Insurance Fraud Scheme Born After Business Failure
Barry Zalma
Sep 7, 2023
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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 Ben-Cohain brothers, quite by accident, came upon an imaginative fraud. The Los Angeles County District Attorney, after a lengthy investigation, charged them with violation of Penal Code § 550, insurance fraud, among others related crimes.
The Ben-Cohain brothers operated a small furniture assembly facility in Los Angeles County. They imported knocked-down children’s furniture (made of composition wood and Formica laminates) from Israel. They hoped to sell it to wealthy people in Beverly Hills and West Los Angeles who wished to support the State of Israel. The quality of the merchandise, however, was not high and the Ben-Cohain brothers had difficulty making a profit.
In 2019 the rains came to Southern California and a skylight in their industrial building leaked some water onto a small amount of their composition board furniture. They called their insurance agent, reported a claim, and with invoices for most of the merchandise they presented and received $75,000 for their actual water damage loss.
The Ben-Cohain brothers purchased the salvage from their insurer for a small deduction in their total claim and sold it shortly after receiving payment. With the proceeds, one brother purchased a used Mercedes sedan and the other a used BMW.
They were soon short of money since they still could not sell the low quality knocked-down merchandise.
They sought out the services of Mr. Rosenberg, a public insurance adjuster, who attached a nylon rope to sprinkler head thirty feet above the warehouse floor and yanked it out of its fitting. The water flowed for fifteen minutes until the fire department came and turned off the sprinkler system. The fire department, with its usual efficiency, vacuumed out the water and protected the furniture.
After the fire department was gone, the brothers, noting that insufficient damage had been done by the water from the sprinklers, ordered their two laborers to form a bucket brigade. The laborers poured twenty-five buckets of water from the restroom on the stored furniture effectively making all of their inventory unsaleable.
Shortly thereafter they called the insurer and a claim was presented for $1,000,000. The insurer, unsuspecting, retained salvors to inventory the damaged furniture and determine if any had a value in salvage. While the salvors were doing their work, one laborer came up to him and whispered:
“Senior, no es accidente!”
Fraud Detected
Although the salvor spoke no Spanish he understood what was said to him. He reported the statements to the insurer. The insurer, American Indemnity Insurance Company, immediately assigned the case to investigator Steve Thomas of its special investigation unit. Mr. Thomas retained the services of Spanish speaking investigators who met with the laborers and obtained the full story of the fraud.
American Indemnity then retained counsel to take the sworn examination of the laborers. Counsel, provided instructions for further investigation and later examined the insureds under oath at the request of the insurer.
American Indemnity, although suspicious, wanted to complete the fair and thorough investigation required of it by California law. During the examination under oath it seemed the brothers Ben-Cohain had blatantly lied. They lied about the cause of the incident. They lied about what was destroyed. They lied about where the things destroyed were manufactured. They lied about the quality of the knocked-down furniture. They lied about the financial condition of their business. They lied about everything.
The brothers provided invoices and shipping documents they intended to prove the value of the damaged furniture. The documents proved that the support for their claim was false and fraudulent. They testified that none of their furniture was purchased domestically. At the time, they did not know that their laborers had introduced American Indemnity to the local manufacturer.
The examinations under oath filled more than four days of sworn testimony. When the testimony was completed American Indemnity denied the claim and declared the policy void because of fraud. American Indemnity, following California law, reported the claim to the fraud division of the Department of Insurance.
The fraud investigator, Martin Sandiego of the Department of Insurance fraud division, commenced the criminal investigation that resulted in a presentation of the case to the Los Angeles County District Attorney’s Office. After considerable work by American Indemnity, its counsel and almost a year of detailed investigation by the Fraud Division, the Los Angeles County District Attorney filed seven felony counts against each brother for insurance fraud and grand theft.
They arrested both brother’s Ben-Cohain while they were parked illegally near a night club on Sunset Boulevard in West Hollywood. After spending a weekend in the County Jail, the brothers were released on $75,000 cash bonds. They left town and forfeited bail.
