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I Did It Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. Arson for Profit Admitted One of my investigators met with the property manager of an Insured to start the investigation of a fire claim believed to be arson. Since he was just starting his investigation with a walk through the burned-out shell the investigator was making conversation with the property manager. “Steve, how long have you managed this property?” “About six months.” “It seems the fire started here on the service porch where the damage is most severe; do you know how it started?” “Sure,” the manager replied with confidence and no sign of concern “I pulled a mattress off one of the beds, stacked up against the wall by the service porch and lit it with a Bic lighter. Once it was burning well, I left and drove four blocks away and came back in time to see the flames coming from the building. I heard sirens so I just drove home.” “Why did you do that?” the investigator asked, incredulous and trying to stay calm. “The owner asked me to burn the building and said he would pay me 10% of whatever he got from the insurance company. When are you going to pay him? I sure could use the money.” The investigator of the arson case was experienced. He knew better than to accept a confession, even one given under oath. The sworn statement was only usable to defeat the claim if it could be corroborated. Without corroboration it was useless. He explained the need for corroboration to Steve. Arson is not Excluded - It's Just a Fire The Insured explained that he had recently been forced to fire Steve because his work was shoddy and some of the rent Steve collected never came to the Insured. Steve had threatened to cause harm to the insured and had almost succeeded. The insured’s claim was paid in full. Steve, whose attempt to harm his ex-employer was blatantly stupid, he faced two felony charges: (1) Arson; and/or (2) perjury. His case was evaluated for possible prosecution and the prosecutor – since he felt no one was harmed since the insured was paid – refused to prosecute. The insurer has also authorized counsel to sue Steve to recover the money it paid to the Insured. After checking Steve’s lack of assets, a decision was made not to sue. ZALMA OPINION Every claims investigation requires a thorough and complete investigation. A confession, like that of Steve in this video, is not always what it seems. Corroboration was needed and when it did not exist it turned out that Steve was just trying to hurt his employer. A false denial of the claims based on Steve's confession would have been wrong and would have exposed the insurer to a bad faith lawsuit. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Liar, Liar, Pants on Fire Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. If Louie has been born fifty years earlier, he would be called a gigolo. Louie was a classically handsome man. He stood 6’2” tall, combed his black hair straight back in a style that would do a Madison Avenue advertising executive proud. His eyes were an unblinking, watery blue that seemed to caress any woman at whom he looked. He ran three miles every morning and maintained a 180-pound, lithe physique. Louie had a pleasant personality. Everyone he met liked him. He could drink beer with the boys and sip wine with distinguished and well-bred women. He wore a tuxedo as if Calvin Klein had his body in mind when it was designed. Louie was not smart. Louie graduated from Thomas Jefferson High School in San Jose with a solid D- average. After leaving high school Louie worked at various menial jobs from janitor to fry-cook. He seldom held a job for more than six months. Louie loved to dance. On weekends he would drive up to San Francisco and spend every night dancing in the clubs. It was on one of these dancing adventures in San Francisco that changed Louie’s life. Louie met Toni Di Battaglia. They danced every dance until the club closed at 4:00 a.m. They danced disco, waltzes and even country and western line dances. Toni told him she worked for the Teamsters Union out of New Jersey and visited San Francisco monthly. When Toni learned that Louie lived in San Jose, she invited him to her hotel and their relationship blossomed. Toni was a wealthy and powerful woman in her own right. She had a husband twenty years her senior who did not understand her. Louie was her release. They were in love. Toni did not love Louie for his intelligence. She did not love Louie for his ability to communicate. Toni loved Louie because he was beautiful, a good dancer and made her look good whenever they were out together. The lawyer was instructed to examine Louie under oath. The insurance company hoped the lawyer would gain more detailed descriptions of the items stolen. They expected, with professional questioning, Louie would establish the true amount of his loss. They could not pay because their appraiser told them the loss could be in a range from $40,000 to $1 million. Louie testified for two days. He was frightened. The lawyer, although always friendly caused Louie to break out in cold sweats he hoped was not visible. He did not tell the truth about anything to the lawyer. Louie limited his descriptions of the property stolen to the list he had written before he called the insurance company. Despite how detailed the lawyer’s probing, Louie stuck to the description he had written. When the lawyer questioned Louie’s ability to earn money to keep up the condo, he created a story to show that he had a source of income. Louie told the lawyer that Toni’s “family” sent him, after her death, an annuity of $10,000 cash every month. The money came each month in a plain brown baggage via UPS. Carla took Toni’s place. Louie still lives in his condo surrounded by antiques. Whenever Carla visits, Louie receives a new bauble. Carla pays his expenses. Louie will never again try insurance fraud. Honest people will pay more for insurance than they should. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Louie the Switch Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. Louie made his living buying and selling used cars in Salt Lake City. He would attend a dealer’s auction and buy a slightly damaged vehicle, take it to a shop, clean it up, paint it and sell it to downtown dealers. Fifty cars would go through Louie’s hands every month. He made a relatively good living clearing between $500 and $2,000 on each transaction. Louie was greedy. The Switch had no moral character. Louie was dishonest. If he could make an extra $1000 on a sale by turning back the odometer 10,000 miles, he turned it back. If he could sell a car for an extra $1000 by rubbing grease on the seams where the repairs from an accident had been done, he crawled under the car and spread the grease. Everyone liked Louie. He was a friendly sort. Louie had no trouble making friends. Everyone at the auto auction knew him. Louie was a professional. He only bought used cars that he could make look good and sell. He never bought bad cars. The Switch always paid for his purchases in cash. If Louie had a weakness, it was skiing. Every winter he would drive from Salt Lake to the mountains of Utah and ski. He owned a condo in Park City which he used when he did not have a tenant for the condo. A FRAUD IS BORN What he saw as the need for the dream cabin drove Louie to crime. One of his acquaintances, a tow truck operator, told him that a lien sale for storage charges was about to happen on a four-wheel drive crew cab Chevy pickup that Louie could buy for $250. The pickup had been declared a total loss by the insurance company after it was driven head-on into a sixteen wheeler while going the wrong way on the interstate. Louie already had in his inventory a four-wheel drive Chevy crew cab. His mind began to spin with devious criminal thoughts. THE FRAUD FAILS The insurance company investigator was ready to pay Louie the full stated value on the policy until he received a declaration of total auto theft from Louie. Louie represented in the declaration that the truck had an automatic transmission and a gasoline engine. The investigator knew, from his experience with vehicle identification numbers, that the VIN number identified this truck as having a five-speed standard transmission and a diesel engine. He was confused. The investigator then searched the National Insurance Crime Bureau (NICB) computer for information on the vehicle. The computer informed the investigator that the vehicle had been in a major automobile accident only thirty (30) days before Louie insured it. The vehicle had been declared a total loss by its insurer. NICB obtained a copy of the prior insurer’s file, including photographs showing the total destruction of the vehicle. Luck, a knowledgeable adjuster, the massive database maintained by the National Insurance Crime Bureau and the resourcefulness of DMV investigators stopped an almost perfect crime. When news of Louie’s arrest, conviction and sentence reached the auto market reported thefts in the Salt Lake City area dropped 10% for the next six months. ZALMA OPINION Although insurance fraud seems an easy and safe crime to pursue it is still a crime and failure to effectively pursue a fraudulent claim can result in prison. This case explained to the public that fraud is not worth the effort when it can result in jail. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

