A Fictionalized True Crime Story
This is a Fictionalized True Crime Story of Insurance Fraud from an
Expert who explains why Insurance Fraud is a “Heads I Win, Tails You
Lose” situation for Insurers.
The Ben-Cohain brothers, quite by accident, came upon an imaginative
fraud. The Los Angeles County District Attorney, after a lengthy
investigation, charged them with violation of Penal Code § 550,
insurance fraud, among others related crimes.
The Ben-Cohain brothers operated a small furniture assembly facility in
Los Angeles County. They imported knocked-down children’s furniture
(made of composition wood and Formica laminates) from Israel. They hoped
to sell it to wealthy people in Beverly Hills and West Los Angeles who
wished to support the State of Israel. The quality of the merchandise,
however, was not high and the Ben-Cohain brothers had difficulty making a
profit.
The Ben-Cohain brothers purchased the salvage from their insurer for a
small deduction in their total claim and sold it shortly after receiving
payment. With the proceeds, one brother purchased a used Mercedes sedan
and the other a used BMW.
They were soon short of money since they still could not sell the low
quality knocked-down merchandise.
They sought out the services of Mr. Rosenberg, a public insurance
adjuster, who attached a nylon rope to sprinkler head thirty feet above
the warehouse floor and yanked it out of its fitting.
After the fire department was gone, the brothers, noting that
insufficient damage had been done by the water from the sprinklers,
ordered their two laborers to form a bucket brigade. The laborers poured
twenty-five buckets of water from the restroom on the stored furniture
effectively making all of their inventory unsaleable.
Shortly thereafter they called the insurer and a claim was presented for
$1,000,000. While the salvors were doing their work, one laborer came
up to him and whispered:
“Senior, no es accidente!”
Fraud Detected
Although the salvor spoke no Spanish he understood what was said to him.
He reported the statements to the insurer.
American Indemnity then retained counsel to take the sworn examination
of the laborers. Counsel, provided instructions for further
investigation and later examined the insureds under oath at the request
of the insurer.