Arson for Profit
The Insurance Investigation Begins
Monday Morning MOM was at his desk at his usual 6:00 a.m. dictating his final report to Jewelers Select Insurance Company about the successful conclusion of the Winslow claim the Friday before, when his telephone rang. It was Richard Scott de Camp, the Lloyd’s Underwriter.
“Good Afternoon, Richard.” MOM replied. “To what do I owe the honor of hearing from you before I finish my first cup of coffee?”
“Good Morning, MOM. I have a fax from an American broker – sent Sunday afternoon – advising that there was a fire at the home of an Assured for whom we have recently issued a Fine Arts Floater for more than $1.3 million US dollars. We haven’t even collected the premium from the brokers yet. We need an immediate investigation.”
“When was the fire?”
“The report shows Saturday night.”
“I’ll contact my cause and origin man and get him right out. Do you know where the Assured is?”
“His broker says he is in suite 1335 at the Encino Ramada Inn.”
MOM took down the details of policy number, name and address of the Assured, telephone number at the Ramada and asked de Camp to fax to him a copy of the schedule, the application, the wording of the policy and the loss notice. He would contact the Assured and make an appointment for immediate inspection of the scene and obtain a statement from the Assured.
“His broker also states that the Assured is not totally fluent in English so you should take an Armenian language interpreter to help you interview the Assured. It seems that the loss is total.”
“I’ll get right to work Richard.”
“Thank you, MOM, I have a bad feeling about this fire.”
“Too many red flags. The fire is so soon after the policy number was delivered to the American Broker; the schedule, now that I look at it carefully is eclectic and not a real ‘collection.’ This Assured never had a fine arts floater before he obtained a policy from me.”
“I know an Armenian gentleman who can act as interpreter for me if needed. While you sleep tonight, I will be interviewing your Assured and should have a preliminary report for you tomorrow.”
MOM woke up his cause and origin man and told him where to go. The house would be open from the firefighting effort and he should be able to conduct his investigation before MOM scheduled a meeting with the Assured. He called his friend, a second generation American whose family immigrated to the U.S. just before World War I when the Turks were starting what is now called the Armenian Genocide. He was fluent in Armenian, an artist whose time was his own, and who had helped MOM many times before with claims involving Soviet Armenians who had entered the U.S. in the 1970’s and 1980’s. He arranged to meet John Aslanian, the artist and friend, for breakfast at the Coco’s three blocks from MOM’s office.
MOM studied the policy wording and schedule carefully as it came out of his fax machine. He phoned de Camp before the Lloyd’s market closed for the evening and asked that he also fax the appraisals on which the schedule was based. He found it hard to understand why similar values were placed on 19th Century Russian art and modern American art by artists unknown to MOM. Montague was surprised to see on the schedule Persian and Caucasian rugs when he knew that Armenia was near the Caucasus mountains and it was more probable that the rugs would be Caucasian rather than Persian. He saw on the schedule a Fabergé cigarette case, ornamental pieces and one Royal Jeweled Easter Egg.
It was the Egg that caused him to call for the appraisals. Fabergé made very few of the Eggs, and only for the Russian Royal family. Most were in the hands of the Russian Museum at the Hermitage, some were owned by the Queen of England and the few remaining were held only by the very rich. It was odd that a Soviet Armenian immigrant gas station owner could afford to own a Fabergé egg. MOM, unlike de Camp, did not just have a bad feeling about the claim, he was highly suspicious.
When the second fax arrived from de Camp and he learned that the appraiser was Nathan Krooner, MOM knew he was involved in a serious problem that required detailed and concerted effort. He telephoned his cause and origin investigator, Bill Mack and told him to try to find remains of any art work and take them into custody for review by art experts.
By 8:00 a.m., while Mack was digging through the debris piles made by the fire company in its overhaul of the second fire, MOM had arranged to meet with Dickran Levonyan at the scene at 10:00 a.m. that morning. MOM scheduled a certified court reporter to be there to take down the statement. At breakfast with his friend, John Aslanian, before meeting Dickran, he sought help to be better prepared to understand the Armenian psyche.
“John,” MOM said as he stabbed a healthy part of his Denver omelet with his fork. “Tell me what you know about Fabergé eggs?”
