True Crime Stories of Insurance Fraud Number 20

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Sometimes an attempt at insurance fraud is defeated because the fraudster is too stupid to succeed.

Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. 

The Poet Who Tried Insurance Fraud

The insured was a poet. Before immigrating from Soviet Armenia, he was a member in good standing at the Armenian Poets Union. They paid him for his work five hundred rubles a month.

At a social gathering at the Armenian church, he expressed his concerns to an acquaintance who ran an art gallery. The gallery owner told the poet he would rent him a portion of his art gallery to open a jewelry store. The poet only needed to buy an insurance policy insuring against loss of an inventory of jewelry. The insurer would not ask him before issuing a policy to prove he had any jewelry but would take his word. The poet was incredulous.

The next day Poetry Jewelry was born. Shortly thereafter he reported an armed robbery.

The loss exceeded a million dollars. Their million dollar fraud would have been successful but for an unusual coincidence. The insurer hired as its adjuster the same firm that had inspected the store for the first insurer. 

The adjuster gathered the evidence together and presented it to the insurer. They rescinded the policy and denied the claim.

The insured and the gallery owner, his mentor, were shocked. They did not give up. They became more aggressive. They retained a lawyer. The insurance company spared nothing. 

At trial, although well-rehearsed, the poet’s lies began to compound. The testimony of the inspector established the inventory was not there at the time of the inspection. The jury returned with its verdict in forty-five minutes. The verdict was for the defense. The jury was convinced that the poet had presented a fraudulent claim and that the insurance company had properly rescinded the policy.

The word went out. This insurance company fights. Do not insure with them.

The insurer saved more than the payment of the poet’s claim. It saved all the other fraudulent claims that would have been presented had they not fought. 

© 2022 – Barry Zalma

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.

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