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 States. In their hometown of Volgograd they were well-known to the local police. The brothers had conducted a crime wave in the town since they turned ten. They were involved in burglary, armed robbery, smuggling, drug dealing and prostitution.
To avoid arrest and a long sentence in a Siberian Gulag, the brothers invented a Jewish mother. They were then eligible to leave as victims of religious persecution. Their application for a Visa to the United States as seekers of religious freedom was accepted immediately. The “Save Soviet Jewry” organization, who knew nothing of their criminal background, financed their trip to the United States.
Upon their arrival in the United States they met with acquaintances from the Soviet criminal class who had also escaped to the United States. They learned that the police were quite effective at catching and prosecuting strong armed criminals, but had little concern for perpetrators of fraud.
The brothers, being dedicated criminals, realized that they must become familiar with American language and American procedures. They spent their first year in the United States, living off the money they were able to smuggle out of the Soviet Union. They studied English and American business procedure at a local high school. One of their classmates in their English as a Foreign Language class was a salesperson for Blue Sword of California, a health insurer. They bribed their classmate to sell them a health insurance policy so they could learn how the system worked. Pleasantly surprised the brothers learned that if they sent a bill from a health care provider to Blue Sword a check in the same amount would arrive in the mail. No one would telephone the provider or verify that the services had been rendered. All they needed was the proper form filled out in the proper manner.
From what they learned in their business class they created their first business entity, Mobile Medical Services. The filing of a fictitious business name statement showing that the brothers Karamazov were the owners of Mobile Medical Services was enough to put them in business.
The plan was simple: with money obtained from a Small Business Administration loan fund set up for recent immigrants, they would lease a Ford Econoline van; they would then lease various pieces of medical testing equipment from local vendors.
The fact that they had no experience or training in the operation of such equipment was irrelevant. All that was necessary was that the equipment looked real. They were immediately provided a loan from the SBA to pay the first three months’ rent.
They visited their local instant printing shop and had a flier printed using the most seductive of all advertising tools.
The flier said only, in forty-point type:
FREE MEDICAL TESTING - Only for Union Members and Government Employees
They then set their van up in a parking lot of a local grocery store and waited for the customers to come in. Each person coming in for free medical testing would fill out a form and assign all of their medical benefits to Mobile Medical Services. They would be seated on an EKG machine, weighed and have their blood pressures taken. They would then be sent on their way.
The brothers Karamazov created a totally fictional account of the medical testing performed on each of their walk-in clients. All of their clients had insurance or were military dependents covered by the CHAMPAS system. The billings were created with the assistance of their classmate, the insurance agent, and averaged between $800 and $1400. Each was justified by a diagnosis of one serious disease or another ranging from pneumonia to cancer.
The brothers sent their billings directly to the insurers of the individual customers. The billings were normally paid without question, although the insurers would reduce the amounts billed by 20% to 30%.
Every two months the brothers would file bankruptcy for the fictitious business and return the equipment to the lessor who knew better than make a claim on a bankruptcy estate. Investigation by the lessor found that the original business had disappeared and its owners were without assets. They would write off the debt.
The brothers would then start a new LLC with the assistance of a typing agency and go to another leasing agent who would find them new equipment.
The brothers, within the first two years of their fraudulent business, had managed to effect gross earnings of $5,000,000 a year. They had twenty mobile vans floating throughout the states of California, Arizona, Nevada and New Mexico. Their profits were growing exponentially.
Each van was insured. When a lessor got close to repossessing a van or its equipment, it would accidentally catch on fire on the freeway. The brothers would recover the total value of the equipment and the van from insurers. The lessors, not named on the policies, would be without recourse.
Had the brothers, from their generous earnings, honestly purchased the medical equipment and the vans, they would probably still be making millions in medical insurance fraud. The adjuster assigned to investigate the “accidental” fires had attended a class on automobile arson given by the California Conference of Arson Investigators. It became obvious that the van fire was an arson. He reported this fact to the Fraud Division of the State of California, Department of Insurance and to the local fire department arson unit.
The insurer retained counsel to examine the brothers under oath. They refused to testify. Their claim was denied since an examination under oath is a condition precedent to the insurance policy and the breach of that condition eliminates coverage. The brothers did nothing to enforce their claim, they just went on to another insurer.
At the Fraud Division, when the fire was recorded into the computer, it noted four other reports concerning the brothers. It appeared they were unrelated, but an investigator was assigned to look into the brothers Karamazov.
As the investigation proceeded, the Fraud Division learned more facts about the brothers that required a team of Fraud Division investigators. They were joined by investigators from the United States Postal Service. The team worked for three years developing a prosecution against the brothers Karamazov. When the indictments came down the investigators had established that the brothers were involved in fraud totaling over $80,000,000.
Before they could be arrested, the brothers returned, wealthy, to Russia. They were certain that they had succeeded in the fraud of the century. On their return to the former Soviet Union, they lived like kings. They considered themselves inviolable.
Confident in their skill as criminals, and tired of living in the Urals, they took a holiday to the South of France. When they arrived, their names were noted by INTERPOL who contacted the United States Marshal Service at the US Embassy. The brothers were arrested and extradited to the United States with the blessings of the French Government.
The trial, in the United States District Court, Los Angeles, was lengthy and involved the brothers and dozens of their co-conspirators. Two of the brothers pled guilty and one was convicted after trial. They are all, to this day, serving time in a federal penitentiary. They have been ordered to make restitution and pay enormous fines.
The chance of the insurers ever recovering any of the $80,000,000 they admit they stole is minuscule. Whatever remains of the assets they took with then to Mother Russia as well protected in banks in the Cayman Islands and Switzerland.
For the brothers Karamazov, the extent of their greed was their downfall.
Crime paid very well for three years and now they are paying for their crime in the federal penitentiary knowing that when they are released they will still be wealthy since the U.S. Government was unable to track down their assets.
(c) 2025 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/subscribe
Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://lnkd.in/gwEYk
The Largest Residential Burglary of All Time
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 ...
Chutzpah is not Enough
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.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
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.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
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...