INSURANCE FRAUDSTER MUST PAY INSURER FULL RESTITUTION
Post 5049
See the full video at https://lnkd.in/gmW8qimV and at https://lnkd.in/g_AYN2N7, and https://zalma.com/blog plus more than 5000 posts.
Plaintiff Liberty Insurance Corporation (“Liberty”) issued a homeowners insurance policy to Defendant Jack Strunk that was active when his home was damaged by fire. Strunk made two insurance claims: one for fire damage and another for alleged theft of certain personal property after the fire. Strunk sued Liberty for the payment of the alleged damages. That case was removed to federal court and ultimately settled by Liberty paying $100,000 to Strunk.
In Liberty Insurance Corporation v. Jack A. Strunk, Civil Action No. 5:24-128-DCR, United States District Court, E.D. Kentucky (April 4, 2025) Liberty sued Strunk for return of the amounts paid in settlement after he pleaded guilty to defrauding Liberty.
THE CRIMINAL CONVICTION
Strunk was convicted of felony insurance fraud. This is not contested as Strunk admited to this in his Answer. Strunk pleaded guilty to, and was convicted of, a criminal fraudulent insurance act based on his conduct in falsely reporting the property as stolen when he filed an insurance claim with Liberty. Liberty sued to recover the $100,000 settlement because Strunk breached the homeowner policy when he fraudulently alleged certain items were stolen.
Strunk was represented by counsel at the onset of this case who later withdrew because of the defendant’s indigency. No counsel entered an appearance. While Strunk participated in submitting a proposed discovery order, he has not been involved since.
MOTION FOR JUDGMENT ON THE PLEADINGS
Liberty filed a Partial Motion for Judgment on the Pleadings, contending that Strunk breached the insurance contract entitling them to the return of the $100,000 only to be offset by restitution Strunk paid pursuant to his plea. The matter was referred to United States Magistrate Judge Edward B. Atkins who directed Strunk to respond to the motion within a specified time only to see no response from Strunk.
Magistrate Judge Atkins then issued a Report and Recommendation (“R&R”) in which he recommended that the Judge grant the plaintiff’s Partial Motion for Judgment on the Pleadings. The R&R also recommended that the US District Judge enter judgment in Liberty’s favor for the full $100,000.
ANALYSIS
The District Court Judge concluded that Congress did not intend to require district court review of a magistrate’s factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings. While there were no objections filed, the District Judge decided to limit the relief to what the plaintiff requested: that the Court grant the Partial Motion for Judgment on the Pleadings holding that Strunk breached the Policy and caused damages to Liberty in an amount to be determined through subsequent proceedings.
ORDER
Accordingly, it was ORDERED that Plaintiff Liberty Insurance Corporation’s Partial Motion for Judgment on the pleadings was GRANTED. The case remained referred to Magistrate Judge Atkins for limited discovery on the breach of contract damages to determine the amount, if any, Defendant Strunk has paid in criminal restitution to Plaintiff Liberty Insurance Corporation as an offset against the judgment.
ZALMA OPINION
After an insurance fraud perpetrator is convicted the insurer is entitled to receive as a condition of the judgment, restitution for what the crime cost the insurer. Since Liberty defended Strunk’s lawsuit and paid him $100,000 without knowledge of the crime, it sued for full restitution. It is entitled to at least $100,000 plus interest less any restitution Strunk paid into the court in an attempt to comply with the restitution order. No insurer should let a convicted fraudster keep the funds he stole. Liberty did not and will have both the order of restitution and the judgment to get its money back by executing its judgment on any property Strunk still owns, for example the house Liberty insured.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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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 ...
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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.
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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.
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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...
