Posted on March 30, 2026 by Barry Zalma

Insurance Fraud, a Way to Reduce Violent Crime
Post number 5313

A Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story helps 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.

She Taught Her Customers The Swoop And Squat:

Recently the California Insurance Department’s Fraud Division arrested a young woman in Los Angeles County for operating an insurance fraud school. She advertised her classes in the “Penny Saver” an advertising sheet distributed free to the public and a print version of Facebook, X Craig’s list. She had operated for several years teaching methods of committing automobile insurance fraud. Only after a police officer enrolled in one of her classes was she arrested.

Her defense counsel suggested that she admit the school existed but that she had no criminal intent. It was her intent only to reduce violent crime in her neighborhood.

The teacher lived in a Latino barrio in East Los Angeles. An area racked with violent crime and gangs. The teacher would testify that robbers shot a close relative in the armed robbery of a convenience store. She felt helpless to change this situation.

She learned, as a result of an automobile accident, the ease with which her claim was paid. She recovered more money than she expected from the insurer with ease. They never verified any of her claims.

She became a student of insurance. She visited the local library and read everything she could. She applied for, and obtained a job as trainee adjuster. She learned to investigate claims. She learned that claims investigations required little effort.

With the knowledge she gained from her reading and employment with an insurer she started her school. The school would teach gang-bangers that robbing convenience stores was dangerous. Store owners shot back. Police tracked down and arrested armed robbers. The police showed no interest in insurance fraud. The money is easy and the work is safe.

She believed, correctly, that if a gang-banger learned how easy it was to steal from an insurance company he would never take the risk of robbing a convenience store or mugging innocent individuals. Every Tuesday and Thursday, she would gather thirty people in her living room and impart her insurance knowledge. She never, personally, participated in insurance fraud. She merely taught people how to do it.

She gathered names of physicians and chiropractors working in the barrio. These health care professionals had no qualms about producing false and fraudulent medical reports. They only wanted the face amount of the billing. She got from her fellow adjusters the names of attorneys who would not ask questions when claimants would appear in their office five times a year. For one third of the recovery they filed suit against anyone.

She taught her customers the swoop and squat:

a car with four passengers pulls in front of a Mercedes or Lincoln, stops short and is rear-ended. All four occupants of the vehicle make claim against the owner of the Mercedes for soft tissue injuries. She explained the uninsured motorist fraud where the claimant’ dents his vehicle by backing into a building or tree. The claimant then reports a hit and run automobile accident to his insurer.

She taught her students how to work together. One plays the insured and the other plays the claimant. She preached it was safer to switch roles regularly. She taught her classes how to pursue a slip and fall claim against a grocery or restaurant.

She taught it was important that before they fall there must be a spilled liquid to slip on.

She did role playing with each of her students. She helped them become familiar with the methods by which adjusters take recorded statements. She explained to each of her students that they should never lie to an adjuster. She explained that absolute truth was required. Only the facts of the accident and the injuries can be fabricated.

She taught each of the appropriate symptoms for a cervical sprain and a lumbosacral sprain or strain.

She explained to each of them the physical therapy that they must describe receiving [even though they would never receive any physical therapy] to convince the adjuster that they had treated with the doctor.

She taught how to negotiate with the adjuster and make the adjuster feel confident. She explained that if they could settle with the adjuster they would keep more of the fruits of the crime.

Her lessons were effective. She trained hundreds of gang bangers to be insurance claimants. All of them made a good living from insurance fraud. They found no reason to commit violent crimes. From the time her class started until her arrest the violent crime rate in the barrio went down twenty percent. Automobile insurance fraud, unknown to the defrauded insurers, in the barrio went up forty percent. The teacher was doing a service for her community. She charged her students for this service, but only enough to pay her rent and survive. She did not become wealthy from the school for insurance fraud. She believes she saved the lives of many convenience store clerks and gang bangers.

At her trial she explained to the judge and jury that she believed the court should honor her for her efforts to reduce violent crime. Punishment for preventing violent crimes, she argued, is inappropriate.

The argument was a good one but the judge applied the law and the teacher was sentenced to spend the next five years in state prison. Her students continue to make a good living making false insurance claims.

Adapted from my book “Insurance Fraud Costs Everyone” Available as a Kindle Book and Available as a Paperback

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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