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Evidence needed to prove fraud



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In order to properly prepare a case for trial, an adjuster or SIU investigator must understand evidence and that evidence is divided into two main categories: direct and circumstance.

Direct evidence

Evidence that direct evidence is to show the existence of a questioned fact without interfering with the proof of any fact. It includes testimonies that tend to directly prove or disprove a current fact, such as eyewitness testimony or an acknowledgment.

Sometimes there may be no direct evidence because documents have been destroyed in a fire, destroyed by water, stolen, thrown away or eaten by vermin .

As important as direct evidence is for evidence of fraud or attempted fraud, courts have noted that it can be difficult to obtain direct evidence of something as internal as intent to commit fraud. [ United States v. Washington 715 F.3d 975, 980 (6th Cir. 2013)]. Jury members are therefore free to consider clues and draw reasonable conclusions from them. In United States v. Hawkins (6th Cir., 2019), evidence was sufficient to allow a jury to rule. Courts are often asked to decide which direct evidence may be allowed. In one case, the government was allowed to introduce tax evidence, evidence of transfer of assets and evidence of "wild acts" as direct evidence to prove a crime. In addition, the government was allowed to introduce, under Rule 404 (b), evidence regarding Mr. Brooks' alleged insurance fraud and share purchase of Mr. Brooks family members. [ United States v. Hatfield 685 F.Supp.2d 320 (EDNY 2010)]

A court found that it was aware that there was no direct evidence that any of the plaintiffs here knowingly participated in any insurance fraud system, or even suspected. However, when a loss is caused by the fraud of a third party, in determining the liability between two innocent parties, the loss should fall on the person who enabled the fraud to be committed. [ Fidelity Natl. Mes. Ins. Co. of NY v Consumer Home Mtge 272 AD2d 512, 514 [2d Dept 2000].] Although any fraudulent conduct on the part of the transferors may not be attributed to the plaintiffs "correctly", the plaintiffs would be among the foremost beneficiaries of fraud [ Chubb & Son v Consoli 283 AD2d 297, 299 [1st Dept 2001]). [ A.B. With. Servs v. State Farm, 7 Misc.3d 822, 795 NYS2d 843, 2005 NY Slip Op 25089 (NY Civ. Ct. 2005)] [19659005] Circumstantial Evidence [06] If0 is no direct evidence [19659förnågradirektabevisskälmåsteindicierläggasframförattbevisabedrägerietDetärdirektbevisomettvittneserettjetplanflygaöverhimlenochdetärindicieromvittnetserettjetplanmenintesjälvajetplanet[ People v. Rios (Cal. App. 2015)]

Indirect evidence is all evidence of an indirect nature when the existence of the main fact is derived from evidence facts through a process of probability reasoning. The investigator takes clues and uses deductive reasoning to reach a conclusion. Evidence of circumstances and the conclusions of a professional investigator are often more reliable than direct evidence as eyewitnesses. There are enough clues to prove arson and other criminal activity. [ Hoosier Insurance Company, Inc. v. Mangino 419 N.E. 2d 978, 986 (Ind. App. 1981)].

Many cases of fraud are proved entirely by clues or by a combination of clues and direct evidence, but rarely by direct evidence only. Fraudulent intent, the most difficult element to prove in many cases of fraud, is usually proven in the circumstances, and necessarily so, since it is impossible to produce direct evidence of the defendant's state of mind, absent from an admission or testimony of a co-conspirator.

In a circumstantial case, the court may instruct the jury that the prosecutor or insurer must exclude all conclusions from the facts except its determination of fraud. If the person examining the facts can conclude a legitimate rather than a fraudulent explanation for a series of events, the insurer's defense or prosecution will fail. Although no such instruction is given, the investigator and the adjuster should apply the same standard when preparing a circumstantial case for trial. . [ Bryant v. State 982 S.W.2d 46, 49; Beets v. State 767 SW2d 711, 734-39 (Tex. Crim. App. 1987)] with clues was sufficient to uphold the conviction for murder for compensation where the defendant is alleged to have committed murder. A guilty mental state is almost always proven by clues. [ Dillon v. State, 574 S.W.2d 92, 94 (Tex. Crim. App. 1978); Parrish v. State 950 S.W.2d 720, 722 (Tex. App.-Fort Worth 1997, no pet)]; Obigbo v. State, 6 SW3d 299 (Tex. App. 1999)]

Sometimes, as in the Indiana case Hicks v. State of Indiana [194590] N.5190 [1244] 2d 676 (1987), a thief will try to defeat a burglary claim by claiming that it was part of an insurance fraud system. If the victim instigated the crime as part of an insurance fraud, there can be no conviction for burglary. But adjusters, like the prosecutor in the case Hicks should be wary of such "confessions" as they can often be fabricated. An insured person should never be accused of fraud based on an accused criminal unless independent, innocent witnesses confirm the criminal's allegations.

"Clear and convincing" standard of evidence

The "clear and convincing" standard is a very difficult and convincing standard. strict standard to set. In New Jersey, In The Case Italian Fisherman, Inc. v. Commercial Union 215 N.J. Super. 278, 521 A. 2d 912 (1987), the court refused to accept the clear and convincing standard of evidence proposed by the plaintiff in an insurance fraud defense, pointing out that evidence of fraud by a predominant part of the evidence (50 percent plus) one, which is very easier to establish than the standard of "clear and convincing evidence") renders the insurance policy invalid from its inception. As another New Jersey court said:

“This court has previously addressed the nature of the defense against arson and the quality of the evidence necessary to support that defense. See Italian Fisherman, Inc. v. Commercial Union Assurance Co. 215 N.J. Super. 278 (App. Div.), cert. nekad 107 N.J. 152 (1987); Olesak v. Central Mutual Ins. Co. 215 N.J. Super. 155, 160 (App. Div. 1987) ("The defense against arson is most correctly seen as a statement that the insured deliberately created the loss and therefore should not benefit from it.") See also Alexander v. Tennessee Farmers Mut . Ins. Co. 905 S.W. 2d 177, 179 (Tenn. Ct. App. 1995) ("In order to succeed in a defense of arson, an insurance company with a predominant part of the evidence must show (1) that the damage was due to a fire of flammable origin, (2) that the insured had an opportunity to ignite the fire, and (3) that he had a motive to do so. ”) It does not matter if the jury determines that the insured personally ignited the fire or did so through someone else's actions. insured caused the fire. See Don Burton, Inc. v. Aetna Life and Cas. Co. 575 F. 2d 702 (9th ed. 1978); Crossley supra 362 NW 2d at 762. In Don Burton the Ninth Circuit expressly rejected "the view that a defense of arson can be defeated by failing to prove that the insured himself was the firefighter. . .. ”575 F. 2d at 705. Rena Inc. v. Brien 310 N.J. Super. 304, 708 A. 2d 747 (N.J. Super. App. Div., 1998). ”

If sufficient facts are available, it is easier to prove revocation than an accusation that the insured committed the criminal act of insurance fraud. Termination, in many states, can be made even if the insured had no intention of deceiving the insurer. To prove the crime of fraud, on the other hand, the prosecutor must prove an evil or criminal intent.


© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

He is available at http://www.zalma.com and zalma@zalma.com. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claimants to become professionals in insurance claims.

Go to training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos at https://www.rumble.com/zalma; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4


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