“That is a large subject MOM. Fabergé was the greatest jeweler of the century and personal jeweler to the Tsar.”
“What does a jeweler have to do with Easter Eggs?”
“Everything, since these were made of gold and precious gems. In 1870 Carl Fabergé took over the business so his father could retire. He believed that the value of a work of art lay in the inspiration of its design and the quality of its craftsmanship and not in the cost of the ingredients employed in its manufacture. The Tsar Alexander II encouraged the young Fabergé in his new enterprise and collaborated to some extent with him in the plan to design a very special Easter Egg to be presented to his Tsarina, Marie Feodorovna in 1884.
The custom of giving these eggs on Easter morning and exchanging three kisses was deeply ingrained in the Russian Orthodox way of life. Easter morning was considered the most important of the calendar and the egg, a symbol of the Resurrection, an essential part of it.”
“So the Eggs were made for royalty.”
“Of course, only royalty could afford the time and materials needed to make them. Some of these eggs were so elaborate that they contained mechanical toys, such as a peacock which steps fastidiously across a tabletop, pauses, turns its plumed head, spreads its tail feathers which coruscate with brilliantly colored enamel and automatically closes them again. Another contains an authentic working model of the Trans-Siberian Express in gold and platinum while others are rock crystal or simply wild flights of Fabergé’s imagination. By the time of the Revolution, Fabergé had offices in Moscow, St. Petersburg, and London. Works by Fabergé, other than the Royal Eggs, are not uncommon.”
“What are the chances that a refugee from Soviet Armenia would own a Fabergé egg?”
“Nonexistent. Although he might own a very nice copy. Fabergé only made about 42 Royal Easter Eggs and I have heard of, at least 3000, that were stolen here in Los Angeles alone.”
“What kind of information should I ask him about, John, that would confirm that the things that burned up in this house were real, valuable antiques?”
“First, MOM, I would ask him about the provenance of the items he claims he had. Their history. Where he got them, from whom and for how much.”
“The investigator’s basic outline for every interview, the six basic questions: ‘Who? What? Why? Where? When? and How? That I understand, but is there anything in his ethnic background that would help me in my investigation?”
“Yes, you must remember that he comes from the old, and now thankfully defunct, Soviet Union. To have any success in a totalitarian government a person must be a consummate liar. You must, therefore take everything you hear with a grain of salt.” John, reminding himself, shook a little salt on his omelet, took a bite out of his English Muffin, and continued. “He will look you in the eye and tell you that rain is dry, and you will believe what he says.”
“O.K., John, I think I have it. Finish your coffee and we’ll drive up into the hills above Los Angeles.”
“I’m finished.” John responded, stuffing the last of his strawberry jam-covered muffin in his mouth and, with some difficulty, mumbled: “Could it be that this is a legitimate fire caused by the serial arsonist that has been setting fires over the last five years in Los Angeles?”
“I start my investigation into every claim believing the loss is legitimate – even the most suspicious and difficult to believe cases – because if I let my prejudices or prejudgments get in the way I will always miss important evidence. If the cause, the claim, or both are fraudulent the person who is perpetrating a fraud will always give himself or herself away before I finish.”
“Yes, I remember the case you and I worked on with a totally believable 82-year-old grandmother – I was sure she had an honest claim – and your investigation proved she was a fraud.”
“John, she was a lovely lady. Unfortunately, the appraiser whose signature she forged to buy the policy had been dead for thirty years. Once we found where he was buried the rest of the case was easy. All we know in this case is that there was a fire and the fire department thinks it was intentionally set. We don’t know who did it or why it was done. That’s what investigators do, get answers to the who, what, why, where, when and how questions. All we know now is a little of the ‘what,” the ‘where’ and some of the ‘how’ but we have no idea “who,’ ‘why,’ or exactly ‘when’ and ‘how.’”
“MOM, I see some people waiting in the drive.” John Aslanian said as MOM’s Cadillac Escalade pulled up to the drive of the Levonyan house.
“The young lady with the briefcase is our court reporter. I don’t recognize any of the others.”
