Despite a guilty plea by a major participant, federalauthorities said today they are still pursuing their investigationof a record $4 million phony Lloyd's insurance scam that operatedin severalstates.

Ex-convict and former California insurance broker RichardPeterson last week appeared before U.S. District Court Judge DennyChin in Manhattan and pled guilty to two felony counts inconnection with the scheme.

Mr. Peterson is due for sentencing on Oct. 19, when he faces upto 20 years in prison for violating federal law against insurancesales by a felon and wire fraud.

The 65-year-old San Francisco resident, according to theindictment against him, sold 400 phony policies, which authoritiessaid were to provide commercial liability coverage to bars andrestaurants in California and elsewhere in a scheme that ran from2000 to 2003.

Herbert Hadad, a spokesman for the U.S. Attorney's Office inManhattan, said that the investigation is continuing. Last year apostal inspectors' complaint referred to an unnamed co-conspiratorin the case who was described as a "purported" surplus linesbroker.

The case was investigated by both the U.S. Postal InspectionService and California Department of Insurance.

California Insurance Commissioner John Garamendi noted that Mr.Peterson had operated even after having his license revokedtwice.

According to authorities and others with knowledge of the case,Mr. Peterson had an elaborate setup that used excellent counterfeitdocuments, had offices in New York as well as California, andactually paid and arranged for defense against some claims.

Mr. Peterson, according to the Postal Inspection complaint,actually kept the operation going in 2001 while he was under home-and community confinement doing an eight-month sentence forbankruptcy fraud.