The Case of the Art Flambé

Arson-for-Profit and Rembrandt

The following is one of the more than 80 fictionalized real-life insurance fraud stories Product Detailsfrom my book, “Heads I Win, Tails You Lose” available on Available as a Kindle Book. and Available as a paperback.


When a person decides to perpetrate an insurance fraud, he pushes the pause button on his morality. His plan to commit the fraud will then become so flamboyant and creative that even the most innocent of claims adjusters will detect the crime. Such was the case of a Belgian immigrant. He came to the United States shortly after World War II. He eked out a living with various jobs as a low paid engineering draftsman.

Before he decided to change his career and try arson for profit, he had lead a dull, but exemplary, life. He, at the age of sixty, married his second wife. Later they had a child. When the child was three, he contracted phlebitis and underwent several surgeries. He was unable to keep up with his work and, in any event, the aerospace industry had just lost several major contracts. He lost his job.

Unemployment Compensation did not pay enough for him to make the $1,400 a month payments on his small three bedroom house in Cerritos, California. His lender foreclosed.

After the foreclosure sale had occurred, he was still living in the house. His homeowner’s policy was still in effect. He no longer had an interest in the house and was subject to eviction. The insured recruited his sixteen-year-old son, from his first marriage, to set fire to the house. He made certain that when the fire occurred he, his wife and young daughter were away visiting relatives in Victorville. The house, with the assistance of much gasoline, burned to the foundation.

Much to his surprise (he was not an insurance scholar) the insurance company immediately denied his claim for the loss of his structure. He did not know that he must, at the time of the fire, have an interest in the structure to collect indemnity. The mortgagee, now the owner, received full payment. He had $100,000 in contents coverage and needed to collect it all.

Of course, because of his extended illness and lack of income, the house had relatively threadbare and simple furniture and furnishings. He needed to bring the values up somehow to effect a policy limits payment.

He prepared an inventory of all of his household furniture and furnishings and added to that an original oil painting by Rembrandt, an original oil painting by Pablo Picasso and an original oil painting by Vincent Van Gogh.

The adjuster was surprised that anyone who owned such valuable art work had difficulty making $400 a month payment to his mortgage company. The adjuster could not understand how the insured could allow his house to go by foreclosure. The adjuster retained counsel to examine the insured under oath.


Under oath, the insured’s testimony established that the insured had attempted to perpetrate a fraud on his insurer.

The insured testified that he was of royal birth, his father being a baron in Belgium. The Baron lived in a castle outside of Antwerp having earned his fortune in the diamond trade. The baron, pleased to learn that he had become a grandfather again, brought his son, daughter-in-law and new granddaughter to visit him at the castle. They spent a month at the castle enjoying the generosity of the baron. Before the insured left, the baron pointed to three oil paintings on the castle wall and told his son to take them home. Grandfather, the Baron, made the paintings a gift in honor of the birth of the new granddaughter.

The insured testified that he took the oils out of their frames, rolled them up and placed the three in a shipping tube which he hand-carried back to the United States. Since they were gifts, he did not report them to U.S. Customs. He had no written record of his ownership or possession of the paintings.

He described the Rembrandt as the dark painting of people sitting about a table with a bright point of light. When asked to describe the painting by Van Gogh, the insured testified:

“Another Dutchman. The painting was in the same style.”

Of course, counsel knew that although Rembrandt painted in very dark colors. Van Gogh, however, painted in wild, bright, and exuberant color schemes. A dark and brooding painting like that of Rembrandt never came off Van Gogh’s brush. Further, counsel knew (after consulting with an art expert) that Rembrandt painted most of his works on board – planks of wood. It was, therefore, impossible to roll it up and put it in a tube. If the insured had one of Rembrandt’s rare canvasses and had rolled it up when he arrived home in Cerritos he would have found a clean canvas and a pile of paint chips at the bottom of the tube.

The insured tried to help the insurer’s investigation. He provided a photograph of a family dinner where the Rembrandt was visible in the background. The insured identified the photograph as depicting the original Rembrandt oil painting in its background. Counsel for the insurer had the photograph enhanced and enlarged. The enlargement showed the single, bright point of light described by the insured was cast by a painting of an electric light bulb. Of course, Tom Edison had not been born when Rembrandt was painting, and would not be born for at least three hundred more years.

To the surprise of the insured only the insurer rejected the claim presented by the insured for fraud, false swearing, and material misrepresentation of fact.

Suit was filed by the Insured for breach of contract and breach of the covenant of good faith and fair dealing. Although the fraud was obvious and blatant the costs of defense of the bad faith action mounted. The suit dragged on for three years. Trial counsel for the insurer were unable to convince a court to grant summary judgment. Finally, at a mandatory settlement conference the lawsuit settled for a payment by the insurer of $30,000 against the wishes of defense counsel who, regardless, admitted he would have charged more than $30,000 to take the case through trial.

There is no question that the settlement was an appropriate economic decision if the insurer was only considering the single lawsuit. They were dealing with a plaintiff’s lawyer they saw on a regular basis. To pay him “tribute” as an economic decision was illogical. When a plaintiff’s bad faith lawyer is paid $30,000 by an insurer for a lawsuit that any three-year-old would know was a blatant fraud, he has been given an invitation to file more suits against that insurer, regardless of the merits of the lawsuit.

Paying a blatant fraud is tantamount to providing plaintiff’s counsel with the key to the vault that holds the assets of the company. The insurer that does so fools itself only that it is making a reasonable economic decision. It will pay, in the future, thousands of dollars because the plaintiff’s bar knows they will pay off rather than pay their lawyers to defend the most spurious of suits.

© 2018 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

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. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

Mr. Zalma’s books available as Kindle books or paperbacks at can be reached at

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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