Red Bluff Insurance Agent Pleads Guilty to Bilking His Clients

David Michael Chene, a former Red Bluff insurance agent pleaded guilty to four felony counts for allegedly duping his former clients into believing that they were investing in legitimate investments backed by State Farm. In 1997, the California Department of Insurance (CDI), Department of Justice (DOJ), Bureau of Investigations and the Red Bluff Police Department began their investigation of the 47-year-old man for his involvement in several suspected fraudulent insurance claims as a State Farm agent.

According to investigators, Chene would send loan and investment solicitation letters to his State Farm insurance clients using company letterhead. He would promise interest rates of 10-12 percent on these investments, which usually averaged between $3,000 to $5,000 per client. When the monies became payable to the clients, Chene would either convince them to extend the terms of the loan, or pay small amounts to make it appear as if he intended to repay the funds. Chene collected more than $200,000 from clients he tricked into investing in a RV trailer park he owned in Red Bluff called Mountain Valley RV Park.

But according to DOJ investigators, little–if any–of the money was actually used for the RV park. Chene’s insurance license has been suspended since his arrest in November 1999. The CDI is in the process of preparing a Summary Revocation Order to permanently revoke his license. Formal sentencing for Chene is scheduled for Oct. 31.