Louie the Switch
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Posted on April 6, 2022 by Barry Zalma
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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 [email protected].
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Insurer’s Exclusion for Claims of Assault & Battery is Effective
Post 5250
Read the full article at https://lnkd.in/gBzt2vw9, see the video at https://lnkd.in/gEBBE-e6 and at https://lnkd.in/gk7EcVn9, and at https://zalma.com/blog plus more than 5250 posts.
Bar Fight With Security is an Excluded Assault & Battery
In The Cincinnati Specialty Underwriters Insurance Company v. Mainline Private Security, LLC, et al., Civil Action No. 24-3871, United States District Court, E.D. Pennsylvania (December 16, 2025) two violent attacks occurred in Philadelphia involving young men, Eric Pope (who died) and Rishabh Abhyankar (who suffered catastrophic injuries). Both incidents involved security guards provided by Mainline Private Security, LLC (“Mainline”) at local bars. The estates of the victims sued the attackers, the bars, and Mainline for negligence and assault/battery. The insurer exhausted a special limit and then denied defense or indemnity to Mainline Private Security.
INSURANCE COVERAGE
Mainline had purchased a commercial ...
Marine Insurer May Dispose of Vessel to Avoid Waste
Post 5249
Read the full article at https://lnkd.in/gfn_UHdp, see the video at https://lnkd.in/gDWVccnr and at https://lnkd.in/gv9nsBqk, and https://zalma.com/blog plus more than 5200 posts.
In Western World Insurance Company v. The Estate Of Shawn Arsenault, No. 25-cv-13413-PGL, United States District Court, D. Massachusetts (December 17, 2025) the USDC was asked to resolve a marine insurance dispute after the sinking of the F/V Seahorse, a commercial fishing vessel, off Cape Cod on June 8, 2025. The vessel’s owner and operator, Shawn Arsenault, died in the incident.
Western World Insurance Company issued a hull insurance policy for the vessel. With no personal representative yet appointed for the estate, the insurer cannot determine the proper payee for the insurance proceeds.
The insurer paid for the vessel’s recovery and removal, and the vessel is now with a salvage company, incurring substantial storage fees. The insurer determined the loss is covered under the ...
Marine Insurer May Dispose of Vessel to Avoid Waste
Post 5249
Read the full article at https://lnkd.in/gfn_UHdp, see the video at https://lnkd.in/gDWVccnr and at https://lnkd.in/gv9nsBqk, and https://zalma.com/blog plus more than 5200 posts.
In Western World Insurance Company v. The Estate Of Shawn Arsenault, No. 25-cv-13413-PGL, United States District Court, D. Massachusetts (December 17, 2025) the USDC was asked to resolve a marine insurance dispute after the sinking of the F/V Seahorse, a commercial fishing vessel, off Cape Cod on June 8, 2025. The vessel’s owner and operator, Shawn Arsenault, died in the incident.
Western World Insurance Company issued a hull insurance policy for the vessel. With no personal representative yet appointed for the estate, the insurer cannot determine the proper payee for the insurance proceeds.
The insurer paid for the vessel’s recovery and removal, and the vessel is now with a salvage company, incurring substantial storage fees. The insurer determined the loss is covered under the ...
Zalma’s Insurance Fraud Letter
Read the full article at https://lnkd.in/dG829BF6; see the video at https://lnkd.in/dyCggZMZ and at https://lnkd.in/d6a9QdDd.
ZIFL Volume 29, Issue 24
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
