Zalma s Insurance Fraud Letter

Transcription

1 Zalma s Insurance Fraud Letter The Essential Resource For The Insurance Fraud Professional A ClaimSchool Publication, Written by Barry Zalma, Esq., CFE 2015 ClaimSchool, Inc. & Barry Zalma Volume 19, No. 3 February 1, 2015 Go to Zalma Books E-Books and Articles by Barry Zalma Subscribe to Version, it s Free! Go to my blog Zalma On Insurance at Quote of the Issue Learn the rules like a pro, so you can break them like an artist. Pablo Picasso Lawyers Accused of Fraud Regarding Asbestos Claims RICO Suit Against Asbestos Plaintiffs Lawyers Plaintiffs lawyers have made hundreds of millions of dollars over claims of injuries caused by inhaling asbestos fibers. As a result of the litigation available insurance was exhausted and the manufacturers filed for bankruptcy protection to save what assets they had from further lawsuits. Some of the suits have proved to be improper. Some cases have been filed with the same plaintiff claiming both asbestosis and silicosis, an impossibility. Expert physicians have been prosecuted for faking diagnoses. Lawyer have been sanctioned. Trust funds were set up to pay for the injured who have no available cause of action because of the bankruptcy of the defendant manufacturers. According to a lawsuits presently pending, U.S. personal injury lawyers allegedly concealed evidence and induced clients to commit perjury to drive up asbestos-related settlements and garner bigger fee, in RICO suits filed by Garlock Sealing Technologies. The lawsuits were unsealed January 20, 2015 in the bankruptcy of a gasket maker. The files, Garlock claimed, will show how plaintiff lawyers withheld evidence their clients were exposed to multiple asbestos products in order to extract higher settlements and court verdicts from Garlock. In one case that generated a $37 million verdict in California, Garlock says, a lawyer with prominent Dallas asbestos firm Waters & Kraus flatly denied exposure to dangerous insulation that his client had already admitted, under penalty of perjury, in another proceeding. The records in racketeering lawsuits Garlock filed against several asbestos law firms were unsealed after a fierce battle by plaintiff lawyers to keep them secret. In January, U.S. Bankruptcy Judge George Hodges in Charlotte, North Carolina slashed Garlock s estimated liability for asbestos exposure from $1.4 billion to $125 million after determining that the higher estimates were based upon court cases infected by the manipulation of exposure evidence by plaintiffs and their lawyers. In a pattern long known to defense attorneys, plaintiff lawyers coach their clients to remember working with only products made by the company they are suing, then file claims with bankruptcy trusts alleging other exposures. Shein s lawyer, Daniel Brier of Myers Brier & Kelly, said the racketeering lawsuit is completely without merit and Shein represented its clients ethically and properly. A typical court proceeding that brought about the filing of the RICO suit follows: Q. The last attorney asked you a few questions about brands of insulation, and I just want to throw out a few more. Do you remember seeing any Armstrong pipe insulation at the Devil s River plant? A. No. Q. Do you remember seeing Armstrong block insulation? Zalma's Insurance Fraud Letter -- Page 1 of 18

2 T A. No. Q. Okay. Do you remember seeing any Unibestos pipe insulation at any of the plants? A. No. Q. How about Quigley? A. No. Q. Okay. Now I m going to move on to the cement. Did you see any Harbison Walker asbestos cement at any facilities? A. No. Q. That name doesn t ring a bell? A. No. Q. Okay. How about Quigley cement? A. No. Q. The last one I have is Celotex? A. No. Q. That doesn t ring a bell? A. No. The plaintiff in this case later filed claims with the Armstrong and Harbison Walker trusts, as well as the Pittsburgh Corning bankruptcy. Garlock s Chapter 11 case has drawn national attention due to the company s allegations that personal injury lawyers fraudulently inflated judgments and settlements. The allegations in the unsealed documents appeared to have already been discussed publicly in an opinion in 2014 by Judge George Hodges. That opinion set Garlock s liability for asbestos at $125 million and said the company s past settlements were tainted by fraud. The others were Belluck & Fox of New York; and Waters Kraus & Paul and Simon Greenstone Panatier Bartlett of Dallas. Mark Iola, a partner at Iola Galerston, also in Dallas, was also sued. Specifically, Garlock alleges that the defendants, through their representation of plaintiffs with asbestos-related injuries against manufacturers and distributors of asbestos-containing equipment, engaged in a scheme that involved willfully concealing material evidence in discovery in order to increase the potential for large judgments for their clients and to improve their clients positions in settlement negotiations. The newly unsealed racketeering complaints alleged that four law firms sued Garlock Sealing Technologies, which made asbestos-lined gaskets, while hiding evidence that their clients were exposed to asbestos products made by other companies. The evidence was allegedly hidden because the other companies were bankrupt, making Garlock a much more attractive target for an asbestos lawsuit, according to the complaints. Garlock, a unit of EnPro Industries, filed for bankruptcy in 2010 in Charlotte, North Carolina, in the face of the mounting cost of asbestos lawsuits. The unsealed complaints cite many examples of alleged fraud, including the Shein Law Center s handling of a lawsuit by Vincent Golini, who was diagnosed with deadly mesothelioma in Golini allegedly told Philadelphia-based Shein he was exposed to 14 asbestos products made by bankrupt companies including Owens Corning and Armstrong World Industries. But when Golini sued Garlock he denied exposure to any products made by a bankrupt manufacturer. After Garlock settled with Golini, Shein had Golini file claims with the asbestos trusts that were set up by Owens Corning and other bankrupt makers of asbestos products. Those trusts often pay only a small fraction of a claim. Shein s lawyer, Daniel Brier of Myers Brier & Kelly, said the racketeering lawsuit is completely without merit and Shein represented its clients ethically and properly. The racketeering lawsuits were originally filed in early They were ordered unsealed last summer but only became available to the public January 20, The allegations in the unsealed documents appeared to have already been discussed publicly in an opinion in 2014 by Judge George Hodges which was reported about in ZIFL last year. That opinion set Garlock s liability for asbestos at $125 million and said the company s past settlements were tainted by fraud. The others were Belluck & Fox of New York; and Waters Kraus & Paul and Simon Greenstone Panatier Bartlett of Dallas. Mark Iola, a partner at Iola Galerston, also in Dallas, was also sued. Attorneys for the law firms said Garlock was trying to relitigate settled cases and blame others for the consequences of its own conduct. Zalma's Insurance Fraud Letter -- Page 2 of 18