ZALMA OPINION
The Fraud Division of the State of California Department of Insurance, the Los Angeles District Attorney’s Office, and American Indemnity Insurance Company deserve commendation for their dedication, hard work and courage in thwarting an attempt at a major fraud.
The two laborers, although fearing deportation as illegal aliens, did the right thing and stopped what could have been the perfect crime.
As long an honest people refuse to stand by and let criminals succeed there is still hope for this country and its insurance industry.
I know things are changing. In the first twenty-five years I had been involved with attempts to defeat or deter insurance fraud I could count ten people, out of the thousands I have investigated, who were arrested for insurance fraud. In the last twenty-five years cases in which I have been involved in dealing with insurance fraud readers of my twice monthly newsletter, Zalma’s Insurance Fraud Letter, can see that convictions for insurance fraud across the country, seem to be increasing. The increase is either due to serious effort to defeat fraud or an increase in fraud that is so serious that it cannot be ignored by prosecutors.
I sincerely hope that the new insurance commissioners and prosecutors across the country will redirect the efforts of their local Fraud Division and attorneys general to prosecute insurance fraud.
Besides million dollar frauds, like that attempted by the Ben-Cohain brothers, effort must be made to bring to justice those fraudsters who avoid attention by committing insurance fraud for small amounts of money repeatedly.
The bail bondsman travelled to Israel to collect the $150,000 his company was required to pay when they defaulted and escaped to Israel. He found them only to have his demand for money met with two UZI machine guns threatening his life. Applying good common sense the bail bondsman returned to California and wrote off the debt on his tax return.
In 1990 Moshe Ben-Cohain and Menashe Ben-Cohain started a course of conduct that led to their arrest for insurance fraud. They failed to appear after posting bond and are, along with their co-conspirator, Raz Rosenberg, fugitives.
Adapted from my book Insurance Fraud Costs Everyone Available from Amazon.com.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/The Ben-Cohain brothers, quite by accident, came upon an imaginative fraud.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/The Ben-Cohain brothers, quite by accident, came upon an imaginative fraud.(c) 2023 Barry Zalma & ClaimSchool, Inc.
Subscribe to Excellence in Claims Handling at locals.com at https://lnkd.in/gfFKUaTf or at substack at https://lnkd.in/gcZKhG6g
Go to Rumble.com at https://lnkd.in/gV9QJYH; Go to Barry Zalma on YouTube- https://lnkd.in/g2hGv88; Go to the Insurance Claims Library – https://lnkd.in/gYq44VM
Chutzpah: After Criminal Prosecution Defendant Sues USA
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Dr. Segun Patrick Adeoye, a medical doctor, filed a lawsuit against the United States of America, seeking damages for alleged violations during his criminal prosecution. He was acquitted by a jury but claims to have suffered significant harm, including financial losses, damage to his professional reputation, and personal distress.
In Dr. Segun Patrick Adeoye v. The United States Of America, Civil Action No. 4:25-cv-83, United States District Court, E.D. Texas, Sherman Division (July 23, 2025) the USDC dismissed Adeoye’s suit.
FACTUAL BACKGROUND
Dr. Adeoye was indicted on charges of conspiracy to commit wire fraud and money laundering. The indictment alleged that he and his co-conspirators obtained at least seventeen million dollars through various fraudulent schemes. Despite being acquitted, Dr. Adeoye claims that his ...
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FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Payment of Appraisal Award Defeats Claim of Bad Faith
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Read the full article at https://lnkd.in/dNpKKcYx, see the full video at https://lnkd.in/dNgwRP8q and at https://lnkd.in/dA9dvd-D, and at https://zalma.com/blog plus more than 5150 posts.
Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
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CASE OVERVIEW
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Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
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ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
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/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
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Professional Health Care Services Exclusion Effective
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Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