The Contractor and the IRS Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. The Failing Fire Reconstruction Contractor Fire reconstruction is a competitive trade. Work, rebuilding burned out businesses, commercial structures and homes requires specialized skill. Obtaining payment from insurers for this specialized work requires a gregarious personality, a talent at marketing, and the skill to do the work to perfection. Willis Rafter was not gregarious, had no talent at marketing and was a sloppy and unskilled builder. For Willis to be successful as a fire reconstruction contractor required imagination and a lack of morals. Willis found he obtained few construction jobs because of his lack of skill. He never received repeat business. He anticipated bankruptcy. Rafter Construction was dying. His best friend in the business, an adjuster, advised him tell the adjuster that he will give you 10% of the next job I bid he will receive the job. on will I get it?” “Of course, silly, I though you would never catch on.” Louise responded, giggling. He found, although slightly more expensive, additional sources of referral in the community of Public Insurance Adjusters. When he obtained referrals from them, he found it necessary to increase his unit costs to cover the extra fee. Rafter Construction became a power in the fire reconstruction business in his community. He had ten estimators working for him and always operated with four to ten construction projects going twelve months a year. He cursed his own stupidity for not learning the simple fee-based method of obtaining business. Louise, as his best friend in the business — the person who taught him how to be a success — always received an annual $5,000 bonus. Willis was shocked when, after a routine IRS audit — six years into his business career as a successful fire reconstruction contractor — he was arrested for tax evasion. The IRS concluded that since the payments to the adjusters and supervisors were illegal in California [a violation of California Penal Code § 550] he could not deduct them as business expenses. ZALMA OPINION Insurance fraud is fairly easy. Willis, by paying a 10% bribe to adjusters saved his business. Although not a big time criminal, like Al Capone, his scheme was brought to an end by the IRS because they found he deducted the bribes as a business expense. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

ZIFL Volume 26 Number 7 Zalma's April 1, 2022, with no April Fools Jokes, provides information needed by every insurance claims and insurance fraud professional, all available FREE on line where you can Read last two issues of ZIFL here. As a tease for the articles at the April 1, 2022 issue of ZIFL the following are indicators of the full articles in the current issue that is available at ZIFL-04-01-2022.: Russian Immigrant Who was Convicted of Fraud Must Leave the U.S. Alexie Legassov, a convicted insurance fraud perpetrator, petitioned the USCA for review of a final order of removal and the denial of a motion to remand. In Alexei Legassov v. Attorney General United States of America, No. 21-2586, United States Court of Appeals, Third Circuit (February 24, 2022) the USCA decided it was time he returned to mother Russia. Pandemic Resulted in Less Workers’ Compensation Fraud Claims New York State Inspector General Lucy Lang on released the 2021 Workers Compensation Fraud Annual Report, publishing results on workers’ compensation claims and fraud investigation results last year. With New Yorkers beginning to come back to work, new workers’ compensation claims rose slightly in 2021 but continued to be reported at more than 18% lower than pre-pandemic levels, according to the report. Additionally, while courts across New York State reopened in 2021, a significant backlog caused by closures during the pandemic resulted in the limitation or delay of criminal proceedings and the presentation of new cases to grand juries by district attorneys throughout the state, according to the IG. Insurance Fraud – Volume I & Volume II Second Edition” Now Available Volume I Available as a Kindle book; Available as a Hardcover; Available as a Paperback Volume II Available Available as a Kindle book; Available as a Hardcover; Available as a Paperback Prisoner States Frivolous Cause of Action for Fraud Insurance fraud is both civil and criminal. One who is a victim of insurance fraud can assert a claim against the fraudster if there is a preponderance of the evidence available. When a plaintiff files suit acting in pro se – as his own lawyer – the courts will bend over backwards to find a way for the plaintiff to state a cause of action. The court will not, however, allow a frivolous action to proceed. Health Insurance Fraud Convictions Fake Signatures, Drug Addicts, Homeless Used to Defraud Results in 130 Months in Prison Keowsha Golden, a South Carolina woman was sentenced to more than a decade behind bars after pleading guilty for her part in a drug conspiracy. The scam that sent to federal prison involved prescription pads, faked signatures, and taking advantage of drug addicts and the homeless, the U.S. Attorney’s Office said in a news release. Man Bites Dog Story: GEICO Sues Fraud Perpetrators In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company & Geico Casualty Company v. Elmwood Park Medical Group, P.C., Molnar Medical Services, P.C. & Kristappa Sangavaram, No. 1:21-cv-00617-FB-RER, United States District Court, E.D. New York (March 14, 2022) Magistrate Judge Ramon E. Reyes, Jr. issued a Report and Recommendation (“R&R”) recommending that default judgment against Defendants Elmwood Park Medical Group P.C., Molnar Medical Services P.C., and Kristappa Sangavaram (“Defendants”) be granted in part. Plaintiffs alleged that Defendants engaged in a complex insurance fraud scheme in violation of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”). Settlement of Fraud Suit Does Not Allow Doc to Sue Insurers SLAPP Motion Appropriate When Fraud Perpetrators Sue Insurers and Their Lawyers Similar to the GEICO case above, nine insurers sued Ajay Mohabeer for fraudulently billing them for medical treatment never provided nor provided in the amounts charged. Other Insurance Fraud Convictions Murder for Hire Life Insurance Fraud Maria Moore, 53, and Marvel Salvant, 49, killed Dominic Sarkar, 56, in the Oct. 8, 2018 shooting at Sarkar’s Fremont home. Moore was listed as Sarkar’s domestic partner and acquired two life insurance policies, for $500,000 and $300,000, with plans to pocket the money after his death, prosecutors argued at trial. Zalma on Insurance Blog Posting True Crime Stories of Insurance Fraud There are now available at https://rumble.com/zalma more than 46 Video True Crime Stories of insurance fraud. The latest is called “How Insurance Fraud Destroyed a Family Become a Practioner of Excellence in Claims Handling Insurance Law and Insurance Fraud Training at ZalmaonInsurance.locals.com/subscribe Barry Zalma has created a special locals.com community called https://zalmaoninsurance.local.com/subscribe. For only $5.00 a month you can view insurance law materials and webinars on insurance claims handling sufficient to train your claims personnel as perpetrators of excellence in claims handling. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