3 In Williams v. BASF Catalysts LLC, 765 F.3d 306, RICO Bus.Disp.Guide 12,531 (3 rd Circuit, 2014) the opposite was charged and defense counsel were accused under a RICO action for fraudulent concealment and fraud and conspiracy to deprive the victims of recovery for their injuries. The Third Circuit concluded that the trial court erred in dismissing the complaint and allowed the case to go forward. The court concluded that the tort of fraudulent concealment, which encompasses claims of spoliation, does not require Williams to prove that she would have prevailed on the merits of her asbestos-injury case. The alleged facts of harmful reliance suffice to state the claim. It seems, therefore, that there are competing charges of fraud. The difference is that the judge found that the plaintiffs were faced with fraudulent claims by plaintiffs counsel while the Williams case only allows them to try to prove the case. The Wall Street Journal, and others, have reported on this and other fraud situations dealing with trial lawyers and legislators. For example, New York Assembly Speaker Sheldon Silver was last week arrested and accused by U.S. Attorneys of an elaborate kickback scheme. Mr. Silver is alleged to have received more than $5 million in a deal where he allegedly directed state funds to the clinic of an asbestos doctor, who in turn provided him with patients who could be turned into jackpot plaintiffs. Weitz & Luxenberg, a class-action titan, paid Mr. Silver huge referral fees for these names. An equally powerful trial firm in Illinois, the Simmons Law Firm, has shuffled money to the same doctor to obtain its own plaintiffs. Indeed, it s now common for asbestos firms to get claimants this way. And yet when the Silver headlines broke, Weitz & Luxenberg founder Perry Weitz said he was shocked that Mr. Silver was engaged on the law firm s behalf in a political version of standard industry practice. The firm quickly put the Albany politician on leave. You can read the full report at New from Barry Zalma The National Underwriter Company Publishes The Zalma Insurance Claims Library The full Zalma Insurance Claims Library is available at Mold Claims Coverage Guide Today, mold claims are common, but they continue to grow in complexity, involving not only property damage but bodily injury as well. Mold-related lawsuits have dramatically increased over the past few years, and the numbers continue to rise. Coverage requirements and related issues can be complicated and confusing. This resource will remove the complexity and allow the insurer, insured, property owner or developer and their counsel to deal with mold quickly and effectively and, if possible, avoid unnecessary litigation. URL: Price: $98.00 Construction Defects Coverage Guide This insightful and practical two volume resource was envisioned and written by nationally renowned expert Barry Zalma, and it thoroughly explains how to identify construction defects and how to insure, investigate, prosecute, and defend cases that result from construction defect claims. Construction Defects Coverage Guide was designed to help property owners, developers, builders, contractors, subcontractors, insurers, and lenders, as well as their risk managers and lawyers rapidly resolve construction defect claims when they arise and avoid construction litigation. If litigation becomes necessary it will help the prosecution or defense of construction defect suits effectively. URL: Price: $ Insurance Claims: A Comprehensive Guide Insurance contracts and clauses are specific in nature but the manner in which insurance claims are pursued and resolved can be remarkably different. Mistakes in handling a claim can undermine the outcome and ultimate value of the claim itself. Insurance Claims: A Comprehensive Guide is the one resource that enables insurance professionals, producers, underwriters, attorneys, risk managers, and business owners to successfully handle insurance claims from start to finish employing proven, practical techniques and best practices every step of the way. Zalma's Insurance Fraud Letter -- Page 3 of 18

4 URL: Price: $ EIGHT WORST INSURANCE CRIMINALS OF 2014 DISHONORED Extreme Schemers Reveal High Price of Insurance Fraud From Coalition Against Insurance Fraud WASHINGTON, Jan. 21, 2015 A driver rockets his $1-million Bugatti into a salty lagoon... Two kids perish in a home-insurance arson their own mother set... A cancer doctor pumps healthy patients with toxic chemotherapy in a $125-million insurance plot. These masters of disaster are among the eight worst insurance criminals of The extreme schemers were chosen by the Coalition Against Insurance Fraud. The No-Class of 2014 displays the year s most brazen, bungling or vicious convicted insurance swindlers. One of America s largest financial crimes, insurance fraud steals at least $80 billion annually. The true-life cases reveal insurance fraud s high human costs. Innocent people are traumatized, injured and lose their savings. Consumers also pay higher premiums. Welcome to the crime warp: Pelican power. A phantom pelican doomed Andy House, who barreled his rare $1-million Bugatti Veyron into a salty marsh to seek $2.2-million of insurance. The Galveston, Tex.-area man claimed he swerved to avoid a pelican. Yet a passing car enthusiast filmed House surging into the lagoon. No pelican in the video. The birdbrained plot earns House up to 20 years in federal prison when he s sentenced. Burning desire. Angela Garcia let her infant daughters die in a house fire she set for just $64,000 worth of insurance money. The Cleveland woman said she crashed through a window and slid down the porch roof. Yet Garcia had no cuts, soot or bruises. Investigators also found suspicious burn patterns inside the rubble. Nor did she want the kids anymore. The court denied her bid to overturn an earlier sentence of two life terms. Dollars & dents. Innocent traffic victims were hounded for months of worthless injury treatment by a crash cartel that handed out factory-line medicine. Personal-injury attorney Joseph Haddad erected a large network of corrupt doctors, chiros and medical clinics. The Bridgeport, Conn. man used police reports to badger crash victims for useless treatment often without exams or diagnoses. Haddad stole $1.8 million of insurance money, and was handed 51 months in federal prison. Armed for fraud. The NYPD officer Christopher Inserra moonlighted and fist-pumped as lead singer for a punk rock band while claiming a painfully injured right arm to steal more than $31,000 in workers compensation money. Inserra said he couldn t even bend the arm. Yet video shows him flailing and thrashing around on stage. Inserra lucked out with three years of probation, yet threw away his police career. His band: Cousin Sleaze. Cancer con. Sara Ylen lay near death with cervical cancer. She d contracted cancer from being raped in a parking lot, she lied. Yelen s Lexington, Mich.-area community rallied around her, and she received $122,000 in hospice care from her insurer. Ylen also sent the supposed rapist an innocent man to jail for 10 years. Except Ylen s cancer was fake, with forged medical records. Ylen received a year in jail, and the innocent man was released. Chemo crimes. Seniors received painful chemotherapy for phantom cancer so Dr. Farid Fata could falsely bill Medicare $125 million. Other chemo victims were so near death they were beyond the treatment. The Detroit-area man gave one cancer-free patient 155 chemo treatments. Another patient badly injured his head at Fata s office. Yet Fata made him receive full chemo before sending him to the ER. The patient later died. Fata faces up to 175 years in federal prison when sentenced. Joint efforts. Orthopedist Dr. Alex Panos botched or faked thousands of joint surgeries to seek more than $35 million worth of insurance money. The Poughkeepsie, N.Y. man rushed up to 20 suspect surgeries in a day. One operation lasted seven minutes. He botched surgeries, or opened up patients and stitched them up without making repairs. Christine Steele had two useless knee surgeries and can t work full-time anymore. Panos received 4 ½ years in federal prison. Deadly romance. Buddy Musso dreamed of being a cowboy singer. The New York City-area man also had the intellect of an 8-year-old. Suzanne Basso romanced and Zalma's Insurance Fraud Letter -- Page 4 of 18

5 lured him to the Houston area. They married and Basso took out a small life policy that paid up to $60,000 if Buddy died violently. Basso s gang cut, beat and doused him with painful bleach. His body was found in a ditch. Basso was executed. Founded in 1993, the Coalition Against Insurance Fraud is a nonprofit alliance combatting all forms of insurance fraud through advocacy, research and outreach. Barry Zalma Barry Zalma is the principal of Zalma Insurance Consultants. He is available for consultation on any and all insurance issues faced by you or your clients. Barry Zalma founded ZIC to help resolve every insurance claim problem faced by you or your clients. His experience and skill as a consultant and expert witness can make the difference before a jury or other trier of fact. For more than 45 years as a claims person and insurance coverage attorney, Barry Zalma has represented insurers, advised insurers on claims handling, interpreted coverages and testified as an insurance coverage, insurance bad faith, insurance claims handling and insurance fraud expert on behalf of insurers and policy holders suing insurers. Mr. Zalma is an internationally recognized expert on insurance, insurance claims handling, insurance coverage, insurance fraud, and insurance bad faith. Barry Zalma will promptly review your file materials and advise you about the viability of your decision to sue or your defenses. He can help you narrow the scope of discovery. Consultation with Mr. Zalma and ZIC can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute. ZIC will assist you in the effort to find a solution to an insurance claims dispute that is fair, intelligent, beneficial and economical. ZIC is available to provide expert advice and, if needed, expert testimony to individuals and their counsel. Advice from ZIC is indispensable to the resolution of insurance disputes. Consultation from ZIC can save you, your counsel or client hundreds of hours of investigative and legal work. With comprehensive knowledge of insurance and insurance claims handling Mr. Zalma understands, and can explain in language a lay jury understands, how and why insurance claims should be resolved. ZIC rates are all inclusive. Mr. Zalma s hourly fee takes account of all incidentals from telephone calls and postage to computer time and word processing. As for third-party costs, ZIC passes along all discounts and vendor savings. The client pays what ZIC pays. Not a penny more. ZIC has made the billing process simple. He is knowledgeable and qualifies as an expert in cases involving insurance bad faith, insurance claims, insurance claims handling, and insurance fraud. Mr. Zalma aids insurers, insurance agents and brokers, and attorneys representing both plaintiffs and defendants with their insurance cases. New Hampshire Insurance Fraud Conviction Affirmed In State v. Carr, --- A.3d ----, 2015 WL (N.H., 2014) the Supreme Court of New Hampshire held that: indictment for criminal solicitation of accomplice to insurance fraud satisfied the state constitutional requirement of specificity; to obtain a conviction for criminal solicitation of accomplice to insurance fraud, the state was not required to prove the elements of insurance fraud or accomplice to insurance fraud; evidence was sufficient to show that defendant acted with a purpose to collect insurance proceeds that exceeded $1500, so as to support a conviction for felony criminal solicitation of accomplice to insurance fraud; and evidence was sufficient to show that defendant purposefully attempted to induce witness to lie to police, so as to support a conviction for felony witness tampering. The defendant, Colleen Carr, appealed her conviction by a jury on one count of felony criminal solicitation of accomplice to insurance fraud and two counts of felony witness tampering. On appeal, she argues that the Superior Court erred by: (1) failing to dismiss the criminal solicitation indictment; (2) declining to give the jury two of her requested instructions; and (3) denying her motion to dismiss the second witness tampering conviction on double jeopardy grounds. The defendant also argues that the evidence was insufficient to convict her of criminal solicitation and of one of the witness tampering charges. We affirm. Background Facts The defendant owned a building at 139 Union Square, in an area known as the Milford Oval in Milford. Her mother s real estate business and a tobacco business owned by Richard Fells occupied the first floor of the building. The defendant and her boyfriend, Conrad Kelleher, lived on the second floor, and a tenant and her daughter lived on the third floor. In late 2012, the defendant and Kelleher discussed selling the building. Kelleher thought that doing so would help the defendant s financial situation, which he knew wasn t good. Zalma's Insurance Fraud Letter -- Page 5 of 18

