The Largest Residential Burglary of All Time
Barry Zalma
Dec 26, 2023
Read the full article at https://lnkd.in/gNqYPNt7 and se the full video at https://lnkd.in/gsiucBGm and at https://lnkd.in/gf_aEdNr and at https://zalma.com/blog plus more than 4690 posts.
This is a Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help Everyone to Understand How Insurance Fraud in America is Costing Those who Buy Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After twelve months trying to get insurance on over $3,000,000 in jewelry and a like amount of fine arts, a Taiwanese man who was a wanted criminal in his own country convinced two American insurers to agree to insure him against the risk of loss to the contents of his home.
To obtain the insurance he concealed from the American insurers that he was, at the time he purchased the insurance: an alien a court had ordered deported; that in his home country he was a wanted criminal; that he had left his home country with over $60,000,000.00 in checks unpaid; that every insurer at Lloyd’s, London had refused to insure him; that all of his property was appraised for more than twice its actual retail replacement value; and that most of the antiques he had insured in reliance on an “appraisal” attesting to a $3,500,000 value, were fakes.
His application gave the impression that he was a Beverly Hills, California investor with appropriate concerns for security. He also made it clear that he was willing to pay a high premium for the protection, a fact that should have raised the concern of the underwriters asked to accept the risk of loss of his property.
Within seven days of the delivery of his policy, a “burglary” was reported. A total of $7,000,000.00 of specifically identified and scheduled personal property was reported stolen. He claimed an additional $2,000,000 in unscheduled diamonds were stolen from their hiding place in one of his 50 suit coats hanging in his master bedroom closet.
The burglars had no problem effecting the burglary because the Insured was out of town. The burglars circumvented, what the insurers were told was a sophisticated central station alarm system, because it was merely a local gong type alarm that had never been turned on. They defeated the promised class E safe (one that requires at least 30 minutes to drill out the lock) with a simple wood drill since the actual safe was nothing more than a locking gun cabinet built into a closet.
The insurers refused to pay because they believed the insured made material misrepresentations and he concealed material facts in the purchase of the insurance.
The Insured retained a prestigious plaintiff’s bad faith lawyer to represent his interests. Because of the reputation of counsel for the Insured and the fear of an extra-contractual judgment, the insurers (against the advice of three different defense firms) settled for more than $4,000,000.00 of the $7,000,000.00 claim. The Insured’s lawyer took a contingent fee of 50%, the insured’s creditors took 20%, and the Insured took what remained. Because the IRS was unable to assert its multi-million-dollar lien in time, it got nothing.
The insurers spent hundreds of thousands of dollars defending the lawsuit brought by the insured. To save $3,000,000.00 off the policy limit claim they paid $4,000,000.00 which they did not owe.
There was no question the insured committed fraud when he got the policy. There was little question that the burglary was also a fake. The burglars even threw some of their loot off a local pier where it could be discovered to make everyone believe it was a legitimate burglary.
Even if the burglary was legitimate, there was clearly no coverage. A court with just a small amount of gumption would have declared the policy void.
The Insured had misrepresented that he had been refused insurance by several insurers and was canceled by another. He concealed the fact that he had neither a central station alarm system nor a class E burglar resistant safe. The promises he made when he bought the policy were false. The insurers believed the misrepresentations and facts concealed were sufficient to void the contract.
After a trip to China to take an examination under oath of the insured’s sister – who was also named as an insured – and two years of discovery, counsel for the insurers moved the court for summary judgment confirming rescission of the policy. The evidence available of multiple misrepresentations and the concealment of material facts, rescission was warranted and counsel was confident the court would agree.
The day before the insurers’ counsel were to appear for oral argument on the motion for summary judgment the insurers and the insured’s lawyer settled the suit without communicating with defense counsel and against the recommendations of defense counsel.
Common sense showed that an insured with a legitimately acquired $7,000,000 valued policy would never settle for less than $7,000,000 if he suffered a true loss. That he was willing to settle should have convinced the insurers the claim was fraudulent. Rather, the reluctance of the court to take a position (it had moved the oral argument three times), lack of action by the courts and the police agencies, and the lack of courage on the part of the insurers, cost the insurers involved more than $4,000,000 in settlement payments and many thousand dollars in defense and investigation costs.
To recover the money lost by paying the Insured the insurers could only pass the payment on to other, honest, insureds and the reinsurers.
The insurers’ fear of punitive damages that shadow every claim made in the states that recognize punitive damages for breach of the covenant of good faith, seemed to be impossible for the insurers to overcome. To stop the criminal who brings a fraudulent claim, insurers must not be frustrated by the continual refusal of the authorities to prosecute insurance fraud. They should decide to recoup the monies paid to the perpetrators of fraud from the fraud perpetrators by judgment or orders of restitution, rather than the honest insured whose premiums are raised to cover the payments made to the perpetrators.
Some insurers believe they have no choice but to settle because the exposure to punitive damages in a bad faith suit, no matter how frivolous, is so great that a jury might believe the fraudsters arguments.
Those insurers fail to realize that paying those who perpetrate fraud, to eliminate the exposure to punitive damages, regardless of the cost of defense of bad faith lawsuits brought by frauds, is not cost effective. Bad Faith is a two-way street. Even though insurers cannot sue for tort damages as a result of an insured’s bad faith they may sue to recover the damages they incur as a result of fraud. Criminal courts, when they convict insureds of fraud should be encouraged to order the person convicted to make restitution of all investigative and legal expenses incurred by the insurer as a condition of probation.
man wearing brown notched lapel suit jacket sitting near brown wooden table
Photo by Sidorova Alice on Unsplash
When an insurer makes payment of $4,000,000 for a claim it knows is fraudulent [even if it is a $3,000,000 savings over the policy limits] the insurer is issuing an engraved invitation to every con-artist in the country to move in and try the same thing. The expense is not for just the obvious fraudulent claim that is paid. The major expense is all of the other claims that are made with the knowledge that, when pushed, the Company will pay.
Once an insurer gets a reputation for paying for fraudulent claims rather than fighting with all of its assets those who perpetrate fraudulent claims will gather like vultures over a rotting carcass ready to pick the bones clean. The reverse is also true: when an insurer makes it clear it will never pay a fraudulent claim, regardless of cost, those who earn their living by fraud will stay away.
It is time that prosecutors learn that the victim is not the giant insurance company but each and every person who buys insurance.
(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 my 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...
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 and let them subscribe to the blog and videos.
Go to https://lnkd.in/gwEYkxD.
Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.
Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
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 ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.
In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
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
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.
This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone 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."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...