The Golden Tooth Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. A broken tooth is a tragedy to most people. To the waitress a broken tooth was the beginning of a career. For fifteen years she waited tables in restaurants varying from small coffee shops to exclusive French restaurants. She saw, almost weekly, at least one customer trying to avoid paying for a meal. They would find flies in their soup or chunks of metal in their hamburger. Sometimes it was the fault of the restaurant and sometimes it was blatant fraud. Some people actually suffered injury because of inadequacies in the kitchen. One Sunday afternoon, sitting in front of her television munching on a dish full of almonds, her right upper incisor snapped and she found half a tooth in her hand. No blood and no pain, just half a tooth in her hand and a jagged piece in her mouth. If she were not creative, if she had not been frustrated at seeing her employers successfully defrauded over the years, she would have made an appointment with her dentist and had the tooth capped. The waitress was very creative. She saw the broken tooth as the start of a profit making venture. Since she had Sunday evening off and no specific plan, the waitress made a reservation for one at a fine restaurant where she had once worked. She took with her to the restaurant, safely tucked in a compartment of her purse, the broken tooth and a small piece of steel that she cut from the top of a coffee can. Her efforts at insurance fraud were successful. However, she became greedy and eventually, her name and broken tooth story began to appear in insurance company databases. When she presented a claim to a restaurant insured by the same company, who had insured the last two restaurants to whom she had presented a claim, the adjuster refused to pay her. He reported to the fraud division of the insurance department in his state the fact that the waitress was apparently making fraudulent claims for the same tooth to various restaurants. The Fraud Division, noting that she was claiming only $650 concluded that the claim was too small to warrant the expenditure of investigative time. No one would investigate further, or prosecute, the waitress. Rather than take further chances, she moved to another city where she continued in her new profession. She is probably having a fine meal in your town tonight. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

The Phantom Rolls Royce Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. The Auto Theft Fraud In many states, before a car can be insured, the agent must photograph the car and its vehicle identification number. This regulation is an effective weapon against fraudulent auto theft claims. The insured managed to purchase material damage insurance on a Rolls Royce in a state where the regulation was fully effective even though he never owned a Rolls Royce automobile. His technique was flawless. His planning immaculate. He was only thwarted in his efforts because of the actions of a dedicated and thorough investigator. To start his plan, the insured went to a Beverly Hills classic automobile dealer and took two Polaroid photographs (slightly out of focus) of a 1946 Rolls Royce. Unlike modern cars, the vehicle identification number was not in the windshield of the Rolls. It was, however, written on the specification sheet provided to him by the dealer. He produced a bill of sale purportedly signed by the neighbor reflecting a $100,000 sale. The insured produced the ownership certificate and the registration establishing the vehicle existed. He claimed to have forgotten to bring with him the keys to the vehicle. Counsel then presented the true documents, item by item. The insured claimed that the documents recorded at the Department of Motor Vehicles were filed by the seller and he had no knowledge of the changes made by the seller. In fact, he could not understand why the seller had filed such strange documents. After counsel had established, with certainly in counsel’s mind, that the insured had sworn falsely, the examination under oath was terminated. Counsel met with the attorney for the insured, privately, and explained that the insured’s claim was in great peril. The attorney for the insured responded: “The bad faith lawsuit I told you to expect will not be filed by me.” The insured had made one serious error: he hired an honest lawyer. His lawyer and counsel for the Classic Car Insurance Company discussed possible resolution of the matter, including the withdrawal of the claim or a mutual rescission of the policy. Counsel for the insured promised to speak with his client and communicate with the insurer. Fraud Fails but Fraudster Not Punished Classic Car Insurance Company saved a $100,000 claim. It spent $30,000 investigating the claim and defeating it. It was lucky. No litigation followed. It reported the loss to the state’s Fraud Bureau who now has the insured’s name on record. There has been no prosecution. No prosecution is anticipated or expected. The Fraud Bureau is simply inundated with fraudulent insurance claims and must limit its prosecutorial efforts to major crimes that exceed $1,000,000 or rings of insurance fraud perpetrators who file multiple claims. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. Insurance Premium Fraud Insurance fraud is not limited to fake claims. Most people don’t present claims. The basic principle upon which insurance is based require the many to pay small amounts so that the few can collect. If the risk is not spread fairly among the many, all suffer. Most businessmen would be shocked at a suggestion that they inflate a claim. They are honest in their business dealings. They honor their contracts and pay their bills. They seldom have insurance claims. When they have a claim, they deal fairly and honorably with their insurer. Paying insurance premiums hurt. The marketplace is competitive. Prices vary from insurer to insurer. Skills vary from insurance broker to insurance broker. Eventually, businessmen learn how insurers set their premiums. They know that rates are applied to modifiers like the square footage of the structure, the payroll, or the gross receipts of the business. A businessman, sitting with his insurance broker, asks how he can get the lowest premium. He will often put his morality on hold when the broker suggests that he estimate a lower amount of gross earnings. The businessman will see nothing wrong with loping 10,000 square feet of his 50,000-square foot warehouse when applying for insurance. When called upon to list the payroll for his workers’ compensation policy, he will be unconcerned when he tells his broker the payroll is $200,000 less than it actually is. It is just good business sense to reduce your workers’ compensation premium. When his policy shows factory workers cost more to insure than clerical, he “accidentally” reports to his workers’ compensation insurer that ten percent of his employees are factory workers and ninety percent are clerical, although the opposite is true. What the businessman does not know, and what his broker does not tell him, is that knowingly misrepresenting a material fact [and there is nothing more material to an insurer than the basis upon which the premiums are calculated] is fraud. Insurance fraud in the acquisition of insurance bears both civil and criminal penalties. An insurance broker who aids or abets and insured in obtaining lower premiums based upon false information is equally guilty of fraud. The agent or broker who does not require the insured to sign an application will find, if the fraud is discovered, that the insured will deny knowledge of the application. He will merely say, “I trusted my broker. My records were obvious in my office. All he had to do was ask and I would have told him the truth.” The broker, faced with such a situation, will find himself defending lawsuits brought by the insured and the insurer. The California Insurance Code now requires the following warning on all claims documents presented to insureds by insurers: FOR YOUR PROTECTION CALIFORNIA LAW REQUIRES THE FOLLOWING TO APPEAR ON THIS FORM ANY PERSON WHO KNOWINGLY PRESENTS FALSE OR FRAUDULENT CLAIM FOR THE PAYMENT OF A LOSS IS GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND CONFINEMENT IN STATE PRISON. I believe, to protect the insured, the broker and the insurer, that the law should be modified to require the same warning on every application for insurance. A warning will not stop a person intent on committing fraud. It will, however, remind the honest businessman tempted to commit fraud to obtain a lower premium of the hazards of his actions. Insurance fraud is not limited to fake claims. Most people don’t present claims. The basic principle upon which insurance is based require the many to pay small amounts so that the few can collect. If the risk is not spread fairly among the many, all suffer. What the businessman does not know, and what his broker does not tell him, is that knowingly misrepresenting a material fact [and there is nothing more material to an insurer than the basis upon which the premiums are calculated] is fraud. Insurance fraud in the acquisition of insurance bears both civil and criminal penalties. Every claim adjuster and investigator should review every word on the application and obtain the insured’s answers asked as if the adjuster has no knowledge of the answers on the application form or be criticized for not completing a thorough investigation. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

