Don’t Sweat the Small Fraud
Post 5194

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"Barry Zalma, Esq., CFE presents blog posts and videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of a True Crime Story of Insurance Fraud with the names and places changed to protect the guilty is based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim."

The Accidental Creation of an Insurance Fraudster

The claimant wore plastic framed eye-glasses with thick lenses. He literally fell into a life of insurance crime and fraud.

One day the claimant was walking past a fine restaurant when he fell and broke the frames of his glasses. The manager saw him fall. She rushed out, helped him to his feet and checked his physical condition. He thought he was uninjured but the frames of his glasses had broken at the bridge.

The restaurant manager, fearful of a lawsuit, offered him lunch on the house and asked the cost of the frames. When he told her $80.00, she went to the register and brought him four crisp twenty-dollar bills. The claimant could not believe his good fortune. It was so easy. From that day on he made a good living from many small frauds.

His method was simple and unique at the time. No particular individual was severely harmed by his fraud. Wherever he went he carried with him the broken pair of eye glasses. He would walk into a restaurant in an area far from where he lived. He would hold his broken glasses in one hand and walk up to the cashier squinting. He would say:

“I tripped over your carpet, fell and broke the frames on my glasses. They cost $80.”

One of two things would always happen:

1 A manager of the restaurant would take four twenty dollar bills out of the cash register, apologize, buy the claimant lunch and send him on his way; or
2 the manager took a formal report for the restaurant’s insurance company.

In either event the claimant would profess he only wanted replacement of his glasses. He told the Manager or the adjuster for the restaurant’s insurance company that he would forget any possible personal injuries he may have suffered.

If they did not pay him on the spot, an insurance adjuster would issue a check instantly. No adjuster would take a chance on a lawsuit if he could settle a claim for $80.00.

The claimant would stop and collect his $80 in five to seven restaurants a day. He would seldom buy a meal. He would also, on a small portable typewriter, write letters to various restaurants and other businesses whose names and addresses he got from the telephone book. He would write simply: “I tripped and fell in your lobby and broke the frames of my glasses. Enclosed is the bill from my doctor for replacement. Please send me your check for $80.”

He would send out twenty such letters a day to businesses at random. At least five would merely send him an $80 check in the return mail.

With his earnings, all of which were tax free, the claimant bought a three-bedroom condominium on the west side of town. He furnished the condo with fine furniture, original art and a few antiques. Soon he was driving a new Tesla all electric roadster.

He eventually bought a word processor. He used it with a mailing list he purchased from a credit card company of all its vendors to send out mass mailings of his $80 demand. On good days he would receive ten to twenty $80 checks from varying businesses.

He quickly used up the businesses in his community. He sold the condominium and bought a motor home. He moved from city to city staying in no location more than sixty days.

He would still be doing this multiple fraud if he had learned to spell. His letters always misspelled the word “frames” as “frams.” This misspelling lent a certain amount of credibility to the claims he was presenting. However, one bright adjuster about to write his fifth check for broken glasses “frams” remembered that the four other claimants that he had paid (with different names) misspelled “frames” the same way. He refused to pay.

He reported the scheme to the local police and the insurance fraud bureau. Neither showed any interest in such a petty theft. They refused to prosecute. They even refused to investigate to determine whether they should prosecute. The reported fraud was just too small to expend the effort and funds to investigate.

The claimant left that city quickly. Unfortunately, the claimant’s Achilles heel cut into his profits. The adjuster spread the word to all the adjusters he knew, put out an alert on LinkedIn and several insurance and investigation discussion groups to watch out for the broken “frams.” The claimant’s cash flow from insurers dwindled.

Somewhere in North Dakota or Kansas the claimant is still making a healthy living by reporting to honest business people that he has broken the frames on his glasses.

Eighty dollars seems a small amount to avoid a lawsuit. The claimant, with multiple eighty-dollar claims, would average, in the two months he would limit himself to in any community, $2500 a day. His collections were either in person or by mail. He almost never bought a meal.

He was small stuff and no one wanted to bother with. Yet he stole, in his own small way, more than $600,000 a year. He took long vacations from his job. He stayed in the best resorts. He lived the good life because an $80 fraud is just too small to bother businesses, insurers, police and fraud investigators.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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