6 Shortly thereafter, the defendant informed Kelleher of her idea to address her situation: she proposed to collect $403,000 in insurance proceeds by having the building burned down. The defendant told Kelleher that because she did not want their belongings to be ruined, they should move them out but then bring some old stuff in so it wouldn t look so obvious. The defendant and Kelleher spoke about involving the tenant in the plan. In mid-january 2013, the defendant approached the tenant, told her [t]hat she was broke, and said that [s]he wanted to torch the building to get the insurance money. The defendant offered to pay the tenant $7,000 to leave for two weeks. The defendant assured the tenant that if the tenant wanted to keep anything[,] [the defendant] would store it at her mother s house. She also told the tenant that she would help [her] find a place to live so [the tenant] wouldn t have to worry where [she] was going to live after that. The defendant informed the tenant that she was moving her own belongings [i]nto her mother s basement, and that she didn t care about the businesses located in her building because they all had insurance. The defendant told the tenant that she didn t want [her] to tell anybody. Later that evening, the tenant telephoned the defendant and told her [she] didn t want any part of this scheme. The defendant told the tenant to get out. A few days later, the tenant spoke to Fells about the defendant s plan because she was afraid... [t]hat the building would be torched and he would lose everything. Eventually, Kelleher, Fells, and the tenant separately told the police about the defendant s plan. On January 17, Kelleher agreed that the police could record telephone calls between him and the defendant. In the first recorded call, Kelleher told the defendant that the police had requested that he come to the station to talk; Kelleher asked, [W]hat am I supposed to do? The defendant responded, Well, go down and... I don t know anything, okay? She then said, I think it s got something to do with [the tenant]... She threatened it. She threatened it,... okay...? In the second call, initiated by the defendant, she told Kelleher to inform the police that the tenant was on Klonopin and was often drunk. She also told Kelleher to tell the police that he knew nothing and that whatever the tenant had told them was a lie. She told Kelleher to say that he didn t hear nothing. At one point, she said, What did I just tell you to say? Kelleher responded, I m going to say that the woman is on... she takes that stuff and everything else and she drinks a lot. The defendant reminded Kelleher also to tell the police that whatever the tenant told them was an absolute lie. In the third call, Kelleher told the defendant that the police had heard rumors about the building being burned down. The defendant asked, Why didn t you say like I told you, Well, the tenant threatened to burn it down. She s always drunk? Shortly after the last call, the defendant called the police herself and left a voic message for one of the officers in which she said that the tenant was drunk all the time, took Klonopin now, too, had a rent arrearage, and that she had threatened to burn down the building because the defendant had refused to allow the tenant s pregnant daughter to live with her. The defendant was arrested later that evening. In September 2013, the defendant sold the building for $150,000. Analysis To be constitutional, the indictment must contain the elements of the offense and enough facts to notify the defendant of the specific charges. An indictment generally is sufficient if it recites the language of the relevant statute; it need not specify the means by which the crime was accomplished or other facts that are not essential to the elements of the crime. A person is guilty of criminal solicitation if, with a purpose that another engage in conduct constituting a crime, he commands, solicits or requests such other person to engage in such conduct. RSA 629:2. The statute does not require that the solicited conduct actually occur. State v. Kaplan, 128 N.H. 562, 563, 517 A.2d 1162 (1986). Rather, the offense of solicitation is complete once the request has been made. People v. Woodard, 367 Ill.App.3d 304, 305 Ill.Dec. 82, 854 N.E.2d 674, 688 (2006). The criminal solicitation statute requires the State only to identify the solicited crime. See RSA 629:2 (providing that [a] person is guilty of criminal solicitation if, with a purpose that another engage in conduct constituting I (2007) (providing that [a] person is guilty of an attempt to commit a crime if, with a purpose that a crime be committed, he does or omits to do anything which, under the circumstances as he believes them to be, is an act or omission constituting a substantial step toward the commission of the crime ). Like attempt, solicitation is an inchoate crime. Solicitation is the act of trying to persuade another to commit a crime that the solicitor desires and intends to have committed. Robbins, Double Inchoate Crimes, 26 Harv. J. on Legis. 1, 29 (1989). The mens rea of solicitation is a specific intent to have someone commit a completed crime. Contrary to the defendant s assertions, the criminal solicitation statute does not require the State to plead and prove the elements of the solicited crime, here, accomplice to insurance fraud. See Munoz, 157 N.H. at 147, 949 A.2d 155 (referring to an indictment alleging attempt). Nor is the State required to plead and prove the elements of the crime to which the tenant would have been an accomplice. Zalma's Insurance Fraud Letter -- Page 6 of 18

7 Because solicitation is an attempt to conspire, and because attempt is by definition a crime not completed, the State could not have pleaded, factually identified, and proved all of the elements of insurance fraud or of accomplice to insurance fraud because those crimes had not been carried out. Criminal Solicitation The defendant s arguments regarding the criminal solicitation jury instruction stem from her mistaken belief that, to convict her of criminal solicitation, the jury had to find all of the elements of insurance fraud and accomplice to. For instance, she argues that the trial court did not break out the required elements of the crime of insurance fraud. Similarly, she asserts that the trial court failed to instruct the jury that, to convict the defendant, it had to establish that [the tenant] knew that there was an insurance policy, that a false or misleading statement would have been prepared and submitted to an insurance company, and that she would have assisted with that statement. However, as we have explained, to convict the defendant of criminal solicitation, the State was not required to prove the elements of insurance fraud or accomplice to insurance fraud. Accordingly, the defendant s arguments fail to demonstrate that the trial court s criminal solicitation instruction constituted an unsustainable exercise of discretion. Sufficiency of the Evidence The defendant next contends that the evidence was insufficient to convict her of criminal solicitation. To convict the defendant of felony criminal solicitation, the State had to prove, beyond a reasonable doubt, that, with the purpose to collect insurance proceeds greater than $1500, she solicited another person to engage in conduct constituting the crime of insurance fraud, intending that the person act as an accomplice. The defendant argues that the evidence was insufficient to convict her of criminal solicitation in part because the State failed to prove the elements of the solicited crime, here accomplice to insurance fraud. Viewing the evidence and all reasonable inferences therefrom in the light most favorable to the State, the court concludes that a rational juror could have found, beyond a reasonable doubt, that the defendant acted with a purpose to collect insurance proceeds that exceeded $1,500. ZALMA OPINION Insurance fraud, especially arson-for-profit, are difficult crimes to commit successfully. When considering committing a crime like arson it is imperative that co-conspirators are chosen carefully. The defendant chose as one of her co-conspirators a tenant who was not ready to enter into a life of crime. Her attempt at arson-for-profit died as a result of her poor choice in soliciting a crime partner who went to the police instead. She solicited someone to join with her in a crime only to be convicted of soliciting the crime. Her stay in jail is the reasonable result of her poor choice of co-conspirators. Wisdom You must not lose faith in humanity. Humanity is like an ocean; if a few drops of the ocean are dirty, the ocean does not become dirty. - Mahatma Gandhi An expert is someone who wasn t there when it happened but who will, for a fee, gladly imagine what it must have been like. - Mike Tigar Amplification is the vice of modern oratory. - Thomas Jefferson Here comes the orator! With his flood of words, and his drop of reason. - Benjamin Franklin If we can prevent the government from wasting the labors of the people, under the pretense of taking care of them, they must become happy. - Thomas Jefferson The true meaning of America, you ask?... It s in a Texas rodeo, in a policeman s badge, in the sound of laughing children, in a political rally, in a newspaper.... In all these things, and many more, you ll find America. In all these things, you ll find freedom. And freedom is what America means to the world. - Audie Murphy Absorb what is useful. Discard what is not. Add what is uniquely your own. - Bruce Lee Barry Zalma is On World Risk & Insurance News Check out my Who Got Caught submissions at and scroll down to Who Got Caught. Zalma's Insurance Fraud Letter -- Page 7 of 18