The Temptation of Fraud Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. Why Honest People Commit Fraud Without Compunction Studies show that insurance fraud is most often a crime of opportunity rather than serious planning. Honest people, when presenting an insurance claim, often have their moral compass point south rather than true north. A person who would walk a mile to return $5 in extra change received from a waitress will add $5,000 to an insurance claim without a second thought. A lawyer whose word is honored throughout his state will, without compunction, demand payment for “pain and suffering” when he was rear-ended even though he resolved all his pain with two aspirin. A judge who has been honored by his peers for his sense of justice and fair play will claim the theft of computers he never owned. A housewife and mother who would beat a child’s bottom raw for stealing a 50-cent candy bar sees nothing wrong with adding $2,500.00 to a claim for smoke damage in her kitchen. Insurance fraud is easier than working and, often, more profitable. The Fraud Division, California Department of Insurance and the industry have been fighting the rings and professional claimants with vigor. They have ignored, because there is little profit or publicity value in it, the small frauds like the plaintiff in the case I described go unpunished and often succeed. The IRC report makes it clear that the professional criminals are 10% of the crime. These professionals should be prosecuted. Only an insurance industry noted for its short-sighted search for instant gratification, would put all its fraud fighting dollars against 10% of the problem and none of its fraud fighting dollars against 90% of the problem. Insurers need a long-term anti-fraud program that goes against the real problem, the opportunist. The honest person must be educated — by punishment if required — that insurance fraud is the same as theft, burglary or armed robbery. People who build-up a claim or otherwise defraud an insurer are as much a criminal as the person who robs a bank with a gun. Funds that have been cut from insurance claims training must be restored, investigative efforts must be accelerated, claims handlers must be encouraged to refer claims to their Special Investigative Units (SIU) rather than to close as many files as possible. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Shoes on Melrose Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. How Avoiding Taxes Can Cost a Merchant It was a successful, trendy, shoe store on Melrose Avenue, West Hollywood, California. Stocked with electric yellow combat boots and pink platform shoes his was the most popular shoe store on the Avenue. The beautiful people provided a good income for Albert Benvenitti, the owner. Albert was an honest man. He treated his customers fairly. He never questioned them when they brought shoes back. Manufacturers admired him because he paid for his merchandise within 10 days of invoice. Like all small businessmen, Albert was certain he was overtaxed. Half his income went to state and federal taxes. No matter how hard he worked it seemed he made less money every year. Albert fought back in the only way he could, he didn’t record every cash sale. The shoes sold for cash simply stayed on his inventory sheet as unsold merchandise. By putting the cash sales in his pocket his profit margin — on the books — went down but the real money he took home increased. By fighting the government, he reduced his tax burden from 50 to 30% of the true net income. When he became the victim of a burglary his books failed to show the inventory he actually lost. Avoiding Taxes Destroyed a Legitimate Insurance Claim Although Benvenitti knew that he lost — from his first-hand knowledge of the business — more than $30,000 in shoes he agreed to a $5,000 settlement and promised to cancel his policy and never insure with that insurer again. The Insurer, on the advice of its counsel, fulfilled its duty as a citizen and reported the fraud to the I.R.S. Benvenitti was audited the next year and paid, with penalties and interest added, the taxes he should have paid. He learned an important lesson: it does not pay to lie to the IRS and that it is important to keep accurate business records. Benvenitti was pleasantly surprised that he was not prosecuted. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Murder of Homeless Man Pay Fraudsters Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. What Happens When the Market Drops George and Adam were partners. Their business, consulting with aerospace manufacturers on preparing the reports required by the Department of Defense, had been immensely successful. For the first five years of business their billings exceeded $3,000,000 a year. They lived well. Like the average Americans they were, they spent every dollar they made and about 10% more than they made. They had no savings. They did have large credit card balances. Because they knew how important each was to the success of the partnership, they purchased Key man life insurance policies with limits of $3,000,000 each from Trustme Life Insurance Company. In 2008 the bottom fell out of the aerospace industry with the election of President Obama who cancelled space programs. Their customers stopped hiring consultants. The billings of the partnership shrank like Alice after she bit the mushroom. A Plan to Profit From Murder Adam called Fuzzy into Adam’s office at 8:00 that night. He asked Fuzzy to sit in his desk chair and shot him in the face with a 12-gauge shotgun at close range. Adam discharged one barrel on each hand to eliminated all of Fuzzy’s fingerprints. Adam then placed his wallet with all its money, credit cards and other identification in the inside coat pocket of his old suit, removed anything that might identify Fuzzy as being someone other than Adam and then drove to the airport in George’s 750 IL BMW leaving the Jaguar in the garage. At the airport, Adam, using cash, purchased a ticket in the name of Adam Smith to New Orleans, Louisiana. He had already purchased, from street vendors on Hoover Street in Downtown Los Angeles a driver’s license in the name of Adam Smith with a birth date five years earlier than Adam’s true date of birth, a social security card, a MasterCard and Visa all issued in the name of Adam Smith. The Crime Fails Adam and George were arrested and tried for the murder of Fuzzy as well as several counts of insurance fraud. The testimony of the young lady, the presence of Adam and the Los Angeles Airport recording of George’s license plate on entry and exit from the airport parking lot made their defense impossible. They were convicted. Adam and George are now spending the remainder of their lives in the State Penitentiary. The insurer recovered $4,000,000 of the $6,000,000 (George and Adam had lived well for that year and a half) and paid the lustful young woman a $400,000 reward. She lived happily ever after. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

True Crime of Insurance Fraud Video Number 39 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. On the second birthday of their daughter, Melissa’s husband left to get two liter bottles of cola. He never came home. A month later she received a postcard from Nebraska: “I’m sowing my wild oats. Can’t be married anymore. John.” When they had two salaries coming in, Melissa could add a little to their income. Even with child care costs, working as a receptionist at a real estate office in Visalia, there was extra money left over. With John, and his income, gone, there wasn’t enough money left from her paycheck even to pay the rent on their small two-bedroom apartment. Melissa had no choice, she quit her job, applied for and received Aid to Families with Dependent Children (AFDC). The Welfare paid her rent, gave her health care, food stamps and enough money for an occasional luxury like a new dress every two months from the vintage store. Melissa was not a typical welfare mother. She had no intention of ever becoming involved with a man again. She would never have another child. Faith walked across the aisle, presented her information to her SIU investigator. He traveled to Visalia and obtained the original invoices and a recorded statement from Melissa’s ex-employer. He presented the results of Faith’s investigation, a copy of the true invoice, a photograph of the allegedly stolen computer and a transcript of the recorded statement of the employer to the Fraud Division of the State of California, Department of Insurance. Two weeks later, four officers of the Division drove from their office in the City of Commerce to Visalia with an arrest warrant. Much to their surprise they found the television and VCR back in Melissa’s house. She was arrested for insurance fraud; her child was placed in the care of her maternal grandmother. Melissa’s attempt to get off Welfare was a total success – she would spend the next year in state prison. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

