Happy 250th Anniversary America
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5384
ZIFL – Volume 30 Issue 13 July 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th 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/ This issue contains the following articles about insurance fraud:
A Very Expensive, Supposedly Successful, Fraud
Arbitration Concluded Multimillionaire was Defrauded by Key Employee Who Initiated the Arbitration
Fahad Ghaffar was found to have breached his fiduciary duty by advising John Paulson against making an investment in a payments company, then turned a $35.7 million profit by buying the shares himself, the arbitrator, Carolyn Demarest, said. She also found that Ghaffar hid his interest in a software company in which he “fraudulently induced” Paulson to make a $12.2 million investment.
John Paulson was awarded more than $47 million by Demarest who found that the billionaire’s former Puerto Rico business partner cheated him on one investment and usurped him on another.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
Court Applies the Law as Written
Failure to Plead Sufficient Facts to State a Facially Plausible Claim Defeats Suit
Allegedly Screwed by Insurance Brokers Judge Allows Plaintiff to Continue Some of His Suit
In Wilfredo Cruz, et al. v. Bay Point Insurance LLC, et al., Civil Action No. GLR-25-44, United States District Court, D. Maryland on June 10, 2026 dealt with a suit brought by Wilfredo Cruz who alleged that Bay Point Insurance LLC, Karl Smith, and David Small committed insurance fraud in connection with insurance policies brokered for Cruz’s trucking business, W&DC General Contractor, LLC.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
National Health Care Fraud Takedown Results in 455 Defendants Charged in Connection with Over $6.5 Billion in Alleged Fraud
Although I Usually Only Publish Convictions I Thought This DOJ Press Release Was Important
Record Medicaid Fraud Charges Largest Number of States Participating in Health Care Fraud Takedown History
The Justice Department on June 23, 2026 announced the 2026 National Health Care Fraud Takedown, which resulted in charges against 455 defendants, including 90 doctors and other licensed medical professionals, for their alleged participation in health care fraud and opioid abuse schemes involving over $6.5 billion in false claims and significant patient harm, including death. Today’s Takedown represents a new era in federal, state, and international cooperation to combat health care fraud: cases in 56 federal districts and 45 U.S. states and territories, with 50 state Medicaid Fraud Control Units participating, the most in Department history.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
More McClenny Moseley & Associates Issues
This is ZIFL’s forty-sixth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. This is truly becoming a never-ending story.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
Federal Insecticide, Fungicide, and Rodenticide Act Requires Reversal
Million Dollar Roundup Verdict Reversed by SCOTUS
FIFRA Preempts the State-Law Failure-to-Warn Claim
In Monsanto Co. v. Durnell, Certiorari To The Court Of Appeals Of Missouri, Eastern District, No. 24–1068, argued April 27, 2026, decided June 25, 2026, the Supreme Court reversed a $1 million judgment found by a Missouri state court.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
Health Insurance Fraud Convictions
Ahold Delhaize USA Inc. to Pay $40M for Allegedly Reporting Inflated Drug Prices on Claims to Federal Healthcare Programs
Ahold Delhaize USA Inc. (Ahold Delhaize), headquartered in Quincy, Massachusetts, agreed to pay the United States and participating states a total of $40 million to resolve allegations that it violated the False Claims Act and state analogs by reporting inflated “usual and customary” prices on claims to federal healthcare programs.
Read the full article and the full 7-1-2026 issue of ZIFL and dozens of convictions at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf.
Lawyer & State Senator Permanently Disbarred
Taking Money From a Client Trust Account Warrants Severe Disciplinary Sanction
Stealing from a Client is Reprehensible
In In Re: Derrick D.T. Shepherd, No. 2026-OB-00357, Supreme Court of Louisiana (June 25, 2026) petitioner Derrick D.T. Shepherd, a former Louisiana State Senator and attorney, pleaded guilty in 2008 to conspiracy to commit money laundering after using his client trust account to help launder nearly $141,000 in fraudulently generated bond fees. The Louisiana Supreme Court permanently disbarred him in 2012, finding that his criminal conduct, use of a trust account, false billing records, and public position warranted the most severe disciplinary sanction.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
Other Than Health Insurance Fraud Cases
Former Commissioner of the Virgin Islands Police Department and Former Management and Budget Director Sentenced for Bribery Scheme
Ray Martinez, the former Commissioner of the Virgin Islands Police Department (VIPD), and Jenifer O’Neal, the former Director of the Virgin Islands Office of Management and Budget (OMB), were sentenced for their roles in a procurement fraud, bribery, and money laundering scheme. Martinez was sentenced to 10 years in prison and three years of supervised release, and O’Neal was sentenced to seven years in prison.
Read the full article and the full 7-1-2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/06/ZIFL-07-01-2026.pdf
(c) 2026 Barry Zalma & ClaimSchool, Inc.
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Barry Zalma
4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847
310-390-4455, [email protected], https://zalma.com
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.
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Go to Zalma’s Insurance Fraud Letter at https://zalma.com/zalmas-insurance-fraud-letter-2/
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 ...
Specific Jurisdiction is Related to an Activity Conducted Within the Forum State.
Post 5408
Posted on July 23, 2026 by Barry Zalma
In New Jersey Manufacturers Insurance Company v. Changan Chu, No. 14-25-00965-CV, Court of Appeals of Texas, Fourteenth District (July 21, 2026) NJM issued an automobile insurance policy in New Jersey to Changan Chu while Chu was a New Jersey resident.
Chu was injured in an auto-pedestrian collision in Harris County, Texas, allegedly caused by an uninsured driver. Chu sued the driver and NJM, seeking a declaration that his UM/UIM coverage was in force and provided $300,000 in limits. NJM filed a special appearance supported by affidavit evidence showing it was a New Jersey corporation with its principal place of business in New Jersey, had no offices, agents, employees, advertising, registration, or insurance business in Texas, and did not insure any person, property, or risk located in Texas. Chu did not file evidence opposing the special appearance.
LAW
A Texas court may exercise ...
Victims of Fraud Should Always Fight Back Proactively
Post 5398
Posted on July 21, 2026 by Barry Zalma
Cross-Claim Against Fraudsters Successful
In Dual Diagnosis Treatment Center, Inc., et al. v. Health Net, Inc., et al., Health Net Life Insurance Company, B331260, California Court of Appeals, Second District, Third Division (July 16, 2026) a trial verdict in favor of Health Net and against Sovereign, a network of mental health and substance use disorder treatment centers, and Health Net, Inc., Health Net of California, Inc., Health Net Life Insurance Company, and Managed Health Network, Inc. (collectively, Health Net) was appealed to the California Court of Appeals.
FACTUAL BACKGROUND
Between 2014 and 2016, Sovereign submitted claims to Health Net for medical care provided to more than 400 patients. Health Net paid some claims but rejected many others. Sovereign, as the patients' assignee, sued Health Net for breach of contract, insurance bad faith, and breach of the Employee Retirement Income Security Act of 1974 (ERISA)....
The Only Solution to Fraud is to Take the Profit Out of the Crime
It Takes Courage to Fight the Fraudster
Post number 5395
Posted on July 16, 2026 by Barry Zalma
In Vivian Maritza Triana Marin, Sebastian Arroyave Penagos, and Daniel Arroyave Penagos v. Marc J. Paynter and Transport Marc Paynter Inc., No. 23-CV-6498, United States District Court, E.D. New York (July 10, 2026) Plaintiffs sued Defendants in diversity after a rear-end collision on the Whitestone Expressway in Queens, New York. Plaintiffs were in a Subaru driven by Vivian Maritza Triana Marin, while Defendant Marc J. Paynter drove a Transport Marc Paynter Inc. tractor-trailer.
Facts:
Dashcam footage from Defendants’ vehicle showed Plaintiffs’ vehicle braking suddenly in the left lane despite an open roadway ahead. Marin could not identify a specific reason for braking, the passenger plaintiffs did not know why she braked, and a non-party witness testified that Plaintiffs’ vehicle stopped abruptly for no apparent reason.
The Accident occurred when ...
