High-Tech Fraud
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Dennis loved computers. He spoke their language fluently. He could converse as easily in Windows, Basic, COBOL, FORTRAN, machine language, UNIX and Linux as English. Basic and DOS were child’s play to Dennis.
Computers were his life. Whenever Intel marketed a new chip, Dennis was first in line to buy faster and more complex computers for his personal use.
Dennis could never afford every computer he wanted to buy. As a programmer for WYSIWYG Enterprises he earned only $60,000 a year. He lived near his work in San Jose. Dennis took the bus from his third floor walk-up apartment to his office. When he wasn’t working, he was modifying and upgrading his personal computers and editing software for his personal use.
Dennis loved working on his HP desktop running Windows 10 and UNIX. He had available for use a 1200 x 2400-dpi color scanner, a full color laser printer that printed at 1200 DPI and a 60 inch flat screen monitor. On the appropriate paper the printer produced photographic quality images.
“Dennis,” Alain exclaimed, “these are valuable antiques (not to mention your computer systems). How can you live in that miserable, cheap apartment without renters’ insurance to protect you against burglary?” “
Dennis took his photographs, which clearly fooled his computer-wise friend Alain and which he was certain would fool any fine arts appraiser, and opened the Yellow Pages under “A” for “Appraisers.” He found a listing of thirty five different names of fine arts and antique appraisers.
Since Dennis never owned any of the items of value depicted in the photographs, he was curious to see the true value of the items his photographs seemed to prove were in his house. He took the photographs to the first appraiser he found in the telephone book. That appraiser, Albert Aisensohn, was the owner of Antique Universe, a retail establishment selling antiques, used furniture and old estate jewelry.
Aisensohn took the photographs and said, “I can’t give you an appraisal from just photographs — when can I see the merchandise?”
When Dennis pulled out the five one hundred dollar bills he had in his wallet Aisensohn immediately sat at an old Underwood upright typewriter and began to type out an appraisal of the value of the various items depicted in the photographs Dennis provided to him. He made no comment, just silently put the bills in his pocket.
Because he only had photographs, Aisensohn estimated age, quality of craftsmanship and value. The appraiser, more often than not, could only provide a range of values such as: Chippendale chair, circa 1890, excellent physical condition, carved from mahogany and covered in a silk Jacquard print, valued between $30,000 and $40,000.
On the 310th day the policy was in effect, a Sunday morning, the day after Intel announced the shipment of 100,000 chips to Dell and HP, Dennis called the San Jose Police Department to report a burglary at his house. He informed the police officer that he left his home for only an hour and a half to walk down to the corner to get a cafe-laté and a sandwich. He drank the cafe-laté quietly at the coffee shop while reading his Sunday San Francisco Chronicle. On his return, he unlocked his front door and realized he had failed to lock the window beside his third floor fire escape. All his antiques were gone. His HP desktop was gone.
He gave the police officer the list of insured items and told him that he had no insurance on the computer work station. The police officer dutifully noted the descriptions from the insurance policy of each item and, from the invoice, the serial numbers of all of the components of the HP. Other valuable computer items were left in the apartment. Dennis and the police officer could only assume that the burglars heard him coming and were frightened away before they could take everything. Dennis was fortunate.
Dennis called up his friend Alain’s father, reported the burglary and after a visit by a claims representative the insurance company delivered a check for $420,000 to him in exchange for a signed proof of loss.
Dennis now knew that his fondest dream had come true. He deposited the check in his account and wired new Hewlett Packard and Dell computers together powered by 20 new dual core Intel chips chained together. His monitor was two sixty-inch screens putting out 2400 x 2400 pixels. He had 45 terabytes of internal hard drive, 5 terabytes of flash memory, and all was backed up with equal amounts of optical storage. His system rivaled those now used by NASA and the NSA.
Dennis lived happily ever after, occasionally creating new photographs as the computer industry created new toys.
ZALMA OPINION
If the insurer interviewed the appraiser they would have defeated the claim and Dennis would be in jail. The insurer did not. Dennis was a lucky criminal.
(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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Happy Law Day
ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
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In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
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A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...