2 Held in Auto Insurance Scam

Targeting Spanish-speaking drivers, two insurance agents allegedly sold bogus auto policies to hundreds of people and pocketed premiums that could amount to hundreds of thousands of dollars, authorities said.

Manuel A. Mendez, 35, of West Covina, and Jeffrey W. Ferguson, 36, of Bakersfield, were arrested Thursday night and held in lieu of $500,000 bail each, said Orange County Deputy Dist. Atty. Ken Chinn. They have been charged with 24 counts of grand theft and one of conspiracy. If convicted they face up to 18 years and four months in state prison.

The pair, who were licensed agents, started Least Cost Insurance Services in Anaheim in 1999 and later moved the business to Covina, said Mike Silva, a spokesman for the California Department of Insurance. Investigators said they advertised in Spanish-language newspapers and also marketed policies at an Industry swap meet.

The investigation began after motorists involved in accidents called the Insurance Department to report that their policies were bogus.

Ferguson and Mendez used a laptop computer to print proof-of-insurance documents, but Chinn alleged they issued few if any legitimate policies. The 24 victims named in the complaint lost $23,000 in premiums that allegedly were never forwarded to insurers, and $73,000 in accident damage claims, he said.

Attorney Michael Sheldon said Ferguson will plead not guilty at his arraignment Monday. No lawyer for Mendez could be reached.