Profits Are Where You Make Them
Read the full article at https://lnkd.in/gpbsgCtE, see the full video at https://lnkd.in/gAbiZZFa and at https://lnkd.in/grMQeNPU and at https://zalma.com/blog plus more than 4200 posts.
Posted on April 29, 2022 by Barry Zalma
See the full video at https://rumble.com/v12wml6-true-crime-of-insurance-fraud-video-number-64.html and at
On his 50th birthday Louie concluded he was a failure. For thirty years he sold insurance to the public. For a $40 commission Louie would often spend hours explaining a tenants’ homeowners policy to a client. The next year, because another broker promised to save the client $5 in premiums, they did not renew and he received no commission.
Louie had always been a dedicated and faithful insurance broker. He put his clients’ interest above his own. If he could save them money (even if it would cost him a commission) he placed them with the least expensive insurer. In return he saw nothing but derision and disloyalty.
Louie decided to change his life now that he was middle-aged and a member of the AARP. Considering his small earnings, retirement at age sixty-five seemed almost impossible. He needed a means to make sufficient money in a short time to retire. His knowledge of insurance and his salesman’s understanding of the greed of his customers brought him a solution.
EMPLOY IV YOU was born.
Louie went to each of his commercial insurance clients with his plan. He explained that if they allowed him to become the employer of their employees, the cost savings in benefit plans would offset his fee. The business’ overall employee cost, he explained, would be less. He would charge each customer 3% of the gross salary of each employee and the actual cost of their benefits. For the 3% fee, he would file all employment forms and issue W-4 and W-2 forms; collect from his customers all employment taxes and pass them to the government; fill out all the forms and give each employee a “cafeteria” plan of benefits. The employees would be happy and the employers would be happy. The employer would have absolute control over the employees and Louie would merely be their titular employer.
Although the idea sounded too good to be true, 80% of his customers decided to take Louie up on the proposition.
EMPLOY IV YOU then applied for, and obtained, a workers’ compensation insurance policy for all of its employees. Louie, being a frugal man, advised the workers’ compensation insurer that he had 400 employees all working in a clerical capacity (the lowest workers’ compensation rate available).
Other than paying the premium that he obtained in advance from each of his clients, Louie’s only other expense was issuing pay checks. A payroll service charged him only $300 a month to issue all the checks and prepair the reports for him. He paid a bookkeeper only $8 an hour to take care of all the other bookkeeping requirements of his business. EMPLOY IV YOU made more profits in the first two months of business than Louie had made in any one of the last five years.
By the time Louie was fifty-five, he had invested his profits into a portfolio of stocks, bonds and mutual fund shares conservatively valued at $3,000,000. The earning from the portfolio would support Louie in comfort through his retirement.
EMPLOY IV YOU’s workers’ compensation insurer, on receiving Louie’s reports of earnings, reduced his premium each year. Louie used the “audits” to increase his profits for five years in a row.
On the fifth anniversary of the business, Louie’s 55th birthday, he decided he had made enough money and offered the business for sale to a legitimate employee leasing business. Louie took the $2,000,000 he received from the purchase, added to it the cash from the sale of his stock portfolio and moved it to Kingston, Jamaica.
He purchased a villa overlooking the sea and is living out his retirement happily.
ZALMA OPINION
Insurance fraud is an equal opportunity crime. It is committed by every race, religion, national origin, gender, sexual preference or occupation, even an insurance agent. It is a crime regardless of who commits the crime or how successful the criminal. A lack of investigation and unwarranted trust allowed Louie to successfully defraud multiple insures and those for whom he sold his services. When something, like Louie’s deal, seems to be 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 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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The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
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.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
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...
