True Crime of Insurance Fraud Video Number 55
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Most insurance companies are formed by major corporations with considerable assets. They are capitalized with serious money needed by the Insurer to cover losses until profits are made. The company is staffed with insurance professionals who believe in the concept of spreading risk. The insurers, whether new or old, provide a definite service to the public.
Betty Bruja wanted to start her own insurance company. She had been an insurance broker for ten years. In those ten years she had trained herself with books and training courses from the Insurance Risk Management Institute, the Society of Certified Property and Casualty Underwriters, the Insurance Institute and the Insurance Claims Library. By devoted and lengthy study Betty obtained the designation CPCU in the minimum time allowed by the Society of CPCU.
She studied underwriting and claims handling. No person, Betty thought, was as knowledgeable about insurance as she. No insurance company operated efficiently. Massive profits could be made if she only was put in control.
For ten years Betty Bruja toiled in the trenches of the insurance industry obtaining a small income off 5% to 15% commissions. She was frustrated. She knew she could make money if only there was capital to fund a new insurance company.
Ms. Bruja hired an independent adjusting company to investigate and adjust claims. Since none of the policies had any wording, she denied coverage on most claims by creating a policy exclusion to fit the claim. During the first year of her program of fraud she paid no claims and collected $500,000 in premium.
Robin Sleuth was the owner of a small traveling carnival. He had purchased a policy from Betty and renewed it with PPC. He was pleased with the premium. He needed a certificate of insurance in the name of the City of Ojai because his carnival was setting up on an empty lot owned by the City. Betty was slow in issuing the form. Robin looked at his insurance file and noticed he never received policy wording from Betty. He faxed her a letter demanding a complete copy of his policy and a certificate.
Betty, recognizing a trouble maker, sent Robin a notice advising, since they could not agree, that his policy was canceled flat and she returned the premium he had paid. Robin was furious. He was forced to cancel his appearance in Ojai and scramble to get insurance through another agent. The premium was twice that he paid to Betty.
PPC immediately hired a private investigator and counsel experienced in fraud investigation. They flew to Robin Sleuth’s home city and interviewed him. They obtained copies of all written evidence and obtained Robin’s promise to maintain the originals in a secure place that were not to be destroyed.
The lawyer and investigator then flew directly to the city where Betty did business and arrived at her new paneled offices. They demanded to see Betty.
Betty, resplendent in her tailored wool suit and silk blouse, met them with courtesy. They told her whom they represented and that she was issuing policies in the name of PPC without authority. Betty was shocked. She denied that she issued policies without approval. She would do everything she could to help them. Ms. Bruja wanted, however, before discussing it with them further, to speak with her lawyer.
Betty’s lawyer was an honest person. He would never go along with her fraud. She needed something to show him. On her computer she created a letterhead for Nicholas Claus Insurance Services, Houston, Texas. The letter, which she created, was dated six months before. Claus, as Managing General Agent for PPC, authorized Betty, as exclusive agent in her state, to write CGL policies for carnivals, bungee cord facilities and hang glider parks.
PPC and its lawyer were satisfied. They had stopped a fraud in progress. They reported Betty to the Insurance Department and advised the Department of the agreement. The Department, overburdened with other work, did nothing since PPC had solved its problem.
What was unknown to PPC, its lawyer, or Betty’s lawyer was that the next day she picked a new insurance company name. Betty rolled all of her clients into Surety and Providence Insurance Company (SAPIC). She told each that she had been duped by PPC but had protected them by getting insurance for them with SAPIC.
Betty is living well. Fraud seems to pay for her. Soon she will make enough money to actually capitalize a legitimate insurance company.
Unfortunately, for Betty, a three-year-old child fell out of a WhirlyGig and became paralyzed. The parents of the child sued the carnival who presented a claim to Betty. She immediately and retroactively cancelled the policy and refused the claim. The carnival had no option but to file bankruptcy and the child became a ward of the state. Betty, emptied her bank account and moved to a retirement community in Sao Paulo, Brazil and never tried to be in the business of insurance again.
ZALMA OPINION
Insurance fraud comes in many different guises. Betty hurt innocent people and profited from her crime. She should have been punished by the Department of Insurance and her license to sell insurance pulled. It didn’t happen and she is now living well in Sao Paulo.
(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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Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
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As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
