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True Crime Stories of Insurance Fraud Number 20
\\n\\nThe 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. He lived in the capital city of Yerevan in the shadow of Mount Ararat. Here, like all Soviet citizens, before the fall of the Soviet Union, he supplemented his income by buying and selling in the black market. He specialized in jewelry and diamonds.
\\nBy 1977 he had amassed, off the pain and suffering of others, over 300 carats of diamonds and diamond jewelry. Most of the diamonds were old mine cut, popular in Russia in the 1890\\u2019s, but now out of date. The wealth he had amassed frightened him. He knew that eventually the Soviet Police would catch him and send him to a Gulag. He was committing the most heinous of Soviet crimes. He was a successful entrepreneur. He went to the American Consulate and got a visa as a refugee. He had convinced the American Consulate the Soviet Government was censoring his poetry. He wanted freedom to write. Poetry is not an essential industry.
\\nThe Soviet Government agreed to his immigration. He came directly to Los Angeles and settled in the Armenian community in the hills of Glendale, California. He brought with him all but twenty carats of the diamonds. He needed to use some of his 300 carats to bribe Soviet Customs Officials.
\\nThe insured went to a new broker. The new insurer did not require an inspection of the premises by anyone other than the broker. It issued a million dollar policy. Two weeks later, before the insurer could change its mind, the poet\\u2019s oldest son locked the poet and his mother, the poet\\u2019s wife, and the gallery owner in the small four by four bathroom. The son then took home all the inventory of Poetry Jewelers. The three people locked in the bathroom waited ten minutes to make sure the oldest son had driven away and then pushed the holdup button secreted in the bathroom because it is common for thieves to lock jewelry store owners in the bathroom. The three captives also pounded on the wall to gain the attention of the restaurant owner next door. The police were called and broke the door down to free the poet, his wife and the gallery owner. The loss exceeded a million dollars. After five days of trial with testimony from nine in the morning until six every night, the jury went off to deliberate. 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.
\\nThe result was unusual. The cost was enormous. The investigation cost, court costs, expert witness fees and attorneys\\u2019 fees exceeded $500,000. The insurer defeated the claim for one million dollars in lost jewelry and fifty million dollars in punitive damages. The word went out. This insurance company fights. Do not insure with them.
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