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.
Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
Go to Zalma’s Insurance Fraud Letter at https://zalma.com/zalmas-insurance-fraud-letter-2/
Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Is Exhaustion Required to Seek Declaratory Relief From an Excess Insurer?
Post 4578
Posted on November 9, 2026 by Barry Zalma
In Fox Paine & Company, LLC, et al. v. Twin City Fire Insurance Company et al., S287404, 593 P.3d 832, 593 P.3d 838, 346 Cal.Rptr.3d 541, Supreme Court of California, (July 27, 2026) the Supreme Court noted that Insurance is sometimes procured in a series of layers, with an insured acquiring a primary insurance policy that provides an initial layer of coverage for loss or liability and an excess insurance policy or policies that provide additional coverage in the event the underlying coverage is exhausted. Usually, the first layer of coverage must be exhausted before the excess layers are available to the insured.
Exhaustion
Fox and Paine’s investment-firm dispute generated extensive litigation and competing insurance claims. Their insurance tower consisted of a $10 million primary policy and four $10 million excess layers.
The Fox Parties alleged that insurers paid their rivals, withheld information,...
Payment of Fines & Completion of Probation Reinstates Right to Vote
Post 4576
Posted on November 5, 2026 by Barry Zalma
To Restore Voting Rights The Felon Must Pay Fines of $546.00
In Florida Supreme Court Mediator Ethics Advisory Committee, ETH F-26-377, No. F-26-377 (October 29, 2026) citizen unnamed and to Ron Desantis Governor, Cord Byrd the Secretary of State Florida Division of Elections provided an advisory opinion to a convicted felon about his right to vote:
To: [redacted] We received your request for an advisory opinion. You indicate that you have one or more felony convictions and request whether you are eligible to vote, including whether you have any outstanding legal financial obligations under section 98.0751, Florida Statutes, and, if so, a statement of the amount that must be paid to make you eligible to vote, and an explanation of how the amount was calculated.
The Division hereby responds to your request pursuant to its legal authority under section 106.23(2), Florida Statutes, and Florida ...
Administrative Review Permits the Agency to Apply its Expertise
Post 4574
In Erwin Jordan Castro Valdez v. Warden, Otay Mesa Detention Center, No. 26-cv-06147-BAS-JLB, United States District Court, S.D. California (October 30, 2026) Castro Valdez, a Cuban national paroled into the United States, was arrested on June 23, 2026, for alleged insurance fraud, grand theft, and making a false report to law enforcement. In his first habeas action, the district court ordered a bond hearing within fourteen days to determine whether the changed circumstances justified revoking his parole.
An Immigration Judge subsequently denied bond because of his pending state criminal case. Castro Valdez filed a second petition under 28 U.S.C. § 2241, challenging that determination and requesting immediate release without first appealing to the Board of Immigration Appeals (BIA).
LAW
According to the supplied text, § 2241 does not expressly require administrative exhaustion, but courts impose exhaustion as a prudential requirement. ...
