Insurance_FraudStoppers

Zalma on Insurance

Barry Zalma, CFE, is an insurance coverage attorney. He is the founder of Barry Zalma, Inc., a California law firm whose practice emphasizes the representation of insurers and those in the business of insurance.

Mr. Zalma is the author of Insurance Claims: A Comprehensive Guide, published by Specialty Technical Publishers, Vancouver, BC at http://www.stpub.com The Truth, The Whole Truth & Nothing But The Truth, Property Claims 2nd Edition and Liability Claims and all course books used by ClaimSchool, Inc. in its training programs. He is also the author of three books published by Thomas Investigative Publishing, and numerous articles for insurance trade publications and law journals.

Mr. Zalma writes the monthly Zalma's Insurance Fraud Letter which is available, FREE, from ClaimSchool, Inc. and over the internet at http://www.zalma.com

Specialty Technical Publishers has published "Mold: A Comprehensive Claims Guide" by Culver City lawyer Barry Zalma. The book is the only comprehensive guide to cover all issues relating to claims of damage by mold or fungal infestations. It is an essential tool for every person who owns real property, manages real property, for all risk managers, realtors, property inspection companies, insurance agents and brokers, insurance claims people, and lawyers who represent property owners or insurers. It is available at http://www.stpub.com or by calling 1800-251-0381

Insurance FraudStoppers sponsored by ...

LOUIE THE SWITCH
A Heads I Win, Tails You Lose Story
by Barry Zalma, Esq., CFE

The story that follows is based on fact but is fiction. The names, places and descriptions have been changed to protect the guilty. This story was written for the purpose of providing insurers, those in the insurance business and the insurance buying public sufficient information to recognize and join in the fight against insurance fraud.
Louie made his living buying and selling used cars in Salt Lake City. He would attend a dealer's auction and buy a slightly damaged vehicle, take it to a shop, clean it up, paint it and sell it to downtown dealers.
Fifty cars would go through Louie's hands every month. He made a relatively good living clearing between $50 and $200 on each transaction. Louie was greedy. The Switch had no moral character. Louie was dishonest. If he could make an extra $100 on a sale by turning back the odometer 10,000 miles, he turned it back. If he could sell a car for an extra $100 by rubbing grease on the seams where the repairs from an accident had been done he crawled under the car and spread the grease.
Everyone liked Louie. He was a friendly sort. Louie had no trouble making friends. Everyone at the auto auction knew him. Louie was a professional. He only bought used cars that he could make look good and sell. He never bought bad cars. The Switch always paid for his purchases in cash.
If Louie had a weakness, it was skiing. Every winter he would drive from Salt Lake to the mountains of Utah and ski. Moving down a mountain on two waxed pieces of wood at 50 miles an hour was more exciting to Louie than selling a used Corvette at a $10,000 profit. On his last trip to the mountains Louie saw an A-frame for sale that, at first sight, caused his heart rate to jump 20 points. He needed that A-frame. It was only a mile for the lifts. It was beautiful, clean and had enough room to sleep the three kids and any friends they might bring along. All he needed was $20,000 as a down payment. He didn't have it. He lived from sale to sale, making just enough money to live and support an occasional trip to the mountains.
What he saw as the need for the dream cabin drove Louie to crime. One of his acquaintances, a tow truck operator, told him that a lien sale for storage charges was about to happen on a four-wheel drive crew cab Chevy pickup that Louie could buy for $250. The pickup had been declared a total loss by the insurance company after it was driven head-on into a sixteen wheeler while going the wrong way on the interstate. Louie already had in his inventory a four-wheel drive Chevy crew cab. His mind began to spin with devious criminal thoughts.
Louie gave $300 at the auto auction to buy the salvaged vehicle in his name and deliver it to his shop. Louie then clipped the vehicle identification number (VIN) plate off the dash of the salvaged vehicle and the dash of the vehicle he had in inventory. He placed the salvaged vehicle's VIN plate on the truck in inventory. Louie next filed a declaration with the Department of Motor Vehicles claiming he had lost his certificate of ownership.
The DMV, without knowledge that the vehicle had been destroyed, promptly provided a new title document. The Switch and his wife were now, as far as the DMV was concerned, the owners of a valuable vehicle.
He then had his wife take the truck to a local insurance broker. The broker, a 5-foot 2 inch woman, dutifully photographed the truck. She then wrote down the VIN number from the ownership certificate. She tried, but the broker was too small a woman to climb up and look in the windshield of the crew cab truck.
A policy of insurance was issued reflecting a $25,000 purchase price and an odometer reading of only 12,800 miles. When his wife brought the pickup back from the broker, Louie switched the VIN plates back to their original position. He sold the vehicle the broker had photographed the next day to a local dealer. Louie loaded the scrap on his tow truck and dumped it out in the desert on Indian land. Louie, who had financed his premium, waited until the first loan payment was due and then reported the vehicle stolen from the curb in front of his house while he was in the mountains skiing.
The insurance company investigator was ready to pay Louie the full stated value on the policy until he received a declaration of total auto theft from Louie. Louie represented in the declaration that the truck had an automatic transmission and a gasoline engine. The investigator knew, from his experience with vehicle identification numbers, that the VIN number identified this truck as having a five-speed standard transmission and a diesel engine. The investigator then searched the National Insurance Crime Bureau (NICB) computer for information on the vehicle. The computer informed the investigator that the vehicle had been in a major automobile accident only thirty (30) days before Louie insured it. The vehicle had been declared a total loss by its insurer. NICB obtained a copy of the prior insurer's file, including photographs showing the total destruction of the vehicle.
Complying with the law and with the assistance of the NICB, the insurance company's investigator contacted investigators with the Department of Motor Vehicles. The Utah Department of Motor Vehicles conducted its own thorough investigation and concluded that it was physically impossible for the vehicle that was insured to have been the vehicle whose VIN number was listed on the policy. The photographs taken by the agent, in fact, showed an automatic transmission and lacked the markings placed on diesel powered trucks by Chevrolet Motors.
Louie, being the expert in the family, presented a written document explaining how he believed he would be entitled to $25,000 for the loss of the vehicle, including a Kelly Bluebook survey of values. Louie's wife submitted a sworn proof of loss. Both documents were determined by the DMV to be fraudulent and Louie and his wife were arrested before they could collect the $25,000 from the insurance company.
Louie, who had been convicted before for rolling back odometers, was convicted of insurance fraud and sentenced to three years in the state penitentiary. His wife was given the same sentence but the sentence was suspended and she was ordered to stay on probation for five years.
Luck, the massive database maintained by the National Insurance Crime Bureau and the resourcefulness of DMV investigators stopped an almost perfect crime. When news of Louie's arrest and conviction reached the auto market reported thefts in the Salt Lake City area dropped 10% for the next six months.
[top of page]

LOUIE THE SWITCH A Heads I Win, Tails You Lose Story by Barry Zalma, Esq., CFE

LOUIE THE SWITCH
A Heads I Win, Tails You Lose Story
by Barry Zalma, Esq., CFE