Not Wise to Explain Scheme to Defraud to FBI Informants
Insurance Fraudster Tries Multiple Bases for Appeal & Still Goes to Jail
Barry Zalma
Oct 12, 2023
Read the full article at https://lnkd.in/g_5uiDit and see the full video at https://lnkd.in/g3Vz7mat and at https://lnkd.in/g-fRSBs8 and at https://zalma.com/blog plus more than 4600 posts.
Brian Higgins diverted for personal use funds he received from his mortgage servicer to repair damage to his home caused by a broken fish tank. He also filed a lawsuit against two witnesses for the prosecution, accusing them of misdirecting the funds instead of himself. For his conduct, a jury convicted Higgins on three counts of mail fraud under 18 U.S.C. §§ 1341-42 and two counts of retaliating against a witness, victim, or an informant under 18 U.S.C. § 1513(e). He appealed.
In United States Of America v. Brian Higgins, No. 22-3538, United States Court of Appeals, Sixth Circuit (October 6, 2023) affirmed his conviction but gave him a win by requiring the District Court to reconsider the amount of restitution he must pay.
FACTS
In 2007, Higgins bought a house in Dayton, Ohio, which he financed with a $900,000 mortgage. By April 2010, Higgins had defaulted on his mortgage payments and, as of October 2016, still owed almost all that he had borrowed ($891,335.37). On top of that, the house was encumbered with about $815,000 in liens, including for federal taxes over the years.
Higgins’s 1,000-gallon fish tank sprang a leak and caused significant damage to the home.
Higgins commissioned Michael Marshall and Scott Waters, contractors and owners of United Demolition, to do the work. But during their initial consultation, Higgins detailed his plan to divert the home repair funds for his own personal use. Higgins asked the contractors to help him with his plan by falsifying documents to procure the insurance monies. Unbeknownst to Higgins, however, the contractors were confidential informants for the FBI on an unrelated matter.
Higgins was initially indicted for mail fraud, wire fraud and aiding and abetting. But after learning of the contractors’ roles in the government’s investigation, Higgins, while under arrest, filed a pro se lawsuit against them both, highlighting their roles as informants and alleging that they were the ones who defrauded Nationstar and the insurance company.
The jury found Higgins guilty of three counts of mail fraud and two counts of retaliating against a government witness. The court sentenced him to an aggregate of 3 years’ imprisonment and ordered him to pay $84,113.04 in restitution.
ANALYSIS
The Sixth Circuit noted that the trial court did not abuse its discretion when it denied Higgins’s motion for additional Funds to hire an expert accountant and argued the district court erred when it admitted evidence of about $815,000 in liens that were on his residence when he filed his insurance claim.
Higgins placed both his general and specific intent at issue when he pleaded not guilty to the mail fraud charges. Evidence of a defendant’s financial condition was relevant and admissible for the proper purpose of establishing motive or intent in cases involving financial crimes. Higgins’s significant financial woes revealed an incentive for him to use insurance monies for his own purposes rather than their intended purposes. Trial testimony bore this out; the contractors explained how Higgins misappropriated the insurance funds for personal business ventures.
The government moved to introduce the recordings to prove retaliatory intent and common plan in relation to the witness retaliation charges.
The parallel between Higgins’s earlier advice to another person to flip and reverse allegations of wrongdoing against an accuser of that person and his later actions in accusing witnesses in his own case of the very crimes for which he stood trial was striking. The Sixth Circuit explained that any reasonable juror would understand that his statements were not confessions to any of the crimes charged. Rather, they would grasp that this evidence might shed light on Higgins’s possible intent in filing suit against the contractors.
Restitution
Higgins’s final challenge was to the district court’s May 25, 2022, order of restitution. The recommended amount equaled the total funds Higgins diverted from the insurance disbursements. The Mandatory Victims Restitution Act of 1996 (“MVRA”), 18 U.S.C. § 3663A, requires the district court to award restitution to victims of fraud. Restitution must be awarded in the full amount of each victim’s losses. That said, restitution is intended to compensate victims only for losses caused by the conduct underlying the offense of conviction.
The Sixth Circuit affirmed Higgins’s convictions and ordered the trial court to inquire further as to the appropriate amount of restitution due to Nationstar.
ZALMA OPINION
People who commit insurance fraud and are caught have chutzpah without limitation. This appeal, with dozens of pages of opinion to resolve the multiple complaints about his conviction that Higgins filed, the Sixth Circuit did away with all his arguments and threw him a bone by requiring the Circuit Court to reconsider the amount of restitution even though it will probably never be collected considering the debts that may have caused him to attempt insurance fraud.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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/
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Go to videos at Rumble.com at https://lnkd.in/gV9QJYH;
Subscribe to Excellence in Claims Handling at locals.com at https://lnkd.in/gfFKUaTf or at substack at https://lnkd.in/gus8Mzkq to the Insurance Claims Library – https://lnkd.in/gYq44VM
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
See the video at and at and at https://zalma.com/blog plus more than 5300 posts.
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
Read the full article at https://lnkd.in/gzvvdkMZ and at https://zalma.com/blog.
Below you will read from this post until you reach the the end of this blog post as the free part of an Excellence in Claims Handling post. To read the full article and receive all articles for members of Excellence in Claims Handling you should consider joining as a paid member to get full access to articles for members only, to our news, analysis, insurance coverage, claims, insurance fraud and insurance webinars, by clicking at the subscription link below.
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 ...
