Why Did Insurer Ignore Evidence of Arson?
Read the full article at https://www.linkedin.com/pulse/arson-profit-proved-circumstantial-evidence-barry-zalma-esq-cfe and at https://zalma.com/blog plus more than 4100 posts.
Posted on March 10, 2022 by Barry Zalma
This criminal case stems from a 2015 fire at Adcor Industries for which the owner, Demetrios Stavrakis, collected a $15 million insurance payout. Suspicions arose when surveillance video showed Stavrakis tampering with the security system at the front entrance of the building on the evening of the fire. A seven-week jury trial ended in convictions on all counts. The district court found that the circumstantial evidence against Stavrakis was sufficient to support his convictions, and rejected a claim that the jury had been improperly instructed on willful blindness. In United States Of America v. Demetrios Stavrakis, a/k/a Dimitrios Stavrakis, a/k/a Jimmy, Nos. 20-4149, 20-4184, United States Court of Appeals, Fourth Circuit (February 24, 2022) the 15 year sentence was affirmed.
FACTS
This case began with a fire in the early morning hours of July 29, 2015, at a building in Baltimore, Maryland. The building housed Adcor Industries, owned by defendant Stavrakis, a precision parts business serving the beverage, aerospace, firearms, and defense industries. Investigators soon established that the fire was set intentionally, with the ignition of a drum of methanol in an interior office. The fire also appeared to be an inside job since there was no sign of forced entry, nothing was stolen, and the arsonist disarmed the alarm with the four-digit alarm code.
Nobody was injured in the fire. But the building was damaged and Adcor’s insurer, Travelers Indemnity Company of America, ignored the evidence against Stavrakis, its insured, and paid an approximately $15 million claim. Some of that money was used to repair the premises and to buy upgraded equipment and machinery. One repair claim, in particular, would become the subject of a separate fraud charge against Stavrakis: a $30,000 claim for a modern security system to replace Adcor’s previous and outdated system, which had sustained only modest damage in the clean-up after the fire. Stavrakis also used insurance proceeds to pay off private loans and, as the evidence later would reveal, to purchase luxury items including cars, a motorcycle, watches, and jewelry.
Surveillance video later showed, however, that Stavrakis in fact did lock up and set the alarm on the evening of the fire, and that he had used the opportunity to tamper with an ID-card reader at the front door. He was arrested and brought to trial in US District Court. A lengthy and complex jury trial commenced on September 9, 2019. Consuming close to seven weeks, the trial featured the testimony of approximately 60 witnesses and the introduction of roughly 700 exhibits.
It was undisputed that the Adcor fire was the product of arson. The government’s theory of the case was not that Stavrakis himself had set the fire – Stavrakis was at home when the fire was reported at approximately 1:30 a.m. on July 29, 2015 – but that he had worked with an accomplice, aiding and abetting the arson in order to collect insurance proceeds. To establish motive, the government introduced “voluminous evidence” that Adcor had been in dire financial straits since 2010, when it lost a lucrative contract with a major customer.
Central to the government’s case against Stavrakis was the surveillance video – played for the jury – that showed him tampering with the security system at Adcor’s front door on the evening before the fire. The government’s evidence showed, Stavrakis took the unusual step of inviting the last employee in the office to join him for dinner. One minute after she left the building for the restaurant, Stavrakis went directly to the main entrance. There, a video camera captured him putting tape on the latch of the door before setting the security alarm, disabling a locking mechanism that required entrants to swipe an ID card. Stavrakis then tested his work, exiting the building and reentering without swiping his own card.
Sure enough, although Adcor’s alarm was disarmed with the four-digit code later that night – first in the lobby, at 12:25 a.m., and then on the shop floor, at 12:33 a.m. – there was no record of an ID card being used to enter the building. Nor was surveillance video from that critical time ever found. Adcor employee Michael Hyatt testified that the relevant hard drives crashed and then, after they were set aside, were lost. In fact, many key pieces of evidence disappeared in the wake of the fire: Shortly after Stavrakis was called to the scene, the tape formerly observed on the front door was removed, as evidenced by a photograph of the door taken early that morning. And less than a month later – before investigators had reviewed the surveillance video showing Stavrakis at the door – the front office doors themselves were discarded and replaced.
