The Texas Department of Insurance said it was not made aware of the charges in the case when Mr. Bruton was dismissed in 2003, because under the law at that time an insurance company was only required to report his activity to law enforcement, which Allstate did.

The law was later changed, and since September 2005, under the fraud reporting statute, an insurance company must report findings of criminality to the department.

In pleading guilty, Mr. Bruton admitted to a seven-year-long scheme in which he funneled money that was supposedly going to pay for policyholders' repair work to Mr. Villarreal, who did little or no actual work on the damaged properties.

An offshoot of the case has been a civil suit by Fred Klecka, another adjuster in the Allstate San Antonio office, who charges he was fired when he ignored management orders not to cooperate with the FBI investigation of the case. His attorney, Matthew R. Pearson, said the company feared if the FBI had the full details, other employees might be charged in the case.

Mr. Pearson also alleges that policyholders whose claims were improperly handled by Mr. Bruton were never informed or made whole by the company. Allstate has denied his accusations.

According to Mr. Pearson, no criminal complaint had been filed against the Allstate managers in the claims section who allegedly told his client to keep mum.

According to a Web posting by the Coalition Against Insurance Fraud, “observers have pointed to the case as a possible contributor to rising insurance premiums and a reason for the public's distrust of the insurance industry. Allstate countered the case alone did not affect premiums.”