The Magic Wall Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. How an Attempt at Fraud Failed In February 1994 Los Angeles County and those communities with damage from the Northridge Earthquake of January 17, 1994 announced they would waive permit fees for earthquake repairs. The announcement gave Wallace Houston an idea to profit from the disaster. Wallace, who was seldom cordial and often nasty to his neighbors, always wanted a seven-foot wall around his home in Agoura. He had been fortunate in the earthquake. His house was intact. He did not even find a crack in the stucco. The day after the announcement he took out a free permit to rebuild a nonexistent earthquake-damaged wall. The Department of Building and Safety, swamped with work and anxious earthquake victims, issued the permit without question. They checked no records. They did not inspect the property. Wallace, a construction worker by trade, hired three day laborers off a street corner in Van Nuys next to the Home Depot. In broken high school Spanish and sign language he explained that they were to dig a footing three feet wide by four feet deep for his new wall. In two days, they dug the trench for the footing, installed a steel cage to stiffen the concrete and wooden planks placed to hold the concrete. Wallace needed approval from a city inspector before he could pour the concrete for the footing. Three weeks after his call for inspection, the department came out and approved the footings. Houston was about to call for delivery of the concrete when it started to rain. As rare as rain is in Southern California, the year of the earthquake was a wet one, the ground refused to dry. The rain would stop for a day or two, but not long enough to allow the ground to dry sufficiently to pour concrete safely. Wallace was frustrated. His footing became unstable. When the footing was dry, it was no longer level. Wallace gathered more laborers and started again. The next day the aerial photographs came in — one taken, fortuitously, only two days before the fateful storm. It was clear there was no wall. The SIU investigator, Pinchorello, took a recorded statement from Wallace, without explaining his suspicions. He made it clear the statement was a necessary formality. Before he could sign the lawyer up, at 6:00 a.m., he was awakened by a loud knock at his door. Three agents of the fraud division, California Department of Insurance, put Wallace under arrest and escorted him out of his house in handcuffs. KCBS, Channel 2 and KTLA, Channel 5, broadcast the arrest live during their early morning shows. The easy money fraud had failed. His insurance policy was cancelled. Within two years Wallace pleaded guilty to one count of insurance fraud and was placed on probation for three years. A year later, after the ground dried, he built the wall. He is still searching for a homeowners insurer willing to insure him. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

True Crime of Insurance Fraud Number 38 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. The most effective tool an insurer has against fraud is the examination under oath. The right to compel an insured to appear for examination under oath has been part of the standard fire policy in every state of the United States that adopted the N.Y. Standard Fire Insurance policy. The right was recognized by the United States Supreme Court in Claflin.v Commonwealth Insurance Company, 110 U.S. 81, 3 S.C. 507, 28 L.Ed. 76 a decision unchanged since it was decided in 1888. When an Insured is suspected of arson, or some other variation of insurance fraud, the insurer will almost always require testimony at examination under oath. The Insured often refuses to appear for examination under oath — a material condition of the policy — claiming the insurer’s demand was a bad faith attempt to deprive him of his right against self-incrimination stated in the Fifth Amendment to the US Constitution. In Gruenberg v. Aetna Insurance Co. 9 Cal.3d 566, 108 Cal.Rptr. 480 (1973) the California Supreme Court ruled that an Insured had stated a cause of action for breach of the covenant of good faith and fair dealing when the insurer denied the claim for refusal to testify at examination under oath. In fact, the Insured agreed to testify as soon as the criminal proceeding was completed. If Gruenberg stands for the proposition that insurers must wait until the Insured is exonerated in his criminal proceeding the California Supreme Court should revisit Gruenberg and adopt the reasoning of the Massachusetts Supreme Judicial Court in Mello and the California Court of Appeals in Fremont and Altfillisch to eliminate a long delay that would make defense of the insured’s suit beyond the ability to prove the defense of fraud. Insurers, to avoid the problem raised by the California Supreme Court should never file, in California, a complaint for declaratory relief against an insured and compel the insured to file since, as a plaintiff, he would be unable to assert the Fifth Amendment to prevent a deposition or trial where he may incriminate himself. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

True Crime of Insurance Fraud Number 3 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. Disasters bring out the best in people. Disasters also bring out the worst in people. Some risk their lives and fortunes to help victims. Others risk prison to profit for the disaster. After the January 17, 1994 Northridge earthquake insurance companies sent teams of experienced claims handlers and billions of dollars to Los Angeles county California to ease the effect of the earthquake on those of their customers prudent enough to buy earthquake insurance. Money was paid out quickly. Because of the extent of the disaster few controls were in place. Those who prey on the hardship of others descended on Southern California as the plague of frogs descended upon Egypt when the Pharaoh refused to heed Moses’ warning. Able Carpenter saw the earthquake as an opportunity to make an illegal fortune without effort. Able had worked for two months before the earthquake as a laborer on a construction project. He went door to door in Northridge convincing the residents whose homes were damaged that he would protect them from their evil insurers and repair their damaged homes quickly and efficiently. Able Carpenter now lives comfortably on the dividends. His customers still have broken homes and insufficient funds to complete repairs. The homeowners and the insurers were defrauded. Good faith claims handling hurt everyone but Able. Neither the homeowners nor the insurers had learned that when a deal sounds too good to be true it is. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

True Crime of Insurance Fraud Number 35 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. True Crime & Insurance Fraud Number 35Fraud knows no boundaries. It matters not at all where the person comes from. It matters only that the person has a felonious heart. Khlaed Amir Fahlavi, born in Tehran, raised in Liverpool, England, and a resident of Los Angeles, California, USA, had such a mind. He lived in London and Los Angeles. He earned a living making claim on British and American insurers. It surprised him how easy it was to commit fraud. Khlaed’s life of crime started innocently enough. At Heathrow International Airport, outside London he dropped a few extra pound coins into a machine and purchased a travel policy from the machine. Although the trip was uneventful, he tested the policy by reporting the loss of one bag. With a minimum of effort Khaled received a £1,200 check. An insurance criminal was born. On his next trip to London Khaled found two policemen waiting outside his parents’ flat on Half Moon Street. They arrested him on the spot, tried him at the Old Bailey and sentenced him to three years in jail for defrauding the English and North American. With knowledge of the English trial, the Los Angeles District Attorney filed criminal charges against the administrators, chiropractors and therapists at Khaled’s clinics and confiscated $500,000 in cash and assets gained from his fraud activities. Khaled served his time. He did not dare return to California where multiple counts of insurance fraud, mail fraud and tax evasion awaited him. Khaled now operates the cash register at the gift shop of the Hard Rock Cafe - London, on Piccadilly where he earns 3 pounds per hour. © 2022 – Barry Zalma B arry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

