Insurance Fraud, a Way to Reduce Violent Crime

True Crime Stories of Insurance Fraud Number 23

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Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim.

Insurance Fraud Designed to Protect Gangsters

Recently the California Insurance Department’s Fraud Division arrested a young woman in Los Angeles County for operating an insurance fraud school. She advertised her classes in the “Penny Saver” an advertising sheet distributed free to the public and the precursor to Craig’s List. She had operated for several years teaching methods of committing automobile insurance fraud. Only after a police officer enrolled in one of her classes was she arrested.

Her defense counsel suggested that she admit the school existed but that she had no criminal intent. It was her intent only to reduce violent crime in her neighborhood.

The teacher lived in a Latino barrio in East Los Angeles. An area racked with violent crime and gangs. The teacher would testify that robbers shot a close relative in the armed robbery of a convenience store. She felt helpless to change this situation.

She learned, as a result of an automobile accident, the ease with which her claim was paid. She recovered more money than she expected from the insurer with ease. They never verified any of her claims.

She became a student of insurance. She visited the local library and read everything she could. She applied for, and obtained a job as trainee adjuster. She learned to investigate claims. She learned that claims investigations required little effort.

The Road to Hell is Paved with Good Intentions

She trained hundreds of gang bangers to be insurance claimants. All of them made a good living from insurance fraud. They found no reason to commit violent crimes. From the time her class started until her arrest the violent crime rate in the barrio went down twenty percent. Automobile insurance fraud, unknown to the defrauded insurers, in the barrio went up forty percent. The teacher was doing a service for her community. She charged her students for this service, but only enough to pay her rent and survive. She did not become wealthy from the school for insurance fraud. She believes she saved the lives of many convenience store clerks and gang bangers.

At her trial she explained to the judge and jury that she believed the court should honor her for her efforts to reduce violent crime. Punishment for preventing violent crimes, she argued, is inappropriate.

The argument was a good one but the judge applied the law and the teacher was sentenced to spend the next five years in state prison. Her students continue to make a good living making false insurance claims.

© 2022 – Barry Zalma

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 practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

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You can contact Mr. Zalma at,, and . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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