” Peterson said after talking to the Baker this week. Baker owed the company $88,000; his life insurance policy was for $250,000.

Law enforcement officials said they have no idea how many debtors have taken out life insurance policies with Premium Commercial named as the beneficiary. When Signal Hill police served the search warrant on the company in 1995, investigators seized only a limited number of policies.

Peterson said he contacted all the debtors named in the life insurance policies he seized, including San Clemente resident James Wengert, who was shot in the face April 10. But at the time, the detective knew only of one act of violence committed against a debtor--Sengupta.

“I interviewed the people in the documents that were seized. Some of them flat out refused to talk to us, saying Mr. Allen is a great guy,” Peterson said.

“If they did talk to me, and they asked the question about their safety, I would give them general security tips. But I did not alarm them, because I had no reason to. It was just a theory that I was continuing to pursue.”

For using a pipe wrench to bash Sengupta, an engineering company owner, Allen was ordered to serve three years probation and attend anger therapy. Since then, Signal Hill detectives have continued to investigate Allen’s company and its dealings with borrowers.

Premium Commercial also had dealings with Skolnick, the recording executive from Thousand Oaks who was gunned down in a Hollywood parking structure. Skolnick had turned over his company to Premium Commercial to pay off $900,000 in debts.

But Skolnick also owed $600,000 to a creditor for a failed studio business. A few weeks before he was killed, Skolnick’s creditor sued Premium Commercial for a share of that debt. Documents show that the recording executive had a life insurance policy that named Premium Commercial as the sole beneficiary, according to sources close to the case.

Wengert, an investment researcher, owed about $400,000 to Premium Commercial at the time of his shooting. His description of the gunman led police to Paul Alleyne--who himself owed $30,000 to Premium Commercial for a loan to his Los Angeles auto parts business.

Alleyne’s arrest in turn led police to another Premium Commercial client, Leonard Owen Mundy, the Los Angeles electrician charged with the June 10 shooting of Fountain Valley airline attendant Jane Carver. That slaying was probably a hit gone wrong, police say.

Officers say Margaret Wengert--wife of James Wengert--appeared to be the intended target. Both women lived in the same area of Fountain Valley at the time of the slaying.

Carver was killed three days after Margaret Wengert filed a lawsuit against Premium Commercial claiming that the firm used pressure tactics to take over her Fountain Valley home to cover her husband’s debt, which the firm said totaled more than $400,000, court records show.

Margaret Wengert on Thursday said the unfolding mystery has left her confused and terrified.

“It’s very frightening,” she said of the police theory that a hit man intended to kill her. “It makes me feel very bad [for the Carvers]. I feel so for that family. It was supposed to be me, but she’s the one who died. It’s a terrible feeling.”

Margaret Wengert has declined to discuss Premium Commercial or any of her or her husband’s dealings with the company.

Fountain Valley Police Lt. Bob Mosley said Allen’s widow, Barbara Allen, and Premium’s current president, Jay Olins, have been cooperating with the various investigations. It was Olins who discovered a “highly unusual” loan in company files that led police to Mundy, Jane Carver’s alleged assailant, Mosley said.

“It was a loan that was made basically without the knowledge of Mrs. Allen and or Jay Olins,” Mosley said. “They had no knowledge of this loan to Mundy. . . . They have certain procedures that the company follows. None of these procedures were followed in this case.”

Mosley said the deal with Mundy appears to have been arranged solely by Coleman Allen. The loan to Alleyne, arrested in the shooting of James Wengert, was similar to Mundy’s, Mosley said.

It remains unclear whether Mundy and Alleyne receive loans from Premium Commercial, or whether the recorded transactions were just paper fronts for some other type of arrangement, investigators said.

“We have not been able to confirm that. We’re still digging,” Mosley said.

Times staff writers Matt Lait, Mark Platte, Dexter Filkins, Greg Hernandez, Mike Granberry and Debora Vrana and correspondents John Cox and Jeff Kass contributed to this report.