MOM pulled his car into the drive, placed the gear into “Park” and opened the door. He swivelled his body sideways so both feet were on the drive before he pulled himself out of the drivers’ seat. With a push of a remote control button the back lid opened and he removed his aluminum briefcase and then moved forward to greet the court-reporter and others waiting for him.
“Good Morning, Jennifer.” MOM greeted the reporter. “Is everyone here?”
“Good Morning, MOM.” Jennifer replied, “Let me introduce you to Mr. Dickran Levonyan, the owner of the house who has been waiting with me here for the last five minutes.”
“It is a pleasure to meet you Mr. Levonyan. I am Marion Orpheus Montague, an independent insurance adjuster and investigator retained by your insurers, the Underwriters at Lloyd’s in London, England. As you heard, my name is often abbreviated to my initials and I have no difficulty responding to anyone addressing me as ‘MOM’.”
“Thank you, sir.” Dickran Levonyan responded, formally.
“And this, Mr. Levonyan, is my friend, John Aslanian, who agreed to come by to help me if you have any difficulty understanding my South Philadelphia accented English. And who are these other gentlemen?”
“My sons, Hrant and Hovsep and my insurance agent Harry Dersogian.”
Introductions completed, MOM let Levonyan show him through the debris. The house appeared to be devastated by the fire with little left but the pile of blackened personal property stacked on the pool deck by the firefighters when they completed the overhaul of the fire scene.
MOM was only interested in getting in his mind the general lay out of the scene. He knew his cause and origin investigator, Bill Mack, had already done a thorough job of finding the cause and origin of the fire and documenting the scene. Bill, who knew that MOM would be here at 10:00 left by 9:00 a.m. and was probably, if he worked in his normal course, meeting with the Fire Department’s Arson investigators to share notes.
Levonyan pointed out where he had stored his collection of Icons under the place where the sofa had been, walls where famous oils had hung, and corners where cabinets had stood to hold fine porcelain. MOM took it all in and only listened to Levonyan’s heavily accented rendition sufficiently to be polite. MOM absorbed the sights and smell of the scene. Even three days after the fire the smell of gasoline, burned wood and broiled cat and rabbit was pervasive.
While touring the family room, where the family cat lost all nine lives, MOM noted its corpse curled up on the pool deck, its fur singed off its stiff-legged body. MOM made a mental note that Levonyan did not point out the corpse. Neither he, his two sons nor the insurance agent seemed the least concerned about the death of a family pet. He also saw Jennifer, the court reporter, setting up her machine on the pool deck on the side opposite the final resting place of the family cat, directly in front of the diving board. She had salvaged two plastic patio chairs and set them around two rocks for the witness and MOM to go forward with the interview.
“Mr. Levonyan, I think I have seen as much as I can see, at this time. I know it is too soon after the fire for you to give me a great deal of detail about what you lost so I, as the representative of your insurers, would like to take a preliminary statement from you.
Usually I would simply put a tape recorder in front of you but, because of the damage here I wasn’t sure it would work. That is why I asked Jennifer and John to be here so it would be as easy as possible.”
“When I get money?” Levonyan asked.
“I don’t know – at this time all we know is that you are the victim of a fire. You understand, in exchange for the promise of the Underwriters at Lloyd’s to pay a claim when you had a loss you also made promises to the Underwriters.”
“I never spoke one your Underwriters. I only spoke Harry.”
“Yes, I understand, but do you understand that an insurance policy is a contract where both parties to the contract make promises to each other and that the Underwriters are only required to pay you if you first fulfill your promises. One of those promises was that you would prove to the Underwriters the amount of your loss and that it was caused by a risk they insured. By showing me the fire damage you proved that a risk insured against happend. Now we must find out if all of the other promises made in the policy have been fulfilled and the amount of your loss.”
“When do I get money?”
“Apparently, you don’t understand me. John, would you please explain the mutual promises made in an insurance company by the person insured and the insurance company, in his language.”
“I will try and, if my command of the Armenian language is not enough I’m sure Mr. Dersogian will help me.”
“Fine, while you do that I’ll give Jennifer a title for the booklet she will create after the statement is completed and take a few pictures.”