Insurance Fraud by Insurance Professionals Bill and Libby were very successful insurance brokers. From their offices in Walnut Creek, California, the Bill and Libby Agency generated $100 million in premium volume for fourteen different insurers with whom they held an agency appointment. They were one of the biggest retail insurance agencies in northern California. Success brought the good life. They owned a six thousand five hundred square foot mini-mansion in the hills of Oakland. They built the house over a lot purchased from a victim of the great Oakland Hills fire storm. Bill and Libby furnished the house with antiques and antique replicas. On every wall Libby hung her collection of ceramic plates and fine art prints. On every shelf sat Lladro sculptures, Hummel figurines and limited-edition sculptures and plates depicting English country scenes. Their daughter, Sassy, had a glass display case in her bedroom with a collection of more than 200 antique or collectible dolls. The home was destroyed by fire. After minimal investigation established that fraud might have been attempted, the already six inches thick with invoices and estimates of repair costs were photocopied and delivered to L.G.L. Eagle. Eagle, appeared to be the twin brother of Gabby Hayes — with teeth was an effective and experienced insurance lawyer. After submitting to an examination under oath Libby corrected her denials to an admission of fraud because her lawyer did not want her prosecuted for perjury. Eagle reviewed the items for which Bill and Libby returned the money in detail. He found that some items he knew were fraudulent were not admitted to being fraudulent while some items he thought were legitimate were admitted to be false. He advised Secure and Stable to cash the check since the fraud had not been cured. Libby continued to lie to herself and her husband in an attempt to reduce her wrongdoing. He recommended that the entire claim be denied, that the policy be declared void for fraud, and that the full amount paid on the void policy be demanded. If payment was not made instantly he further recommended that Secure and Stable file a suit in U.S. District Court under the Racketeer Influenced and Corrupt Organization Act (RICO) demanding three times the amount paid as punishment. Secure and Stable could not allow insurance professionals who attempted to defraud their own insurer to profit from a crime against their profession. A business built on the idea of Uberrima fides (utmost good faith) will not do business with people who have proven they cannot be trusted. © 2022 – Barry Zalma B arry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime of Insurance Fraud Number 34 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim When "Obvious Fraud" is Wrong Sometimes, what looks like an obvious arson for profit turns out to be an accidental fire. The insured lived near the ocean within the city limits of San Luis Obispo. Recently divorced she lived alone for many months. The divorce had caused her much emotional trauma. After twenty-five years of marriage, her husband announced he could not live with her anymore and moved out. She sought treatment for her depression. She visited with multiple psychiatrists and psychologists, who only made her life more miserable. Shortly before the divorce became final, walking aimlessly through an older part of town, she happened upon an occult bookstore. She bought a book on the power of the mind. The good book gave her a life purpose. She began to apply the principles stated in the book and found peace for the first time since her divorce. She became a regular customer of the book store. A friendship grew between her and the owner, who introduced her to others in San Luis Obispo interested in the occult and powers of the mind. When the divorce was final and she gained absolute title to the land and house the book store owner moved into the house with her. As they, and their friends, concentrated their psychic energies, they became convinced that a major earthquake would strike California and destroy all who lived in San Luis Obispo. The investigation by the fire department revealed that the fire was suspicious. No specific cause could be found for the fire. It did burn very hot. There were marks on the floor in the second bedroom that seemed to show a flammable liquid was spread. The insurer was concerned. It demanded the examinations under oath of the insured and her book store owner lover. Both testified clearly, concisely and honestly that they had no idea why the fire occurred. Both testified, with vigor, concerning their belief in their psychic powers. Both denied adamantly any knowledge of the cause of the fire and explained why they sold the house because of what they believed was the oncoming major earthquake. They explained that they had purchased a house near Nashville because of the low taxes and the stable land below all of Tennessee. The investigator advised the insurer that, after examining the bed and after reviewing the testimony of the insured and her lover at the examination under oath, it was his conclusion that the fire was the result of a short circuit in the bed motor which ignited the highly flammable (and now banned) polyurethane foam mattress. He explained that polyurethane foam, when heat is applied to it, liquefies and burns vigorously. The liquefied polyurethane foam flows on floor surfaces and leaves a trail similar to that left by the spreading of a flammable petrochemical accelerant. The mystery solved; the insurer paid the insured the loss she incurred to her personal property. The two insurers split the cost of rebuilding the structure. The insured and her lover used the proceeds of the sale of the house and the insurance claim to move to the house they had found in Tennessee. They now live in a large home on ten acres of land where they have gathered with them other believers in the occult and the power of the mind. Since both the insured and her lover were ministers of the Universal Life Church, they performed their own wedding and are living content, spreading the word of the power of the mind. Their wedding ceremony was interrupted by an earthquake from the New Madrid fault registering 3.2 on the Richter scale. Since they were Californian’s the two slept through, and never felt, the minor earthquake. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime of Insurance Fraud Number 33 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. An Evil Insured The Sleaze was not a nice man. He learned the safe way to steal in prison. A Superior Court Judge had sentenced him to two years in state prison for forging his mother’s will. His cell mate, an armed robber bragged about his successful brother. The brother had found a new career claiming the theft of small pieces of jewelry on homeowners’ policies. Insurance companies always paid, whether he owned the jewelry or not, rather than fight. His cell mate explained how prosecutors had no interest in this type of crime. Insurance companies, fearing punitive damages verdicts would pay even when the claim was fraudulent. The Sleaze vowed that when he got out of prison he would pursue this safe form of crime. The Sleaze was a man of his word. Immediately after leaving prison he bought a tenant’s homeowners policy. He asked for, and received without question, a $10,000 jewelry extension from the company. His limit of liability, instead of the standard $1,000, was $10,000. Within a month of buying the policy, he reported the probable theft of a $10,000 ring. He told the adjuster that he was at the Beverly Wilshire Hotel meeting with a business associate. He removed his ring to wash his hands in the men’s room. He forgot to replace his ring, returned to his lunch and realized the ring was missing about the time he finished lunch. He immediately went back to the restroom but found the ring missing. He reported the possible theft to the men’s room attendant and to the hotel security office. He told the adjuster that the ring was a family heirloom given to him by his father a week before he died. He had no appraisals or receipts. He had nothing in writing that proved he owned the ring. He had no photographs showing him wearing the ring. He was willing, however, to swear that he owned the ring and that it was probably stolen from the restroom at the Beverly Wilshire Hotel. The Sleaze would not let the matter rest. He filed suit in Superior Court naming counsel and the insurance company for fraud in the taking of his automobile. The insurance company had to retain new counsel to defend its attorney and itself to this new lawsuit. When that suit was unsuccessful the Sleaze filed small claims court actions alleging fraud and hoping that the insurer or its attorney would fail to appear. When counsel appeared at the small claims court action, the Sleaze, who was present, faked an illness and begged for a continuance. When this was unsuccessful, judgment was entered on the small claims court action for the insurance company and its counsel. On the surface, the Sleaze was unsuccessful in his fraudulent claims against the insurance company. He was successful in committing fraud. He was successful in raising the reasonable costs of defending fraudulent insurance claims beyond logic. He placed a lawyer in fear of her life and cost her law firm and the insurer she represented the cost of a body guard. Anyone who believes that insurance fraud is not a violent crime never met the Sleaze. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime of Insurance Fraud Number 32 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. Insurance Professionals Must Avoid Temptation to Defraud Public adjusters, like personal injury lawyers, work on a contingency fee. For a percentage of the recovery, they present claims on behalf of insureds to insurance companies. Like personal injury lawyers, some are honest and some are not. The public adjuster who is the subject of this tale is one of the latter. This amoral public adjuster profits from the misery and grief of unfortunate people who suffer loss. His car is equipped with a multi-band scanner turned to all of the fire department frequencies. When he hears of a fire on his scanner he drives directly to the scene. He has been known to arrive before the fire engines. In his briefcase he carries glossy brochures explaining what services he provides and how insurers will take advantage of innocent insureds not represented by amoral public adjusters. While the embers of their house cool, he has the homeowners sign a contingency fee contract promising to take care of all their needs. Because state law requires that the contract have a seventy-two-hour cancellation clause he does nothing for the first three days, except leave the property owner with blank inventory forms upon which he has instructed them to write a description of every item of property in their house. Once the seventy-two hours have expired and the contract can no longer be canceled, he calls in contractors and furniture restorers to prepare estimates for the restoration of the house and its contents. The amoral public adjuster’s success relied on the fact that the company’s adjuster is overworked, underpaid and under-trained. The company adjuster does not have the time to thoroughly investigate each fire loss. He must rely on the honesty of the insured and the contractors bidding on the repair work. Sometimes Fraud Succeeds He didn’t have the time, he didn’t have the training, and he didn’t have the support. He talked to the insured on the telephone who told him he was away from the house when the fire happened. The adjuster had a contractor he knew prepare an estimate which he used as the basis of his adjustment. The contractor was introduced to the adjuster by the amoral public adjuster. The adjuster never saw the dwelling. He trusted his contractor and the amoral public adjuster to do his work for him. The insured got their house fixed and more money than they were entitled to receive. The amoral public adjuster collected 25% of the total payment for a total of five hours work. The contractor, even after paying 15% to the amoral public adjuster, made a profit of 40% and did only the least amount necessary to repair the house rather than the maximum amount specified on the reconstruction estimate. The fraud was perfect. The perpetrators and the victims alike, were satisfied.

True Crime Stories of Insurance Fraud Number 31 Insurance Fraud as a Means to Avoid Poverty Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. The Collector Gets an Ideal The collector knew good Chinese art. He was passionate about hand-carved jade. He could talk with authority on any art over one thousand years old. He knew the lives of each emperor that ruled China during the last three millennia. He did not have the wealth to enjoy his passion. All he could afford was jade carved with dental drills. He believed his life would be unfulfilled if he could not possess carved jade figurines from the Tang Dynasty, but the collector had no job. He subsisted on unemployment insurance. When he could find work, he acted as a real estate appraiser for local banks in Inyo County, California. He did collect jade within his limited income. Mostly, it was machine carved in prison camps outside Shanghai, Mainland China. When he saved his money, he bought factory-made jade carvings in the style of the Tang Dynasty made in Taipei, Taiwan. As he collected his poor imitation Tang Dynasty carvings, he missed meals. Hunger made it difficult to sleep. For four days the collector read everything his library had on the subject of insurance. After thirty days of intensive investigation, the adjuster gave counsel evidence sufficient to allow him to recommend to the Underwriters that they deny the claim for fraud. Aunt Susie never owned $2,000,000 in jade art. None of her friends or neighbors in the small town of Mexico, Missouri had ever seen any Chinese objects in her home. She was a third grade school teacher her entire life and left an estate, according to her local lawyers, only sufficient to pay for her burial expenses. The Story Ends with a Happy Ending The collector was not smarter than the characters in the movie “Double Indemnity.” The adjuster was not Edward G. Robinson. He was a professional insurance claims adjuster. The Underwriters won this case. The cost was still less than the amount they would have had to pay under the policy. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime Stories of Insurance Fraud Number 30 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. As insurance companies become more sophisticated in the tools needed to defeat insurance fraud, the frauds become more complex. Those who earn a dishonest living stealing from insurance companies find that the simple, straightforward fraud, is no longer successful. They have become insurance scholars to learn better ways to steal from insurance companies. The 1942 banking industry wrote a document known as the standard or union mortgage clause [Form 438 BFUNS] to protect mortgage holders from dishonest borrowers. The banks were concerned because occasionally their borrowers committed arson and the insurers refused to pay. The policy was declared void as a result of the arson and resulting fraud and neither the insured nor the mortgagee recovered. As a condition of allowing their borrowers to buy insurance from particular companies, the banks insisted that the companies attach to their policies a union mortgage clause. The clause provided that if the borrower, by act or omission, caused the policy to be void, it would only be void as to the interest of the borrower and not the lender. Therefore, even if an insurer proved that its insured burned the building down, it still must pay the mortgagee its interest. The contract between the mortgagee and the insurer was a separate and distinct policy. The insurer could only defeat it if the mortgagee had knowledge of an increase of hazard. The union mortgage clause gave security to honest and reputable lenders. It also gave a dishonest lender the means to commit an arson for profit without the possibility of loss or criminal prosecution. The fraud would work with the insurance criminal first buying a distressed dwelling at a foreclosure sale for less than its true value. With a coconspirator, he would arrange a mortgage on the dwelling for three times the amount paid. He would then buy a homeowners policy from an unsuspecting insurer, naming the mortgagee under a standard or union mortgage clause. Before the first installment was due on the premium financing the dwelling would burn to the ground. Gasoline would be found on the premises and the local fire arson unit would conclude that the fire was intentionally set. The building would be vacant and without contents. The named insured, the alleged borrower who had used a fictitious name in the purchase of the insurance, would disappear. He would not even give notice of the claim. The lender would submit a proof of loss claiming that its entire interest was destroyed. It would also make claim for the full policy limits, providing a copy of the mortgage instruments to establish its claim. The insurer, convinced that the insured set fire to the dwelling, and unable to reach him, would be thankful that it had no contents or additional living expenses to pay. It would write the named insured at his last known address denying his claim for failure to cooperate. They would pay the mortgagee’s claim in full. Usually, the insurer, not wishing to get into the mortgage business, would not even request an assignment of the mortgage debt. The lender, paid more than the original price for the fire damage to the dwelling would issue a notice of foreclosure and sell the property at a foreclosure sale as an empty lot. The original named insured would share half the proceeds of the insurance policy with the mortgagee and would also receive 50 percent of the monies received from the foreclosure sale of the empty lot. The insurer, with no way of proving the conspiracy would close its file. The insurer believed that an arsonist had not succeeded in his crime. The insurer had no choice but to pay the “innocent” mortgagee. This type of fraud continues. Unscrupulous lenders invest their profits in distressed properties, both residential and commercial. The losses they report are not always fire. Some more imaginative insurance criminals use the vandalism coverage to provide a more profitable fraud. First, they