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True Crime Story of Insurance Fraud Number 17  

https://zalma.com/blog

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. This Video Blog of True Crime Stories of Insurance Fraud with the  names and places changed to protect the guilty are all 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.  Career criminals are not the only people who perpetrate insurance fraud.  

The temptation has become so great that almost anyone who is given the  opportunity, will try. Those who do not premeditate insurance fraud are  called perpetrators of soft frauds. Most are small. Some are not. The  story that follows is a not a soft fraud but one that was premeditated  for a great deal of money by a person who should have known better.  Some years ago, residents of a hillside community received a letter from  the county engineer informing them that their houses sat on an active  landslide. The engineers concluded that an unusual amount of irrigation  water, water from septic systems, and rainfall lubricated an ancient  landslide under their homes and that the slide was moving. The engineers  were concerned because it was moving at the rate of three inches a  year.

 The houses sitting on the landslide were also moving a few inches a  month. Within ten years the houses would be torn apart by the movement  if nothing was done to stabilize the hillside.  Homeowners, living on the hill, noticed cracks in the plaster walls.  Concrete block walls split at the mortar seams. Cracks formed in the  foundation systems. Since the homes on the hill were all valued from  $500,000 and $5,500,000, the monetary value of the potential loss of 300  homes on the landslide was enormous. Many of the homeowners gathered  and hired counsel to pursue persons responsible for their damage.  On advice of counsel, the homeowners reported claims to their insurers.  Most of the insurers denied the claims because of clear and unambiguous  exclusions for earth movement or subsidence. The insurers concluded that  the predominant cause of the damage was the excluded peril of earth  movement. The claims were fairly and reasonably rejected. Some of the  homeowners accepted the decision of their insurers. Some of the  homeowners sued their insurers. The imaginative homeowners, like the  insured, found a better way.  Fraud Defeated by Investigation  As a lawyer the intentional concealment of a material fact with the  intent to deceive an insurer to its detriment is fraud, a criminal act,  and if convicted, grounds for disbarment. For that reason, the insured  accepted the denial and did nothing further about the claim.  Had the insurer not done the minimum investigation and retained the  services of a competent engineer it would have paid the $2,500,000.00  claim. Had the insured\\u2019s fraud been presented to a prosecutor he could  have been arrested, tried and convicted of attempted insurance fraud and  would have been disbarred.  He was lucky that the insurer agreed to a mutual rescission of the  policy, a return of the premium, and to forget what was attempted.  

\\xa9 2022 \\u2013 Barry Zalma