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By Barry Zalma
In 1990 Moshe Ben-Moshe and Menashe Ben-Moshe started a course of conduct that led to their recent arrest for insurance fraud. They failed to appear after posting bond and are, along with their co-conspirator, Raz Rosenberg, fugitives.
The Ben-Moshe 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.
The Ben-Moshe 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-Moshe brothers had difficulty making a profit.
In 1991 the rains came to Southern California and a skylight in the brothers’ industrial building leaked some water onto a small amount of their composition board furniture. They called their insurance agent, reported a loss and, with invoices for most of the merchandise they purchased, they presented a claim and received $75,000.00 for their supposed loss. The Ben-Moshe brothers purchased the salvage from their insurance company (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 bought a used Corvette.
They were soon short of money. They sought out the services of Mr. Rosenberg, who attached a nylon rope to a sprinkler head, thirty feet above the warehouse floor, and yanked it out of its fitting. The water flowed for fifteen minutes until the fire department came and turned off the sprinkler system. The fire department, with its usual efficiency, vacuumed out the water and protected the furniture. After the fire department was gone, the brothers, noting that insufficient damage had been done, ordered their two laborers to form a bucket brigade. The laborers poured twenty-five buckets of water from the restroom on the stored furniture. Shortly thereafter, the brothers called the insurer and a claim was presented for $1,000,000. The unsuspecting insurer retained salvors to inventory the damaged furniture and deter-mine if any of it had a salvage value. While the salvors were doing their work, one laborer approached them and whispered:
“Senior, no es accidente.”
Although the salvor spoke no Spanish, he understood what was said to him and he reported the statements to the insurance carrier. The insurer, American States Insurance Company, immediately assigned the case to investigator Steve Thompson of its special investigation unit. Mr. Thompson retained the services of Spanish-speaking investigators who subsequently met with the laborers and obtained the full story of the fraud.
American States then retained me to take the sworn examination of the laborers. I did so, aided the investigation, and later examined the insureds under oath.
American States, although suspicious, wanted to complete the fair and thorough investigation required of it by California law. During the examination under oath it seemed the brothers Ben-Moshe had blatantly lied. They lied about the cause of the incid-ent. They lied about what was destroyed. They lied about where the things destroyed were manufactured. They lied about the financial condition of their business.
The brothers provided invoices and shipping documents they intended to use to prove the value of the damaged furniture. The documents proved that the support for their claim was false and fraudulent. They testified that none of their furniture was purchased domestically. They did not know the laborers had introduced American States to the local manufacturer.
The examinations under oath filled more than four days of sworn testimony. When the testimony was completed, American States denied the claim and declared the policy void because of fraud. The insurer then reported the claim to the Fraud Division of the Department of Insurance in accordance with California law.
The fraud investigator, Martin Gonzales of the Department of Insurance Fraud Division, commenced the criminal investigation that resulted in a presentation of the case to the Los Angeles County District Attorney’s Office. After considerable work by American States and its counsel and almost a year of detailed investigation by the Fraud Division, the Los Angeles County District Attorney filed seven felony counts against each brother for insurance fraud and grand theft. They have arrested both brothers Ben- Moshe, who have forfeited $75,000.00 cash bonds. Raz Rosenberg is still at large and bail has been set for him at $100,000.
The Fraud Division of the State of California Department of Insurance, the Los Angeles District Attorney’s Office, and Ameri-can States Insurance Company deserve commendation for their dedication, hard work and courage in thwarting an attempt at a major fraud. The two laborers, although fearing deportation as illegal aliens, did the right thing and stopped what could have been the perfect crime. As long as honest people refuse to stand by and let criminals succeed, there is still hope for this coun-try.
I know things are changing. In the first twenty-five years I had been involved with insurance fraud, I could count ten people (out of the thousands I have investigated) who were arrested for insurance fraud. In the last sixty days in Los Angeles and San Diego Counties cases in which I have been involved, there have been seven individuals who have found themselves under arrest for insurance fraud and arson-for-profit schemes. I sincerely hope that the new Insurance Commissioner, with his avowed concern, will redirect the efforts of the Fraud Division. Besides stopping million-dollar frauds, like that attempted by the Ben-Moshe brothers, effort must be made to bring to justice those fraudsters who avoid attention by repeatedly committing insurance fraud for small amounts of money.
Barry Zalma, of the Culver City, California, law firm of Barry Zalma, Inc., is also the president of ClaimSchool, Inc., the publisher of How Your Friends and Neighbors are Screwing You,” a compendium of similar columns.
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