The jury convicted Stavrakis on all counts.
ANALYSIS
Circumstantial Evidence
Arsonists seldom confess nor are they dumb enough to set a fire on camera. Therefore, most arson trials are based upon circumstantial evidence.
The trial court, of course, recognized at the outset that the government’s case against Stavrakis was circumstantial. But circumstantial evidence, the court explained, is treated no differently than direct evidence in assessing its sufficiency. So long as the evidence, viewed in the light most favorable to the government, could be accepted by a reasonable finder of fact as sufficient to support a verdict of guilt beyond a reasonable doubt, the jury’s verdict must be sustained.
Stavrakis’s primary argument: that the “central” evidence in the case – the video showing him tampering with the security system at the front door – was irrelevant because “there was no actual evidence to support the pivotal conclusion that the arsonist entered through the front door” and not through a hatch on the building’s roof or some other door. The court found, however, from which a reasonable jury could infer that the arsonist entered through the front door, including the fact that the alarm was disarmed first, at 12:25 a.m., in the lobby area immediately adjacent to that door. There also was the “irrefutabl[e]” fact that Stavrakis had taped the front door, and had done so before he attempted to set the alarm – so before he could have experienced the sensor alignment problem that he used to excuse his actions. A reasonable jury, the court finished, did not have to accept a “wildly speculative” “roof hatch scenario,” which would have had the arsonist using a ladder, on a public street, to climb onto the roof and through a hatch that evidence showed could not be opened from the outside.
In sum, the jury had before it a compelling case – circumstantial, but compelling – from which it could find, beyond a reasonable doubt, that Stavrakis knowingly participated in the arson. The proper focus is “the totality of the evidence,” which in this case was sufficient to support a guilty verdict.
After denying Stavrakis’s motions, the district court sentenced him to a total of fifteen years’ imprisonment. Stavrakis timely appealed his convictions.
Argument
A jury may make reasonable inferences from circumstantial evidence and for the reasons carefully detailed by the district court, “substantial evidence” in this case supported a reasonable inference of guilt. Viewed in the light most favorable to the government, the evidence is not in equipoise [A situation in which things are perfectly balanced]. As the district court found, the voluminous evidence introduced over the course of this seven-week trial, taken as a whole, made a substantial and “compelling” case against the defendant.
Stavrakis argued it was wrong to submit a willful blindness instruction. The Fourth Circuit concluded that such an instruction was warranted where “the defendant asserts a lack of guilty knowledge” – as Stavrakis does in connection with the handling of the $30,000 claim – but the evidence supports an inference of deliberate ignorance. It is not enough, in other words, that a defendant should have known, but for mere negligence or recklessness, that he was involved in a crime.
Where the evidence indicates that a defendant purposely closed his eyes to avoid knowing what was taking place around him, then a willful blindness instruction properly allows the jury to impute the element of knowledge.
ZALMA OPINION
With such damning evidence it is amazing that Travelers paid Stavrakis $15 million without, at least, reviewing the available evidence, without collecting the video that the government collected, and without taking the examination under oath of Stavrakis to inquire about the motives he had for the fire. Regardless, the government should be commended for putting on a thorough and evidence heavy trial that should have been collected by the insurer. Hopefully they sought restitution as the victim of the fire.
© 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, [email protected] and [email protected] . 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/
Like
Comment
Share
Intentionally Shooting a Woman With A Rifle is Murder
Post 5196
See the full video at and at and at https://zalma.com/blog and more than 5150 posts.
You Plead Guilty You Must Accept the Sentence
In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.
Affirmation of Sentence:
The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.
Reasonable Inference on Trigger Pulling:
The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.
Guilty Plea Facts:
The appellant admitted during the plea hearing...
The Judicial Proceedings Privilege
Post 5196
Posted on September 25, 2025 by Barry Zalma
See the full video at and at
Judicial Proceeding Privilege Limits Litigation
In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.
The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.
Case background:
Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...
Misrepresentation or Concealment of a Material Fact Supports Rescission
Post 5195
Don’t Lie to Your Insurance Company
See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.
In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.
FACTS
Plaintiff's Application:
Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.
Misrepresentation:
Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.
Accident:
Plaintiff's SUV was involved in an accident on August ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...