I recently came across a 20+ year old article written by California attorney Barry Zalma in his book Heads I Win, Tails You Lose. The following story, originally titled “Disaster Scum,” is as relevant today as it was when written, especially in the wake of Hurricane Harvey and perhaps Hurricane Irma. Be sure your customers are wary about dealing with post-catastrophe crooks.


Disasters bring out the best in people. Disasters bring out the worst in people. Some risk their lives and fortunes to help victims. Others risk prison to profit for the disaster.

After the January 17, 1994 Northridge earthquake insurance companies sent teams of experienced claims handlers and billions of dollars to Los Angeles county California to ease the effect of the earthquake on those of their customers prudent enough to buy earthquake insurance. Money was paid out quickly. Because of the extent of the disaster few controls were in place.

Those who prey on the hardship of others descended on Southern California as the plague of frogs descended upon Egypt when the Pharaoh refused to heed Moses’ warning.

Able Carpenter saw the earthquake as an opportunity to make an illegal fortune without effort. Able had worked for two months, before the earthquake, as a laborer on a construction project. He went door to door in Northridge convincing the residents whose homes were damaged that he would protect them from their evil insurers.

He offered each homeowner a profit on their insurance claim. Even after paying his fee their house would be improved and better than it was before the earthquake. He promised them Lanai’s, hot tubs, extra bedrooms and cash. He seemed to each of the homeowners to be too good to be true. They would survive the earthquake and make a profit.

Able had no concern that he was neither a licensed contractor, public adjuster nor attorney. He relied on the greed of his customers and their natural distrust of insurers.

Able had no concern for the needs of the people who put their trust in him. His only concern was money. He wanted to be rich.

Regardless of the extent of damage to the dwelling of his customer the estimate Able prepared would be the same. The structure needed to be totally rebuilt at a cost of $175 per square foot. He would submit contracts to the homeowner prepared on forms he bought at a local stationary store. He wrote on each contract a fictitious license number, knowing that the customer would never call to check. He negotiated with each insurance company adjuster. His fee was only 40% of the amount received. He promised each insured that he, as a general contractor, would build their home into a new, earthquake safe structure if they turned over to him the remaining 60%.

Even Able was surprised at the gullibility of his customers and the speed with which the insurers settled the claims. Within a month of the earthquake he had over 50 contracts signed by homeowners from Northridge to Van Nuys and from Sherman Oaks to Westlake. His estimates were never less than $500,000.

Within three months of the earthquake Able collected almost $10,000,000 in fees and $25 million in construction contracts. He had no interest in actually rebuilding the homes. He had explained to the customers who relied on him that he would start work as soon as material were available. He called them every day.

Able explained that the earthquake had destroyed much of his ability to obtain construction materials. He comforted them with promises of quick work once the materials arrived. Able had no concern that each of his customers, whose homes were not as damaged as he reported, were subject to prosecution for fraud. His only concern was money.

When the collections reached $10,000,000 Able deposited the money in a bank account on Grand Turk Island in the Bahamas, bought an airplane ticket and retired to a villa he purchased on the island. The remainder of the $10,000,000 he invested in mutual funds. Able Carpenter now lives comfortably on the dividends. His customers still have broken homes and insufficient funds to complete repairs.

The homeowners and the insurers were defrauded. Good faith claims handling hurt everyone but Able. Neither the homeowners nor the insurers had learned that when a deal sounds too good to be true it is.

Copyright 1994-2017 by Barry Zalma. Reprinted with permission.

Photo by Got Credit

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information