Insurance Fraud & The Jeweler

True Crime & Insurance Fraud Number 22

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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.


The jeweler was not an intelligent man. He had tried a manufacturing jewelry business ten years before and failed.

After his jewelry business failed, he operated a sandwich shop but stayed near the jewelry business. He located his shop in the basement of a building dedicated to jewelers in Seattle, Washington. He was fairly successful and made an adequate living. He still had stored in the garage of his house his old jewelry table, some molds and a large safe.

One morning, when business at the sandwich shop was slow, he sat down with a customer to have coffee. They spoke of old times when the jeweler made fine rings. The customer and the jeweler both came from Yerevan in Armenia. They talked about growing up under the shadow of Mount Ararat. They talked about the difficulties of surviving the capitalist society of Washington state. The friend was a wholesale diamond dealer. The diamond dealer’s sales dropped 75% during the 2008-2009 recession.

As they drank their Greek coffee, they discussed how an acquaintance, after a robbery, had easily collected $500,000 from his insurer. They were surprised that his insurer took his books and records on face value. They knew that their acquaintance operated a cash business whose records were kept only to deceive the United States Government.

By their third cup of coffee the jeweler and his friend conceived a method to create instant wealth. Their plan was simple. It would take advantage of the insurer’s need to deal fairly and in good faith with its insureds.

. Eventually the one-million-dollar claim settled for a total payment by the insurer of $750,000. The insurer saved 250,000. The insured got $750,000 more than he had lost and netted, $740,000.

He had no reason to refuse to sign a general release. Of course, when he agreed, the insurer and its adjuster were convinced that they were victims of a fraud they could never prove.

The adjuster was convinced that the claim was fraudulent because, in his experience, no legitimate insured, suffering a million-dollar loss, would agree to reduce his claim by 25%. Such knowledge was not comforting nor could it be presented in evidence at any court.

© 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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