Zalma’s Insurance Fraud Letter – February 1, 2019

Zalma’s Insurance Fraud Letter

 Zalma’s Insurance Fraud Letter, Volume 23, No. 3      

Insurance Fraud Takes Many Different Forms 

Falsely Promising a Customer That a Shipment is Insured Is Criminal 

Insurance fraud is usually a crime by an individual against an insurer. However, since insurance fraud seems to be ubiquitous, it can also be an insurance fraud act to promise to a customer that a shipment is insured when it is not.
In United States of America v. Melinda J. Campbell (No. 17-5642); Elliot Campbell (No. 17-5973), No. 17-5642, No. 17-5973, United States Court of Appeals for The Sixth Circuit (January 15, 2019) Justice Nalbandian, writing for a unanimous Sixth Circuit wrote: “When it comes to Melinda and Elliot Campbell-think Bonnie and Clyde. But rather than rob banks, the Campbells targeted the trucking industry.”
FACTS
The Campbells created fake shipping companies, persuaded third parties to hire them to deliver cargo, and then held the shipments as hostage until the third parties paid ransom for the deliveries. The government charged the Campbells with six counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of conspiracy to commit extortion. After a five-day trial, a jury convicted the Campbells.
The Campbells operated various trucking companies in Kentucky. Bryan Napier worked for the Campbells as a dispatcher. This meant that Napier found cargo for the Campbells’ trucks to deliver from point A to point B. And then the Campbells (with Napier’s help) entered into contracts with various shipping companies to deliver the cargo.
But to induce the shippers to enter into these contracts, the Campbells made “false representations and/or promises” which they “never actually intended to comply [with].” For example, the Campbells agreed to meet certain conditions, such as providing proof of a trucking license, insurance, and tax forms; using several drivers to make deliveries within a specific time frame; and covering the cargo with a tarp. The Campbells also promised to deliver the cargo before getting paid. But once the shippers were duped, the Campbells failed to follow these conditions.
The government identified at least 69 victims who lost money under the Campbells’ scheme. The Campbells also instructed the drivers to “rejigger” loads. This meant that shippers would pay the Campbells extra to deliver cargo exclusively with no other cargo on the truck. But after agreeing to this condition, the Campbells instructed their drivers to comingle other cargo on the truck-and deliver the additional cargo first to “make it look like they had complied with that requirement.”
The Campbells prolonged their con by creating fake company names and fake employee names. The Campbells then used these fake names to falsify government forms and insurance documents.
The Campbells went to trial and tried to explain their conduct. The Campbells’ defense relied on the general rule that a trucking company retains a “carrier’s lien” on a shipment-which allows the carrier to keep the shipment until the customer pays. According to the Campbells, they lawfully refused to deliver cargo-under these default carrier’s liens-until their customers paid. And Napier and Elliot each testified that, if a dispute arose, he believed he had a legal right to withhold delivery.
In their contracts, the Campbells explicitly waived any carrier’s lien and promised to demand payment “within twenty days from the receipt [of cargo].” The district court found that “[a]s a result of these contractual terms, the default rules . . . no longer applied . . . [and] the Campbells had no legal right to demand payment from their customers up front.” Once the Campbells gave up their right to a carrier’s lien, it became unlawful for them to refuse to deliver cargo until their customers paid.
Melinda argued that these losses stemmed from an unrelated trucking accident (and insurance dispute)-and not from the fraudulent trucking scheme itself. The district court disagreed, explaining that “it is clear to the Court that insurance was part of the Campbells’ criminal activity and that these insurance losses-even if they resulted from an accident-were reasonably foreseeable, because one of the ways that the Campbells tricked customers into doing business with them was by claiming that they had insurance when they, in fact, did not.”
The district court sentenced Elliot and Melinda to fifty-six months in prison.

 The Current Issue Contains the Following

  • Insurance Fraud Takes Many Different Forms
  • Investigating the Fraudulent Claim
  • Fraud Investigation Methods s
  • Good News From the Coalition Against Insurance Fraud
  • Health Insurance Fraud Convictions
  • Other Insurance Fraud Convictions
  • Arson-for-Profit Fires
  • The Insurance Claims Library

Books

The most recent posts to the daily blog, Zalma on Insurance, one of Feedspots top 50 insurance law blogs are available at http://zalma.com/blog.Check in every day for a case summary at http://zalma.com/blog

The most recent posts to the daily blog, Zalma on Insurance, one of Feedspots top 50 insurance law blogs are available at http://zalma.com/blog.Check in every day for a case summary at http://zalma.com/blog

 

 


Zalma’s Insurance 101

I have completed a video blog calledZalma’s Insurance 101 that consists of 1022 three to four minute videos starting with “What is Insurance” and moving forward to insurance fraud investigations explaining the basics of insurance and insurance claims handling in a painless fashion that can be viewed every morning with the first cup of coffee at  Zalma’s Insurance 101.

If you start at Volume 1 at the bottom of the blog’s first page and view one or two videos a day you will have approximately 12 to 24 hours of training a year until you get to the last video.

The videoblog is adapted from my book, Insurance Claims: A Comprehensive Guide available at the Zalma Insurance Claims Library

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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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