8 Good News Convictions from the Coalition Tony Yao said he messed up his back while on the job as a California Highway Patrol officer. The Sacramento-area man started collecting workers comp money. He appeared for doctor visits using a cane and bent over in seeming pain. But surveillance caught Yao carrying shopping bags, helping walk a bike, and taking apart a baby carriage. He even was seen hammering a stake into the ground to hold up a banner for a San Francisco 49ers NFL playoff game. The limp was a ruse, and Yao threw away his career with a fraud conviction. [Yao] was living in a cloud of narcotics and pain which caused him to behave in a manner that was not consistent with the strong morals and integrity that he has, his defense attorney s sentencing memorandum says. Yao could spend up to 5 years in prison when sentenced, and must repay more than $80,500. Monseratte Shirley saved her sooty skin by ratting out cohorts in a deadly insurance arson that killed 2 people and leveled an Indianapolis neighborhood. The trio botched their plot to steal $300,000 when the fire exploded. The next-door neighbors died and more than 80 homes were wrecked. Shirley will testify against former boyfriend Mark Leonard and his brother Robert. She pleaded guilty to arson Tuesday in exchange for leniency. That spared her potential life in prison. They bungled 3 tries to burn down her home by filling it with inflammable gas. First they blocked the chimney vent and changed the thermostat vent so it would click and set the home ablaze. That failed, and so did another go-around with a new thermostat. They tampered with the gas line the third time, causing a massive blowup. Shirley also had raised the home coverage to $300,000 before the fire. Plus she and Mark boarded their cat and found a place for her daughter to stay while they gambled at a casino to create an alibi. Shirley may have a 20-year sentence suspended in return for her cooperation, officials say. Bragging about duping auto insurers with false treatments helped send physical therapist Walkyrie Massie and her assistant to federal prison. The Brockton, Mass. Rossi was a physical-therapy assistant. He filed cookie-cutter treatment notes for patients who didn t show. Rossi also stayed for just minutes of therapy and billed for full treatments, including when he was away from Westgate Physical Therapy. The clinic billed insurers more than $400,000 and received nearly $175,000. The feds infiltrated the clinic with a cooperating witness who pretended he needed treatment after a crash. He taped clinic owner Massie boasting about forging the mole s name on sign-in sheets for phantom treatment. Massie received 30 months in jail and Rossi 18 months. They also must repay the stolen insurance money. The Massachusetts Insurance Fraud Bureau played a lead role in the investigation. Showing no remorse or sense of responsibility helped convince a judge that Mark Allan Misgen deserved nearly 5 years in prison for incinerating his home for insurance money. The Ellendale, Minn. man and his wife screwed up an amateurish home arson. Firefighters found a pan left on the stove, and paper smoldering on the counter. They were called back about an hour later for yet another blaze. This time the main and second floors were engulfed. Misgen s wife said she left after cooking Ramen noodles for their 2 kids, and might ve left the stove on. The blaze demolished the home. The fire started in a closet 4 feet from the stove. An accelerant likely was used based on the fire s fast speed. They over-insured the house and made a $395,000 claim, of which about $382,000 was for the house structure. Plus they were behind on home payments and still paying for 2 restaurants. Misgen stayed defiant after his conviction. Unwise move; he already was on probation for a prior felony charge of receiving stolen property. The judge was in no mood for leniency. Up to his nostrils in debt, Louis Hugh Plunkett Jr. strangled his housemate for a life-insurance bailout. The Fort Mojave, Ariz. man lived with community college instructor Marilyn Susan Burdick. A friend found the dental-hygiene teacher floating face down in the pool. Burdick had a black eye, neck bruises consistent with strangulation, a fractured eye socket and fractures to her spine. Burdick also was struck at least 4 times. As for motive: Plunkett had a $411,000 federal tax lien and $69,000 in state tax liens. He switched the beneficiary of several of Burdick s life policies from her daughter to himself. Plunkett offered a strained explanation for the violence at trial: Burdick fell in the kitchen and hit her head on a heavy wood dining table and maybe a chair, then hit her head on the floor. Plunkett said he checked on Burdick throughout the day and night, trying to convince her to go to the hospital. She went outside and probably fell into the pool after hitting her head on the pool deck. Representing himself at trial, he was convicted and will be sentenced Feb. 24. Zalma's Insurance Fraud Letter -- Page 8 of 18

9 Malik Muhammed stole more than $115,000 from auto insurers by billing for phantom injury treatments. The St. Louis-area man hired one chiro at a time to treat crash victims. The chiros worked part-time, usually every Tuesday and Thursday. Yet Muhammed continually billed auto insurers for treatments and procedures when no chiro was onsite. He also billed for Sunday treatments, when the clinic was closed. Muhammed received more than 2 years in jail. It took a dump truck to wreck a camping trailer for an insurance payday, but the ruse worked. Stephen J. Gretchen paid an employee of his roofing firm to repeatedly ram the truck into the Wheeling, W.Va. man s Coachman Freedom Express camping trailer. Gretchen told his insurer the vehicle was demolished in a hit-and-run crash. He received $27,776 from his insurer. He also illegally avoided paying federal employment taxes. Patricia Mock told Donegal Mutual that someone pried open the passenger-side door of her 1999 Dodge Caravan and stole a laptop. The Garrett, Pa. woman s boyfriend Evan Blair discovered the vehicle damage, she said. The loss supposedly was $521.20, including a $100 deductible. In fact, Blair masterminded the con, instructing Friedens to file the false claim. Motorists in the Detroit area may be unaware that they re road hazards they re driving without valid auto insurance. Hakeem Olaynika Sansui lied that he was an insurance agent. He sold fake auto-insurance certificates to verify proof of insurance for vehicle registrations. Sansui is part of a growing statewide problem of drivers carrying fake auto-insurance certificates, officials say. Often the drivers think they re carrying real coverage. About one-fifth of insurance certificates presented in Wayne County, where Sansui operated, are invalid. Honest drivers may have difficulty getting their repair and medical bills reimbursed when they have crashes with drivers who lack auto coverage. Cuban gangs are sending immigrants to the U.S. as street-level hucksters to help further lucrative insurance schemes. Joel Bauta Lopez earned $7 a month as a bus dispatcher in Cuba. Within a few years of arriving in the U.S. he was driving a Hummer, living in a condo and vacationing at Caribbean resorts. Bauta got rich bilking auto insurers as owner of a bogus clinic in Miami. America s open-door policy has enabled a large criminal network of Cubans to start up and thrive, says a series by the Sun-Sentinel (Fort Lauderdale). Many are smuggled to the U.S. to set up fake clinics. The rings often are sophisticated, with as many as 100 people. Others are small cells that, combined, have stolen millions from the U.S. economy. One crew opened a home healthcare agency in Miami in 2010 and within three days submitted $1.5 million in fraudulent claims to Medicare. When busted, such recent arrivals can be swiftly sent home, richer than they could ve imagined back in Cuba. They re beyond the reach of the U.S., which has no extradition agreement with Cuba. Immigrants jailed in the U.S. figure the money they amass is worth the generally short jail time they receive. Some 41 percent of the people arrested for healthcare fraud nationally since 2000 were born in Cuba, according to the Sentinel series. The next-largest group involves people born in the U.S. (29 percent of arrests), followed by Nigerians and Russians, at 3 percent each. The balance comes from 70-plus nations. A spike in Medicaid scams is one fallout of the Affordable Care Act in New Jersey, officials say. The federal health-reform law is expanding Medicaid coverage to the state s poor. Scams are following, officials say. Naum Lanevich is the latest indicator. He billed state Medicaid with 178 claims for phantom services. Naum received 3 years in state prison. Medicaid prosecutors recouped about $72 million in 2012 and 2013 combined. That s by far the largest 2-year total since the program was formed in 2008, Acting Insurance Fraud Prosecutor Ron Chillemi says Health Insurance Fraud Convictions Walkyrie Massie, 39, and 65-year-old Edward Rossi of Rochester, Massachusetts were sentenced on January 22, 2015 for defrauding insurance companies regarding physical therapy services they said were provided to patients injured in car accidents. following treatment. U.S. District Judge Richard Stearns sentenced Massie, 39, and Rossi of Rochester to prison for 30 months and 18 months, respectively, and two years of supervised release. The judge also ordered them to pay $174,597 in restitution to the defrauded insurance companies. According to the U.S. Attorney s office, Massie and her employees submitted fraudulent medical reports to the insurance companies for services provided at her business, Westgate Physical Therapy in Brockton. Rossi, a licensed physical therapy assistant, was supposed to offer therapy to patients several times a week. After that, a physical therapist was to evaluate the patient, and then Westgate would bill the insurance company According to officials, Rossi filed cookie-cutter treatment notes for patients who either didn t show, were in the clinic for minutes or were not seen by Rossi at all because he was absent. From 2009 to 2011, Westgate billed insurance companies more than $400,000 and received more than $174,000 based on the fraudulent treatments. Zalma's Insurance Fraud Letter -- Page 9 of 18

10 During the investigation, federal officers used a cooperating witness, who feigned having been in a car accident and went to Westgate for treatment. From March 2011 to June 2011, the patient recorded visits to Westgate and taped Massie boasting about forging the witness s name on sign-in sheets that made it appear he had received treatment, prosecutors said. 60-Year-Old Doctor To Spend Four Years in Prison Linda Rosenberg, a northwestern Indiana doctor was sentenced to nearly four years in federal prison for her role in a kickback scheme involving Medicare and Medicaid patient referrals. Federal prosecutors said 60-year-old Rosenberg was sentenced to 46 months. The Chicago woman pleaded guilty in April to three criminal counts related to her Hammond practice. Rosenberg was accused of accepting about $1,500 a month from a Chicago-area laboratory for sending Medicaid and Medicare patients there for blood draws. Her indictment alleges she had a similar referral arrangement with a northwestern Indiana business that provides body scans and X-rays, and allegedly accepted $34,000 between June 2011 and February Rosenberg also illegally dispensed the prescription painkiller hydrocodone to a patient without a legitimate medical purpose. Other Convictions Showing Off on YouTube Results in Conviction for Fraud Stephen Robinson, aged 30, of Newcastle, U.K. was sentenced to 200 hours unpaid work and 600 fine for costs plus 60 victim surcharge at Newcastle Magistrates Court on Monday 26 January after pleading guilty to fraud by false representation. Robinson, who broke his ankle showing off in Youtube video was jailed for making a compensation claim against the Newcastle Council. On the 28 June 2012 Newcastle was suffering from flooding due to persistent and torrential rainfall. Robinson claimed that he was walking along Pooley Road in Slatybridge when he placed his right foot on a metal drain that collapsed, causing him to sustain a broken ankle. The road was flooded at the time. He contacted Newcastle City Council to claim compensation who then passed the claim to their insurance company. The company then earmarked 17,000 for compensation for the claim after initial investigations found that he had broken his ankle due to a metal drain in the road. The company then discovered a youtube video showing Stephen Robinson taking a running jump into the flooded road watched by a crowd of cheering people. The video then shows him limp out of the flooded road and show his broken ankle to the crowd. The Youtube video has over 5000 views. Robinson was arrested on 23rd January He was charged with fraud by false representation on 14th March Months For Fraud & Marijuana Kevin Turner of Essex, U.K., was sentenced to 20 months in prison this week after admitting to production of controlled Class B drugs and four counts of fraud by false representation. Mr. Turner, an electrician, made four 5,000 ($7,496) claims to his insurer between December 2012 and June 2013, each time claiming his power tools had been taken from his van. The fourth claim aroused the suspicion of the insurer, Zurich Insurance Group Ltd. who referred the matter to the Insurance Fraud Department of the City Police of London. When detectives searched Mr. Turner s property, they found forged receipts used to file the bogus insurance claims as well as an outbuilding containing 53 mature marijuana plants. Mark Reynolds, who ran the IFED s investigation, said Mr. Turner s taste for the high life was his undoing. Turner s lavish lifestyle turned him into a drug producer and persistent insurance fraudster, which today has seen him jailed as a convicted criminal, Mr. Reynolds said in a statement. Proof that Insurance Fraud Is an Equal Opportunity Crime Reynaldo Gonzalez, a San Antonio-based deputy U.S. marshal pleaded guilty to wire fraud relating to an insurance fraud scheme. According to a statement from the U.S. Attorney s office, Gonzalez entered his plea in San Antonio, Texas. He admitted that he filed a fraudulent claim for medical treatment of various fictitious injuries and using a physician s signature and tax identification number without the doctor s knowledge. Zalma's Insurance Fraud Letter -- Page 10 of 18

11 The insurer then sent several benefit checks to Gonzalez. The 38-year-old deputy is now on administrative leave. U.S. District Judge Micaela Alvarez could sentence him to up to 20 years in federal prison and fine him up to $250,000 at sentencing April 23. Meantime, he remains free on bond. From the Insurance Fraud Bureau of Massachusetts Physical Therapy Owner and Employees Sentenced for Fraud Brockton On January 15, 2015, Walkyrie Massie, aka Vicky Lopes, and Edward Rossi were sentenced to 30 months and 18 months in prison, respectively, two years of supervised release, and ordered to pay $174,597 in restitution to the defrauded insurance companies. Massie and Rossi pleaded guilty to conspiracy to commit mail fraud and two counts of mail fraud in September and August 2014, respectively. On December 18, 2014 Deidre Chouinard was sentenced to three years supervised probation, ordered to perform 500 hours of community service, and ordered to pay $11,712 in restitution. Chouinard pleaded guilty in September 2014 to mail fraud and conspiracy to commit mail fraud. A fourth defendant is awaiting trial. Massie, the owner and operator of Westgate Physical Therapy, and her employees submitted fraudulent medical progress notes to insurance companies in connection with physical therapy the company purportedly provided to patients involved in car accidents. Specifically, Rossi, a licensed physical therapy assistant, was supposed to provide physical therapy to patients several times a week until Chouinard, the physical therapist, re-evaluated the patient and signed off that the treatment was complete. Westgate would then send a bill to the responsible insurance company. The progress notes contained in the patients chart would also be used to determine personal injury protection payments, as well as any bodily injury settlements with other insurance companies. In reality, for the majority of patients, Rossi simply filled in cookie-cutter treatment notes for patients who either never showed up that day, came into the clinic for mere minutes, or were not seen at all by Rossi because he was not present. Furthermore, Rossi signed notes for treatments that Massie performed, even though she was not licensed to do so. Based on these fraudulent submissions, from 2009 to 2011, Westgate billed insurance companies more than $400,000 and received more than $174,000 in payments. Acupuncturist Pleads Guilty to Insurance Fraud provided. Woburn - On September 16, 2014 Yongshuo Qu pleaded guilty in Middlesex Superior Court to twelve counts of insurance fraud and eight counts of attempted larceny in connection with billing more than $30,000 in fees for acupuncture and other services he did not provide through businesses he operated in Lowell and Medford. He was sentenced to two years in jail, suspended for four years. He was ordered to pay $24,000 in fines and $13,885 in restitution to Commerce Insurance. Between March 2008 and April 2012, Qu was engaged as a licensed acupuncturist. He served as a resident agent for two businesses, HealthLand, operating out of Lowell and out of his home in Medford, and Back2Balance, located in Boston. At the time, Qu advertised services for Acupuncture, Massage, Chiropractic, Physical Therapy, Chinese Herbal Medicine and Chi Gong Therapy. Qu was not, himself, nor did he employ, a licensed chiropractor or physical therapist. Investigation revealed that within that time period, Qu billed for legitimate massage services rendered to 13 clients, but then added hundreds of additional charges for examinations and treatments he never Additionally, in several instances, he billed insurance companies for work he said he had completed that had actually been performed by unlicensed practitioners. In total, Qu fraudulently billed more than $30,000 in insurance claims. Wholesale Distributor of Fruits and Vegetables Pleads Guilty after Reporting False Claims On November 6, 2014 John Alphas was sentenced to serve one year and one day in prison followed by three years of supervised probation. He was ordered to pay a $60,000 fine and $178,568 in restitution to Zurich North American Insurance Company. Alphas pleaded guilty to an Information on August 1, 2014 on a charge of wire fraud. Alphas is the owner of The Alphas Company Inc., a wholesale distributor of quality fruits and vegetables from all over the world. Produce is shipped to Alphas from various parts of the country, where it is stored before being distributed to customers. Alphas filed property loss claims with Zurich for losses occurring in 2007 and Zurich paid approximately $229,740 for the alleged losses. The scheme involved Alphas ordering a load of fruit or vegetables from a West Coast supplier which were then loaded onto a truck of a private trucking company for shipment to Alphas. The supplier generated an invoice to reflect the cost of items shipped and the transportation costs involved. While en route to Alphas the load would allegedly be lost or damaged. An investigation conducted by the insurer uncovered evidence that invoices submitted by Alphas in support of each of the submitted claims had been altered to reflect significantly higher costs than the original invoices showed. Owner of Lowell Asbestos Company Pleads Guilty to Workers Compensation Fraud Lowell - On October 2, 2014 a Lowell man pleaded guilty in Middlesex Superior Court to five counts each workers compensation fraud and larceny. He was sentenced to five years probation and ordered to pay $25,000 restitution. The Lowell man is the owner and operator of a Lowell asbestos abatement company. The company was insured by Travelers Insurance Company for workers compensation insurance and employers liability insurance from April 2007 through December In an effort to evade high insurance premiums, the Lowell man misrepresented the true Zalma's Insurance Fraud Letter -- Page 11 of 18

12 number of employees and payroll, and understated the number of jobs performed by his business. Based on his reporting, the Lowell man was granted the minimum premium rate on his policy and underpaid Travelers thousands of dollars in premium payments. As a result of this scheme, he put Travelers unknowingly at risk to cover any undisclosed employees for injuries that occurred or may have occurred during the policy periods. The company employed up to 30 workers with at least four full-time employees between 2007 and 2012 and misclassified the work of his company during the same period. Medford Woman Pleads Guilty to Insurance Fraud Medford On December 9, 2014 a Medford woman pleaded guilty to one count of motor vehicle insurance fraud. She was sentenced to six months in the House of Correction, suspended for one year. She was ordered to pay $500 in court costs and to perform 50 hours of community service. The woman reported to Plymouth Rock Assurance Corporation that she was allegedly operating a Mitsubishi Lancer on April 23, 2012 when a 2005 Hyundai Sonata collided with her vehicle. The collision resulted in damage to the driver s side of the Mitsubishi and also caused the vehicle to leave the roadway and hit a telephone pole causing additional front end damage and deployment of airbags. The Medford woman reported alleged injuries from the accident. However, the operator of the Hyundai stated that the operator of the Mitsubishi was a male with a suspended driver s license. A second witness also stated that she drove the Medford woman to the scene after the accident occurred. Chelsea/Revere CIFIs Gregg Lacedra was found guilty on a charge of motor vehicle insurance on January 6, He was sentenced to one year probation. Restitution is to be determined. Lacedra reported to police and Met-Life Auto & Home that on December 18, 2012 his 1994 Lincoln was parked and unattended when it was allegedly struck by an unknown vehicle which fled the scene. The Lincoln was deemed a total loss. A forensic examination of the Lincoln determined the vehicle was in motion when it backed into a brick object. Fragments of stone were found in the damaged areas. Lawrence CIFI Lynn CIFI On October 22, 2014, a Lawrence woman pleaded guilty to charges of motor vehicle insurance fraud and attempt to commit a crime. She was placed on supervised probation for two years and ordered to pay $2,139 in restitution. The Lawrence woman reported to Commerce Insurance Company that while operating her 2004 Cadillac SUV on December 29, 2011 she was allegedly involved in a motor vehicle accident when she was struck by another vehicle which fled the scene. She did not report the accident to police and did not file a claim with Commerce until February 14, Investigation revealed that the woman s Cadillac was involved in a high speed pursuit with police on December 31, 2011 while her son was driving the vehicle and attempting to flee police after an altercation. Police identified a vehicle that was struck by the Cadillac during the pursuit. The owner of this vehicle stated that the Cadillac was operating at a high rate of speed and ran a stop sign causing the accident. A Salem man pleaded guilty on September 30, 2014 to insurance fraud and other unrelated charges. He was sentenced to two years in the House of Correction, six months to serve and the balance suspended for two years. On January 20, 2012 the Salem man was operating his uncle s 2008 Toyota Tundra, insured with Safety Insurance, when he allegedly struck a telephone pole. He claimed and treated for alleged injuries. Western Massachusetts CIFI Arlene Kelsey pleaded guilty to charges of motor vehicle insurance fraud, attempt to commit a crime, larceny and conspiracy. Sufficient facts were found and the case was continued without a finding for one year. Shawn Kelsey pleaded guilty to charges of larceny and conspiracy. Sufficient facts were found and the case was continued without a finding for one year. Together the couple was ordered to pay $9,167 in restitution to the auto body shop. While operating the couple s 2013 Hyundai Elantra on November 18, 2013, Arlene was rearended by a 2000 Audi. The Audi operator was found at fault for the accident. The Kelseys filed damage claims with both their insurance carrier, Commerce, and the adverse operator s insurer, Progressive. Total cost of repairs was appraised by Commerce at approximately $8,687 and a check was issued to the Kelseys to repair the vehicle. Progressive estimated the cost of repairs at approximately $9,167. On December 12, 2013, Arlene was notified by the auto body shop that the repairs were complete; however, she stated to the auto body shop that she had not yet received payment for the repairs. The auto body contacted Progressive and was requested by the insurer to complete a work claim form/direction to pay document to be signed by Arlene Kelsey. Arlene signed the form authorizing Progressive to issue payment to the auto body for the repairs and she took possession of the Hyundai. Progressive was unaware that the Kelseys had also filed a claim with Commerce and been issued a check for the repairs. Progressive subsequently stopped payment on their check and re-issued a check to the auto body shop for the difference in the appraisal amounts. The Kelseys endorsed and retained the Commerce payment and filed an identical damage claim with Progressive to pay for the repairs. Zalma's Insurance Fraud Letter -- Page 12 of 18

13 Lawyer & Adjuster Convicted for Stealing from Settlement Fariborz Romeo Rahrovi, 40, a former Nationwide Insurance claims associate was sentenced in King County Superior Court to 12 months of work release and ordered to pay his victim $165,000 in restitution. Rahrovi On Nov. 21, 2014, he pleaded guilty to two counts of theft, criminal conspiracy, and money laundering related to the theft of an accident victim s $525,000 insurance settlement. Rahrovi worked with Seattle private law attorney Edward Joseph Callow on the scam, the Washington State Insurance Commissioner s Office said in a statement. Callow was sentenced in August 2014 to 24 months in prison and ordered to pay restitution and attorney s fees to his former client, the agency said. Callow paid his client only $165,000, about one-third of the total settlement, the agency said. Rahrovi pocketed $135,000 for his role in the scam. Callow kept the remaining $225,000. Ex-Insurance-Agent Sentenced to Three Years Isidro Santillan, 54, has been sentenced to three years in state prison and agreed to pay more than $133,000 in restitution to multiple victims. For more than two years Santillan reportedly embezzled more than $100,000 from clients, pocketed premium money and created phony documents leaving his clients at financial risk. Santillan was arrested in August 2014 after an investigation by the California Department of Insurance confirmed Santillan s fraud. The department began its investigation after receiving multiple complaints regarding Santillan s business practices involving the sale of various insurance products and bonds. Operating out of his office in Pacoima, Santillan sold polices to contractors across the state, but left them uncovered by not forwarding premiums to brokers, finance companies and insurers. Santillan reportedly concealed his theft by providing some of his clients with phony premium finance agreements. Santillan pleaded no contest to two felony counts of grand theft and multiple acts of embezzlement. In addition to serving jail time and paying restitution, Santillan will have no involvement in insurance business in any capacity for 10 years after his release from prison. The case was prosecuted by the Los Angeles County District Attorney s Office-Consumer Protection Unit. Escaping Jail by the Merest Whisker Paul Havert had suffered a work-related wrist injury and submitted a claim for approximately 200,000 against his employer, a customer of AXA Commercial Lines and Personal Intermediary, arguing that his injuries would prevent him from returning to his trade as a bricklayer. On the grounds that he had suffered a genuine injury and in light of submissions that Havert s family were suffering financial hardship and were in arrears with their mortgage payments, AXA made prompt interim payments of 30,000. However, at the civil trial, District Judge Stapely, sitting at Middlesbrough County Court, awarded damages of only 40,661. This was on the basis that Havert had indeed suffered a genuine injury but the judge did not accept Havert s account in relation to three issues, namely his pre-accident earnings, his post-accident earnings and his post-accident working hours. District Judge Stapely ordered the outstanding settlement amount of nearly 10,000 to be paid to the Court pending an Inland Revenue investigation and Havert s costs were also reduced by 50%, the penalty falling on his solicitors and counsel. AXA subsequently brought contempt of court proceedings against Havert for lying under oath about his past and current financial conditions as he sought to secure an inflated, fraudulent settlement. Prior to the contempt trial, due to be heard by the Honourable Mr Justice Males on 13 January 2015, Havert admitted contempt (five minutes prior to commencement of the hearing) for failing to disclose earnings from other employment in the original civil trial. More specifically, he had submitted a witness statement on 1 May 2013 stating that he was only earning 100 a week whereas bank statements showed receipts of over 33,000 between 6 December 2012 and 31 May Prior to sentencing, Mr Justice Males warned Havert that he should have no complaint if given a custodial sentence and on sentencing him to six months, suspended for two years, he was escaping jail by the merest whisker. It was further ruled that AXA may apply to the Court to recover the balance of the settlement originally awarded to Havert ( 9,834.29) in consideration of the cost accrued by the insurer in Havert s delay in admitting his guilt. In welcoming the outcome of the case, Edward Frost, Claims Fraud Manager at AXA Commercial Lines and Personal Intermediary, said: Although this is just Zalma's Insurance Fraud Letter -- Page 13 of 18

14 one victory in the fight against fraud it is important that AXA and all other insurers pursue and prosecute fraud wherever it is attempted. Havert had attempted to execute a significant fraud against us and our determination to protect our shareholders and honest customers from the cost of fraud should send out a clear message to anyone who seeks to defraud us either systematically or by inflating a genuine claim, as was the case here. The industry s fight against fraud is really building up a head of steam and it would appear that we are beginning to secure real support from the justice system in our endeavours to prosecute these fraudsters. In addition, we have the continuing great work of the Insurance Fraud Enforcement Department, the Insurance Fraud Bureau and the Insurance Fraud Register which now has the names of over 2,000 known fraudsters on its systems. Arson-for-Profit Fails Gbabia Kollie of Johnson City, Tennessee pleaded guilty to his role in the burning of an occupied Rhode Island apartment building in what prosecutors called an arson-for-profit. Federal authorities and Providence officials in January announced that 27-year-old Kollie pleaded guilty to arson and conspiracy in U.S. District Court in Providence. Federal prosecutors say Kollie and three co-defendants were involved in the torching of a multifamily home in Providence in November Several people who were sleeping in the building at the time got out safely. Two other defendants pleaded guilty and await sentencing, and the fourth defendant awaits trial. Kollie faces five to 40 years in prison. Sentencing is set for April 3. Court documents say Kollie helped arrange the arson in return for $7,000. ZIFL is amazed that for the paltry sum of $7,000 Kollie was willing to commit arson with the probability of causing the serious injury or death of people in the building. Please Say It Isn t True Michael A. Maggio, 53, admitted being improperly influenced in a nursing home case by campaign contributions in 2013 for his planned run for an appellate court seat. Maggio, a former Arkansas judge waived indictment and pleaded guilty to a federal criminal information (PDF) charging him with accepting a bribe for reducing a nursing home negligence verdict from $5.2 million to $1 million. At that point, he was still a sitting Faulkner County Circuit Court judge. Maggio withdrew as a candidate for an appeals court seat last year. A plea agreement (PDF) filed in the Eastern District of Arkansas case provides more details. It says as much as $24,000 in campaign contributions was at issue. However, it is not clear that Maggio s campaign received all of that money. The maximum sentence in the bribery case is 10 years. However, the plea agreement points to a guideline sentence of 30 to 37 months, although that is not binding, when Maggio is sentenced at a later date, the Arkansas Business article says. An investigation is ongoing, a spokeswoman for the U.S. Attorney s office in Little Rock told the Times Record. ZIFL must assume that the nursing home was insured and will look forward to follow-up investigation and prosecution of the persons who bribed judge Maggio to bring the judgment down to what could have been the amount of available insurance. Maggio was removed from the bench last year after over online comments made under a pseudonym that included discussion of a confidential adoption of a child by actress Charlize Theron. He is also facing a civil suit, along with other defendants, that alleges campaign contributions influenced his decision-making concerning the jury verdict in the nursing home case. Arson for Profit Fails On December 11, 2014, a jury in the United States District Court, Northern District of Ohio (Eastern Division) in Bruce Givens, et al. v. West Bend Mutual Insurance Company, United States District Court for the Northern District of Ohio, Eastern Division, Case No. 4:13-CV returned a verdict in favor of West Bend Mutual Insurance Company arising out of two incendiary fires which occurred at its insured s day care business in West Bend argued that the fires were set in order to destroy the structure, permitting the owner to relocate it to a better location. The desire to move resulted from the State of Ohio s change in reimbursement for underprivileged families day care reimbursement. While the business owner admitted that the fire were intentionally set, he denied that either he or the business had the Zalma's Insurance Fraud Letter -- Page 14 of 18

15 motive or opportunity to have caused the fire. He also denied making any material misrepresentations in the course of the claim. The jury found that the business owner s spouse, who served as the administrator of the business, was responsible for causing the loss. The jury also unanimously found that the spouse, as the administrator of the business and the person with substantial control of its operations, made material misrepresentations in the course of the claim investigation. While the owner of the business originally sought over $400,000 for its losses, the jury s verdict in favor of West Bend resulted in the owner receiving no money on the claims. Zalma Insurance Consultants provides the following services to its clients: Acting as a consultant or expert witness on behalf of insurers and insureds in litigation. Acting as a consultant to the insured in the presentation of a first party claim. Analysis of claims file material to allow the party to present evidence to establish and document bad faith or the existence of a genuine dispute between the insurer and insured. Review of policy wording and claims files to determine if there is a basis for payment or denial of a claim. Analysis of insurance litigation for the insurer and the insured. Consultation with insurance claims personnel on methods to avoid charges of bad faith. Zalma's Insurance Fraud Letter -- Page 15 of 18

16 Consultation with insurers and insureds on insurer compliance with Fair Claims Practices laws and regulations. Training on insurance and insurance law for all insurer personnel. Acting as a mediator to help resolve insurance claims short of litigation. Analysis of insurance policy wording. Litigation advice to defense or plaintiffs counsel. Consultation from Zalma Insurance Consultants can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute. Zalma Insurance Consultants will find a solution to your insurance claims dispute that is fair, intelligent, beneficial and Economical. If you only need an opinion letter I will review your entire claim file and policy wording and prepare a coverage opinion letter for the flat fee of $4, Otherwise, my services are billed at $ per hour, portal to portal. Zalma Insurance Consultants provides expert advice to counsel for insurers and plaintiffs counsel. Advice from Zalma Insurance Consultants is indispensable to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative and legal work. Call Barry Zalma at or at zalma@zalma.com by Barry Zalma & ClaimSchool, Inc Sepulveda Blvd, CULVER CITY CA zalma@zalma.com Zalma s Insurance Fraud Letter ZIFL is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using ZIFL you understand that there is no attorney client relationship between you and the publisher. ZIFL should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. The Insurance Fraud Deskbook Barry Zalma, Esq., CFE 2014 Paperback, 638 Pages, 7x10 The Insurance Fraud Deskbook is a valuable resource, peer reviewed by the American Bar Association, for those who are engaged in the effort to reduce expensive and pervasive occurrences of insurance fraud. It explains the elements of the crime and the tort to claims personnel, and it provides information for lawyers who represent insurers so they can adequately advise their clients. Prosecutors and their investigators can use this book to determine what is required to prove the crime and win their case. The full text of decisions from courts of appeal and supreme courts across the country are provided so the reader can understand what happens after the investigation is completed and can apply that information to undertake their own thorough investigations. It allow claims personnel and their lawyers to understand what errors would cause a defect or a not-guilty verdict. The effort to reduce insurance fraud requires the assistance of both civil and criminal courts. The Insurance Fraud Deskbook can help the prudent fraud investigator, insurance adjuster, insurance attorney, insurance Special Investigation Unit and insurance company management to attain the information needed to deal with state investigators and prosecutor. Available from the American Bar Association at: or orders@americanbar.org, or New E-books from Barry Zalma Do you have a book reader like the Kindle, the Nook from Barnes and Noble, the Sony Reader, an IPAD, and Google based tablet or any computer that can read Adobe pdf files? If you do, you can read any of Barry Zalma s E-books. MOM & The Taipei Fraud Zalma's Insurance Fraud Letter -- Page 16 of 18

17 A short novel dealing with a massive fake burglary of a Beverly Hills, California residence in hopes of garnering enough money to pay off debts and avoid deportation back to the Republic of China on the island of Taiwan. Follow the investigation of Marion Orpheus Montague (MOM) as he uncovers the fraud and provides defenses needed to save the insurers he represented $7 million. If it does not upload please zalma@zalma.com and I will personally send you a copy of the in pdf format. Zalma on Diminution of Value Claims Since 2001 the Georgia Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Mabry, 274 Ga. 498, 556 S.E.2d 114 (Ga. 11/28/2001) there has been serious concern in the insurance industry about how a court could change the wording of an insurance policy agreed to by the insurer and the insured. MOM & The Taipei Fraud A short novel dealing with a massive fake burglary of a Beverly Hills, California residence in hopes of garnering enough money to pay off debts and avoid deportation back to the Republic of China on the island of Taiwan. Follow the investigation of Marion Orpheus Montague (MOM) as he uncovers the fraud and provides defenses needed to save the insurers he represented $7 million. If it does not upload please zalma@zalma.com and I will personally send you a copy of the in pdf format. Random Thoughts on Insurance - Vol. II Since 2010 I have been writing a blog post at least five days a week. This e-book is a collection of those posts that reveal my interest in insurance case law. Some of the cases reviewed were important. Some were of first impression. Others will be totally unimportant. All were interesting to me and I hope are interesting to the reader. This e-book is more than 900 pages of my review of interesting cases in 2012 and After you purchase please wait for the e-book to upload from PayPal. If it does not upload please zalma@zalma.com and I will personally send you a copy of the in pdf format. Zalma on Insurance The Complete Authority on Property & Casualty Insurance Updated Daily by the Zalma on Insurance Blog In over 1180 pages Zalma on Insurance provides information on the following subjects important to every person involved in insurance, insurance claims, insurance coverage and allegations of insurance bad faith. The earnings of almost every civil lawyer in the United States are funded by the insurance industry. Insurance can best be described as the mother s milk of the law profession. The civil defense lawyer is paid by an insurer for each hour he or she works. The civil plaintiffs lawyer is usually paid by taking a percentage of any judgment entered in favor of the plaintiff, which judgment is usually paid by the defendant s insurer. In almost every situation in which a civil lawyer practices the funds for that work comes, either directly or indirectly, from insurance. Consequently, lawyers must use their wits and energies to avoid or to pursue litigation to the benefit of the client. Both sides understand that an insurer will eventually pay one or both sides in the dispute. Insurance is important to every civil dispute and even some that fall within the criminal courts. Heads I Win, Tails You Lose This E-book started now contains 87 fictional stories on how insurance fraud is perpetrated by changing the names and places of the incident to protect the guilty. The title, Heads I Win, Tails You Lose is meant to describe insurance fraud as it works in the United States. Whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser. If the fraud succeeds the insurer must charge more premium to cover the expense of defending the fraud and payment of funds to the fraud perpetrator. If the fraud fails the insurer must still charge more premium to cover the expense of defending the fraud. Everyone, except the lawyers and fraud perpetrators, lose. It Takes Courage to Fight Insurance Fraud The legislatures of the various states, the United States Congress, the National Association of Insurance Commissioners, The National Insurance Crime Bureau and insurance industry groups have finally decided that the war against insurance fraud is worth fighting. Until the states, the local police agencies, the district attorneys, the United States Attorneys, and the Attorneys General of the various states join in the battle it will be fought to a stalemate. The insurance industry cannot successfully fight insurance fraud alone.= Zalma's Insurance Fraud Letter -- Page 17 of 18

18 Insurance industry sources estimate insurance fraud from lows of $80,000,000,000 ($80 billion) a year to highs of $300,000,000,000 ($300 billion) a year. Regardless of which, if any, estimate is accurate the amount of money going to insurance criminals is staggering and approaches no less than 3% to 10% of premium collected. What has been the result of these new statutes? Are insurance criminals going to jail? Have there been scores of arrests? Have the courts been inundated with prosecutions? No. The prosecution of an insurance fraud is as rare as snowfall on the on the Island of Oahu.. It happens, but not in the numbers that the extent of the crime would suggest. Convictions are even more rare. Prosecutors complain that insurance companies do nothing. The statutes compelling insurers to form fraud investigation units usually have no penalties if the insurer fails to establish such a unit [California imposed regulations that imposes a $5,000 fine for failure to establish a Special Investigation Unit or to train its integral anti-fraud personnel and other states are following that lead.] After you make a payment through PayPal, please wait for the article to upload to your machine. If you have a problem with the purchase please write to me at zalma@zalma.com. As readers of ZIFL are aware, Barry Zalma is an insurance coverage attorney, consultant and expert witness. As a California attorney, Mr. Zalma limits his practice to transactional, rather than litigation, counsel concerning insurance coverage matters, mainly representing insurers and those in the business of insurance. Mr. Zalma was licensed to practice law in 1972 and has operated his own firm since He is admitted to practice before all California courts, California U.S. District Courts and the Ninth Circuit Court of Appeals. He has qualified as an expert in various state and federal courts across the U.S. and the British Cayman Islands. The comments made in each issue of ZIFL are for information only and are not intended as legal advice. If you need legal advice, Barry Zalma practices law as the Law Offices of Barry Zalma, Inc., 4441 Sepulveda Boulevard, Culver City CA or at , fax: , or at zalma@zalma.com. If you need an insurance claims handling, insurance coverage or insurance bad faith consultant and expert contact Mr. Zalma at Zalma Insurance Consultants, or to zalma@zalma.com. Zalma's Insurance Fraud Letter -- Page 18 of 18