avoid the hazard of physical injury when setting an arson fire. They also avoid arrest if accidentally seen committing the arson. Second, by judiciously vandalizing the structure, the mortgagee and the named insured find that they can have a distressed property totally remodeled and restored at no cost. The borrower, shortly after taking possession, would take a three-pound sledge hammer and punch a single hole in every sheet of drywall in every room, a single hole in every cabinet door, a single hole in every passage way door breaks each porcelain fixture in the baths, break the lock and put a single hole in the front and rear entry door. He would also dent or damage the central heating system and cut jagged slashes through the carpeting. The borrower, and named insured, would then disappear, since the entire transaction was a sham with fake names and identification. The mortgagee, claiming discovery of the damage on an inspection trip to decide why the payments had not been made, would report a vandalism claim. The mortgagee, knowledgeable about insurance, would have records showing that the premises were occupied less than thirty days before the discovery of the vandalism. The insurer, in good faith, would agree to a scope of damage requiring the replacement of all of the drywall, the repainting of all of the rooms, the replacement of the carpet and all of the plumbing furnishings and fixtures. The mortgagee would agree to an actual cash value settlement. Then, using its own employed workmen, the mortgagee would repair the drywall with patching plaster, caulk fixtures and for one tenth of the cost of a reconstruction contractor would totally remodel the house. The mortgagee would then conduct a foreclosure sale and sell the remodeled house. The mortgagee would profit by both the receipt of the cost of repairs and the profit on the sale of the now remodeled and restored house. The mortgagee and the borrower would split the proceeds equally and start the cycle over with a new house. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime Stories of Insurance Fraud Number 29 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. He was a good employee. He arrived for work every day on time. He did his job eight hours a day and never goofed off. He was loyal to his employer. His diligence got him raises and promotions. In 2009 his boss came to him and said: “The recession has hit me hard. I can’t afford to keep paying you. You are laid off.” He was shocked. He could say nothing. He could do nothing to keep his job. He packed up his personal belongings, said “goodbye” to his boss and left. The next day, he went to the state office of unemployment. He filed the first claim in his life for unemployment benefits. He was ashamed, but had no choice. Coming out of the unemployment office he met a pleasant man. Having nothing better to do, he accepted the man’s offer of a cup of coffee. They sat on a bus bench and talked about his troubles. The man asked detailed questions about his job. He explained that the employer was not alone. Other people were suffering just like he was. He explained there was a way to tide him over better than unemployment insurance. The employee was dumbfounded. “Are you offering me a job?” he asked. “No. I am only offering a way to make yourself some money without any effort.” The solicitor outside the unemployment office received a flat $500 fee from the lawyer. The doctor, who billed $600 for the complete examination and evaluation, gave the lawyer $200 as the lawyer’s fee for the referral. Everybody did very well except the workers’ compensation insurer and the employer whose business was having enough difficulties without finding its workers’ compensation premiums increased. The employee received a bonus on top of his unemployment benefits that was sufficient to carry him into his new job with a small nest egg. Rather than burning a building, the person committing insurance fraud merely signs his name to a claim form. Although most insurance fraud is not a violent crime, the crime of insurance fraud has become so rampant that a task force akin to the one used to quell the Los Angeles riots of 1992 and 2019-2020 riots is needed. That such a task force was not generated after the 1992 riots I doubt it will be started after the 2020 riots and Presidential election. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime Stories of Insurance Fraud Number 28 Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. The jeweler had learned to cut diamonds in Antwerp. For ten years he worked in a small office grinding facets onto stones of half a carat or less. The boredom of the job infuriated him. He had no future. He came to the United States on a tourist visa. He knew that the only way he could become a legal permanent resident was to have a business in place. The income he derived from his sales was sufficient to allow him to live in Southern California, but not set up a business. He needed a large influx of cash. After only a month working the wholesale jewelry market, the jeweler learned about insurance. It seemed to him that when they weren’t talking about gems all jewelers spoke about insurance. It was expensive. The insurers required them to install sophisticated alarm systems. The insurers required them to install safes that far exceeded any need of reasonable security. The jeweler saw insurance as a way of setting up a permanent business and becoming a legal resident of the United States. He got from his jeweler acquaintances the name of an insurance broker who asked few questions. He contacted that broker. He told the broker that he was a diamond salesman who operated his business from his home. The broker presented an application to Underwriters at Lloyd’s, London since no American markets would accept such a risk. The Underwriters at Lloyd’s refused to insure the jeweler because he had insufficient security at his apartment. The jeweler was undaunted. He went to another insurance broker. This time he described his business premises as the location of one of his acquaintances. He put on the new application the address of the acquaintance. He also included the type of safe at the acquaintance’s premises, the type of alarm system and all other security devices of the premises. The jeweler described his inventory as $100,000 in loose diamonds The lawyer suggested that the jeweler leave well enough alone. The insurance company seemed willing to close out their books without payment and not pursue criminal prosecution. If he upset them, he might find himself facing criminal charges. Finally, because the lawyer knew of the fraud, he made it clear to the insured that he refused to sue for the jeweler. The jeweler’s attempt at fraud could have been successful. His mistake was not knowing enough about insurance law. His mistake was giving the lawyer for the insurance company facts that enabled the insurance company to rescind his policy. To be a competent and effective as a perpetrator of insurance fraud, it is necessary to know when to lie and when to tell the truth. The jeweler did not know. He told the truth when he should have lied. He lied when he should have told the truth. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/

True Crime Stories of Insurance Fraud Number 27 Riots & Insurance Fraud Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. In the spring of 1992, riots broke out in Los Angeles. Arson and looting persisted for three days until the National Guard was called in to bring peace to the streets. The insured, the owner and operator of a failing restaurant saw the riots as an opportunity. Chez Expensive was in Hollywood. It catered to a small motion picture and television producers who gather along Highland Avenue between Third Street and Hollywood Boulevard. The motion picture business was bad. The television commercial business was bad. Chez Expensive began to see luncheon crowds of three couples. The insured was barely grossing enough to pay his rent. Riots and civil commotion cause everyone hardship. Innocents suffer the most. Those with criminal intent, however, take advantage of the misery of others. This story, unlike all of the stories in this book, is purely fictional. After more than 53 years in the insurance industry dealing with arson and insurance fraud almost continuously, I believe I can safely estimate that at least 10 percent of the six thousand fires set in the 1992 Los Angeles riots were not caused by the rioters. I assume, similarly, that about 10 percent of the fires set by BLM and ANTIFA activists in Portland, Seattle and Minneapolis were not caused by the rioters. It is a distressing comment on our society that in a time of civil unrest the innocents suffer, usually honest and honorable people are tempted to steal from an insurance company, and the criminal’s profit. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/