After 20 minutes of heated discussion with those who spoke Armenian Dickran agreed to be interviewed in front of the court reporter. Levonyan and MOM sat on two, larger flat rocks facing each other and directly across from the court reporter. John Aslanian moved his chair next to MOM while the two young men and the insurance agent sat on plastic chairs near Levonyan.
The interview was calm, low-key and non-confrontational. MOM learned that Levonyan knew nothing about insurance, had never had a policy of any kind with Underwriters at Lloyd’s previously, relied totally on Harry – who would interpose modifications of John’s translations, objections and often answer questions posed to Levonyan. MOM watched as Aslanian’s prediction was fulfilled – Levonyan answered each question posed to him in what appeared to be a forthright manner – and seemed to lie for the sheer joy of getting away with it. He testified 180 degrees from facts MOM had learned from his computer-literate investigators’ search of the public databases. He claimed he never had a claim, had never been canceled by any insurer. He testified – for Jennifer administered the oath – that all $2,000,000 in fine arts scheduled on his policy had been taken with him from his home in Soviet Armenia.
Levonyan explained that he escaped the tyranny of Stalin [a dictator who had died 20 years before Levonyan left Soviet Armenia] and was able to bring his household goods with him. All of the art was acquired as gifts from his family or purchased with his earnings as an engineer at the sport shoe factory in Yerevan.
The statement recorded by the pool was not as much an interrogation as a narration. Whatever question MOM would ask would be answered with a ten minute story of Levonyan’s life in the Soviet Union.
John Aslanian, who was born and raised in Southern California, exchanged meaningful glances with MOM, while translating the responses carefully.
After one hour and forty minutes MOM announced: “I’m done for now, Mr. Levonyan. I appreciate your cooperation at this most traumatic time. I do need your further help.” MOM opened his briefcase and pulled out a pad which he handed to Levonyan. “This pad contains forms to help you list all the things you lost and it will help the Underwriters at Lloyd’s determine the actual amount of your loss. Please put in the form, perhaps with the help of your sons, one of whom has graduated from an American High School, information that gives me a description of each item you claim was destroyed, the date and place you first got the item, how much you paid for it or, if a gift, what it was worth when you first obtained it, and its value at the time of the fire. Will you do that for me?”
MOM and Aslanian listened to a flow of Armenian between Dickran and his agent responded to in kind for approximately three minutes. Dersogian then translated, in answer to the question: “Yes.”
“We will meet again. I will be sending some of my investigators to go through the debris; I have hired a salvor to see what can be saved and to make an inventory of each item of personal property that can be identified, and I will need to take a statement from Mrs. Levonyan, your three sons, and probably a follow-up interview with you. Where can I reach you?”
Levonyan provided MOM with the number of his suite at the Encino Ramada and his number at his gas station in Los Angeles. As they were about to end, MOM asked:
“Mr. . Levonyan, it seems clear that the fire was started by someone. It was not an accident. Who would do this to you?”
“I no bullshit man,” Levonyan shouted in English. “No one hates me. I am a good, hard-working businessman. It must be the K.G.B. or the Turk. The Turks hate all Armenians. They killed millions of us, you know.”
“So, if I am to catch the person who did this to you I should look for a Turk or a K.G.B. agent, is that what you think?”
“Yes. The K.G.B. was very angry with me. That is why they made me come to the United States.”
“Tell me that story.”
Levonyan, a person who could never resist the temptation to tell a story, used another 40 pages of the transcript to describe his flight from Soviet Armenia. MOM, like a Buddah waiting for 60 saffron-robed monks to finish their prayers, listened with rapt attention. When the story was finished, the record was closed, Jennifer put away her machine and everyone said a good-bye after setting an appointment for their next meeting. MOM put his aluminum case in the storage area of the Cadillac, waved to the Levonyan’s standing in the driveway and drove down the hill, silent.
© 2017 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness 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 49 years in the insurance business.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Check in on Zalma’s Insurance 101 – a Videoblog – that allows your people to learn about insurance in three to four minute increments at http://www.zalma.com/videoblog
Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide
The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=214624, or 800-285-2221 which is presently available and “Diminution of Value Damages” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=203226972
Mr. Zalma’s three new e-books were recently added and are available at http://www.zalma.com/zalmabooks.html
Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/zalma, on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma
The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation