Michelle Martinez, of Providence, talks about the problems she and her husband had with Catone Insurance Agency, which was eventually closed.

The Providence Journal / Andrew Dickerman

Access was restricted at 858 Broad St. after the agency’s closure. Business is now being conducted by Reinaldo Catone’s daughter Nyurka Cole, under strict state rules.

The Providence Journal / Andrew Dickerman

Luis Martinez of Providence, and his wife, Michelle, were customers of Catone Insurance Agency, which has been shut down by the state.

The Providence Journal / Bill Murphy

PROVIDENCE — When Luis A. Martinez backed his Jeep Cherokee into another man’s car three years ago, he didn’t worry. That very day — Oct. 23, 2003 — he had purchased a policy through Catone Insurance Agency at 858 Broad St., and had a receipt and binder to prove it.

A few days later, Martinez learned otherwise, when his license was suspended because he’d been unable to show the police an insurance card.

Two weeks later he received more bad news when a Progressive Insurance agent contacted him on behalf of the man whose car he hit.

“Progressive told me, ‘No — according to somebody at Catone’s — you never went there to sign an application or anything,’ ” Martinez said this week. “They also told me it was going to cost $10,000” to fix their client’s car.

Martinez went back to the Catone agency. “They told me I had insurance,” Martinez said, but Catone Insurance produced a file showing he applied for a policy on Oct. 27 — four days after the accident.

“That’s their story,” Martinez said. He claims the agency changed the application date and forged his signature. He wasn’t alone. At least seven other people told the DBR that they paid Catone for insurance and discovered they had none, or that they briefly had insurance but that it had been canceled for nonpayment — even after they had made payments, according to DBR Director A. Michael Marques. Like Martinez, some made those discoveries after having accidents and having their licenses suspended. In June, the DBR revoked the licenses of Catone Insurance and Katyuska Gaviria, Catone’s agent of record, and turned the matter over to the state police and the Criminal Division of the attorney general’s office. In addition, the DBR also fined Gaviria and the agency $10,000 and ordered them to “satisfy all consumer claims.”State police are investigating numerous complaints involving insurance policies sold at 858 Broad St. over the past few years through Catone Insurance. State police Maj. Steven G. O’Donnell confirmed that the Auto Insurance Fraud Unit has received the case, but noted that the investigation “is in very preliminary stages.”

AFTER CATONE lost its license, the DBR received similar complaints about Caracas Insurance and its insurance agent, who apparently took over at 858 Broad St. The agent, Altegracia Hernandez, faces a hearing Nov. 29.

And the DBR recently suspended by emergency order — then reinstated with conditions — the license of the current occupant, One Stop Insurance, which is run by Gaviria’s sister, Nyurka J. Cole.

At the June show-cause hearing against Gaviria and Catone Insurance, the DBR said the agency failed to submit to insurance carriers customers’ insurance applications, failed to pay monthly premiums and forged consumers’ names on applications. The DBR also said that Catone submitted checks for premium payments that later bounced and allowed unlicensed employees to sign the licensees’ names on insurance applications. Gaviria and her lawyer, Emili Vaziri, did not attend the hearing.

“I would call it egregious,” says Elizabeth Kelleher Dwyer, deputy chief of legal services for the state’s insurance division. “This is extremely unusual. I really can’t think of another case where people would pay the premium and not get the insurance.”

The total consumer losses are difficult to estimate. Dwyer put the figure at “somewhere between $100 and $400” per person for at least eight complainants, and noted that new complaints have been received.

The Catone agency did return some payments after the department intervened, according to legal documents in the case. Martinez says he also believes Catone Insurance took care of his $10,000 bill from Progressive.

MARQUES, THE DBR director, noted that all the complainants are assigned to the state’s high-risk pool. Most, if not all, are Hispanic, and some are apparently immigrants. People in that situation often “don’t understand the process, and they’re easily fooled,” he said, suggesting that the “buyer beware” adage applies here.

Customers need to understand that they need proof of insurance, Marques said, and if “you don’t get the policy in a reasonable amount of time, you should be contacting the agent and asking where it is.”

Marques said that’s why his department acts “as quickly as possible.” One complaint may be an administrative error, he said, “but when it’s six or seven, it’s no longer an administrative error.”

The complaints against Hernandez, who took over at 858 Broad St. after Catone, include two from people who discovered after they’d had accidents that Hernandez had apparently failed to forward their premiums to the Rhode Island Auto Insurance Plan – the high-risk pool.

The Auto Insurance Plan reported that it had received more than 60 “incorrect broker of record letters” from Hernandez, “each of which needed to be returned for proper signature,” and received “a number of applications with no deposit premium,” as well as submitting numerous checks “which were refused for payment.”

Hernandez was operating her business as Caracas Insurance, but the DBR had no such licensee. On Oct. 19, it ordered Caracas to stop writing insurance policies.

Hernandez could not be reached for comment.

ON OCT. 31, the DBR by emergency order suspended the insurance license of Nyurka J. Cole, Gaviria’s sister. Cole began selling insurance out of 858 Broad St. after obtaining her license Oct. 17. The DBR cited “extremely serious malfeasance” and “extreme consumer harm” attributed to the previous tenants, in enforcing its emergency order.

Cole entered into a consent agreement that granted her a provisional license to sell insurance “under very strict conditions,” under the company name of One Stop Insurance.

One of the 15 stipulations requires Cole to post “prominent notice at the business that they are the licensed insurance producer and are not associated with Katyuska M. Gaviria, Catone Insurance Agency, or Altegracia Hernandez.”

Cole’s lawyer, Stephen T. Voccola, said, “The problem is that I have a client who is a very honest and straightforward businesswoman,” but because the DBR had prior problems with other business holders at that same address, “they had suspended her license, pending a hearing. We went down there and assured them … that we had no issues with any restrictions that they wanted to impose.”

Another stipulation requires that Reinaldo Leon Catone – father of both Cole and Gaviria – “will not be associated with the business nor shall he be allowed on such premises.”

DBR director Marques said complainants told the department that Reinaldo Catone “was involved in the operations of the office. … Based on that reason, we wrote that into the stipulation.”

Interviewed at her office this week, Nyurka Cole said, “Everyone knows that my father owned [Catone Insurance],” but “that business is no longer.”

Reinaldo Catone, who several years ago ran for Providence City Council, is president of Catone Travel Agency at 860 Broad St. His front door is less than five feet from his daughter’s business, One Stop Insurance.

Says Cole, “It’s very awkward.”

Reinaldo Catone could not be reached for comment.

ON TUESDAY, Vaziri, lawyer for Gaviria, said she was “unaware of any investigations pending” against her client or the Catone agency.

Asked why Gaviria had stopped responding to DBR correspondence and failed to attend the June hearing, Vaziri said, “I’ll have to get back to you on that.” She said the same when asked whether her client had paid a $10,000 administrative penalty or had complied with a DBR order to make her clients whole for their losses. As of yesterday, she had not responded.

Hearing officer Joseph L. LoBianco’s decision against Gaviria and the Catone agency cites six cases. One of those involves Juan DeLaRosa, of Pawtucket.

Joseph J. Ranone, a Warwick lawyer whom DeLaRosa consulted, said Tuesday that he tried to assist DeLaRosa with a $1,500 fine he incurred “for failure to have [auto] insurance.” The fine was issued in New York City, when DeLaRosa “got into a car accident, was asked for proof of insurance, and what he had wasn’t enough,” Ranone said.

According to Ranone, his client “went back to Catone and asked, ‘Why don’t I have my insurance card?’ ”

“They gave him some kind of story. They ended up sending his insurance [premium] in after the accident. So they forged his signature on the application — that was clear,” Ranone said. “I reported it to DBR. My name was added to a list of other complaints.”

Another case involved Hector Cruz, of East Providence, who bought insurance through the Catone agency in June 2004, and made five monthly premium payments, according to the hearing officer’s decision.

In October 2004, the Rhode Island Auto Insurance Plan notified Cruz “that the policy would be canceled effective October 18, 2004, for nonpayment of premium.”

Cruz contacted the Catone agency, “and was assured that the cancellation was in error” and his insurance policy was still active. But the decision notes that Catone Insurance and Gaviria “had, in fact, failed to forward Cruz’s payment to the insurer.”

Eight days after his insurance was canceled, Cruz was in an accident and found out he was not covered.

Cruz’s lawyer, Robert J. Ameen, says, “His case was fairly blatant. He had made a number of payments and was given a receipt each time and apparently payments were never forwarded to the Rhode Island Auto Insurance Plan,” and Cruz “got a cancellation notice.”