A True Crime Story of Insurance Fraud
Barry Zalma
Aug 18, 2023
Read the full true crime story at https://lnkd.in/gpE8DUrr and at https://zalma.com/blog plus more than 4550 posts.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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 stories 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 names, and places have been changed to protect the Guilty.
Arson for Profit can be Expensive
Most people do not understand how hard it is to set fire to a house that will destroy the entire dwelling and its contents. Most residences simply do not have sufficient combustibles in the right place to allow for a sustained fire. Many homes, especially the more modern ones, have fail-safe devices everywhere that make accidental fires a thing of the past.
An Insured decided that the only possible means of escaping his mortgage was to burn down his house. Being a rather imaginative fellow, he decided to also make the fire look like an accident.
On leaving his house in the afternoon, he opened the gas jets on the stove, blew out the pilot on his gas dryer and water heater, and set the thermostat on his electronically ignited furnace to 80 degrees Fahrenheit. It was a hot Summer day, but he assumed it would eventually cool off a little, the thermostat would kick on the furnace, and the electronic starter would cause a gas explosion that would destroy the entire house. What he did not count on was Southern California’s Santa Ana Winds that brought heat from the desert and kept the outside temperature in the hundreds all day and into the night. The Insured was shocked that a nosy neighbor with clear sinuses would smell the gas, turn it off at the meter, and save the house.
Of course, when the Insured returned home, he had to hide his disappointment that the house was still there. Undaunted, however, he tried again the next week. This time he took no chances. He went to the hardware store and bought a case of Coleman cooking fuel and spread it throughout the house. Then he tore up a book of paper matches so that there was no cover, only matches. He lit a cigarette and placed it low between the matches and left the house confident that when the cigarette burned down it would ignite the match heads and burn down the house. He was again sorely disappointed when he returned home to find the house still there.
The would-be arsonist had his innocent wife with him as an alibi. When they entered the house, she became hysterical at the sight of the flammable liquids poured throughout the house. She insisted that he report the incident to the fire department. He wouldn’t do it so she, against his wishes, called in the Arson Investigators.
“Boy, you were lucky.” A young fire arson unit investigator said. “The idiot who tried to set fire to your house set his fuse upside down!” Immediately, his partner kicked him in the shins but it was too late to stop him.
The fact that the cigarette, to be used as a fuse, must be placed at the head of the matches, not the base, was not known to the insured and the cigarette merely burned itself out.
The Insured learned a lesson from the arson investigator. The house burned down almost totally two days later.
The claim to the insurer included, among many other things, one encyclopedia Britannica and a wooden duck decoy. These inconsequential items, making up part of a claim for more than $100,000.00 in personal property, led to the Insured’s arrest when they were found, intact and undamaged in his temporary residence.
The Insured was arrested for arson and insurance fraud. His claim was denied.
He, of course, sued for bad faith, and the insurer was required to defend the law suit for a total of five years because it could not compel his testimony at deposition or trial until his criminal case was resolved. In the fifth year of the bad faith suit the insured’s lawyer called the insurer’s lawyer and suggested his client would provide a release and dismiss the suit with prejudice for a payment of only $5,000. The adjuster in charge – although he had spent over $30,000 defending the suit, refused the settlement and instructed his lawyer to offer only $2,000.
Following instructions, the insulting offer was made and, much to the surprise of the defense lawyer, the offer was accepted. The suit finally settled with the arsonist and his presumably innocent spouse, for a payment of $2,000.00. Twenty times less than that amount expended by the insurer to defend the spurious lawsuit brought by the Insured.
Why did the Insured offer to settle for so little? For at least two reasons:
Because the District Attorney could not set a man free to try the arson case and it was continued over and over again until all the witnesses were gone or had forgotten everything they knew.
Because the District Attorney and the Insured had made a deal that if the Insured pleaded guilty to one count of insurance fraud he would not go to jail.
The District Attorney, although he knew of the insurer’s interest in the case and the lawsuit pending against it did not advise the insurer of the deal. Of course, had the insurer known that the insured was going to plead guilty to insurance fraud they would have paid nothing.
The case was never tried. Two days after the settlement was paid in the civil action and more than five years after the fire, the Insured appeared in criminal court and pleaded guilty to one count of insurance fraud. He was given probation. The case wasn’t a priority matter to the prosecutor since only an insurance company was being hurt. The fact that the insurer was required to defend a bad faith suit for five years at enormous cost was of no apparent concern to the prosecutors.
The Insured did not profit from the fire with a cash award. He was relieved of his mortgage debt [which the insurer was required to pay to the mortgagee who had not been culpable in the arson] and he paid his lawyer one third of the $2,000 settlement. Since the insured was judgment proof the insurer lost, as uncollectable, the amount paid to the mortgagee and sold the bare land.
Interestingly, the arson investigator who worked so hard to find evidence to arrest the insured was later arrested and convicted as a serial arsonist. Apparently, he was upset that there was an arson fire in his town that he did not set.
Adapted from my book Insurance Fraud Costs Everyone available https://www.amazon.com/gp/product/B08QG3MYCR?pf_rd_r=845HWBP1C0XK5A3GZ6BQ&pf_rd_p=9d9090dd-8b99-4ac3-b4a9-90a1db2ef53b&pd_rd_r=787f0f76-2377-4ad2-9d91-df3dbda2a0e7&pd_rd_w=R9LjE&pd_rd_wg=QXi9P&ref_=pd_gw_unk
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Adapted from my book Insurance Fraud Costs Everyone available as a Kindle Book https://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5xhttps://lnkd.in/guPbnt5x
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Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
See the video at and at and at https://www.zalma.com/blog plus more than 5250 posts.
The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
Read the full article at https://lnkd.in/guNhStN2, see the full video at https://lnkd.in/gYqkk-n3 and at https://lnkd.in/g8U3ehuc, and at https://zalma.com/blog plus more than 5250 posts.
Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
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When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
