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Has The Train Wreck Begun? Critical Obamacare Provision Put on Hold

Kim Komando


Former North Carolina Insurance Agent Accused of Embezzlement


Inside Track



Bumbershoot Policy Must Have Notice Within 30 Days. What’s a Bumbershoot?

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Operators of Two Bogus Tech Support Schemes Settle With FTC



Say What?

$700,000 Returned To Victims Of Bogus Health Insurance



Back Issues

The Individual Mandate: Why Obamacare Is Guaranteed To Fail


Twenty-Four States Approve Electronic Proof Of Insurance Coverage


Huge Mako Shark Jumps Into Fisherman’s Boat Wrecks $5,000 In Havoc!

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News 16

The Most Expensive Presidential Trip In History? The Obamas Visit Africa


Wall Of Shame: The Thirty Worst Charities - You Won’t Believe These Rip-Offs!


Florida Announces MultiState Settlement Agreement With TIAA-CREF Life Ins Co.


Federal Judge Hands Down Epic Sentence To Inept Terroist Richard Reid


Warrant Issued For South Georgia Insurance Agent David Marcus Jones, Jr.


The Advisor Scams The Scammer - Georgia Agency Employee Loses $1200


LA Sen. Elbert Guillory Switch Parties - And Tells Why In Fascinating Video


New Jersey Insurance Agent Faces 10 Years For $1.4 Million Senior Scam


Doctors And Healthcare Workers Walk Out On Obamacare Talk


American Cities Ranked By Likelihood Of Automobile Accidents


Flying Cars! Are They Finally Here? Terrafugia Claims One Will Be Ready Soon!

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Orrin R. Beilly, Esq. Barry Zalma, Esq.


The Towing & Rental Group


FYI Georgia View & News


Insurance Expo 2013! July 11-13 Duluth, Georgia

Cover Photo: © R. Manera



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he massively unpopular PPACA, more widely known as Obamacare may have begun to unwind. The Obama regime announced on July 1 that the ACA’s requirement that employers with greater than 50 employees offer health insurance or face stiff tax penalties is to be delayed one year.

wel,” House Speaker John Boehner said. “This is a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patientcentered reforms.” One advocacy group, the American

“The president’s healthcare law is already raising costs and costing jobs. This announcement means even the Obama administration knows the ‘train wreck is coming and will only get worse. I hope the administration recognizes the need to release American families from the mandates of this law as

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Action Forum, claims that Obamacare has cost a total of almost $31 billion and 112 million man-hours to date. Almost 56,000 new employees, laboring 2,000 hours per year would be required to process all the paperwork generated under the act once implemented. According to Rep. Bill Cassidy of (RLA), “This delay in implementing the employer mandate acknowledges this while encouraging employers to drop insurance coverage for their employees. Taxpayers will pay more and deficits will increase. We must replace Obamacare with patient-centered reforms that expand healthcare access without destroying jobs.” 7

July 2013 A Publication of AdMax Media Corp Corporate Offices

P.O. Box 31551 Palm Beach Gardens, Florida 33420 561.718.0745 © Entire Contents 2013 AdMax Media Corp

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ALEIGH -Insurance Commissioner Wayne Goodwin today announced the arrest of Christopher McPhatter, 41, of 110 W. Ninth St., Lumberton; he was charged with one count of embezzlement by an insurance agent. Department of Insurance criminal investigators allege that from Jan. 2012 through October 2012, while working as a licensed insurance agent, McPhatter received insurance premium payments of approximately


$3,700 from 21 individuals, but did not apply the funds to their accounts. Investigators accuse McPhatter of keeping the money for his own personal use and gain. McPhatter surrendered on June 30 to criminal investigators at the Robeson County Detention Center where he was arrested and placed under a $5,000 unsecured bond. McPhatter’s insurance license was revoked prior to his arrest, and he has repaid all of the consumers involved.

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Entering your cellphone FOUR TRICKY FACEBOOK identity. number often leads to bogus premium charges appearing on your SCAMS TO AVOID wireless bill.


by Kim Komando

rom snake-oil salesmen and pool-hall hustlers to Nigerian princes and Spanish prisoners, scams were happening long before the Internet. Unfortunately, the Internet has only made things worse. Modern scammers can reach billions of potential victims with a single message. And their scams are getting better every day. If you aren’t paying attention, you could fall for a scam and not ever realize it. One of the easiest places to encounter online scams is Facebook. Facebook encourages sharing, which means certain scams can travel far and wide. These aren’t harmless scams either. Some of them can install viruses that take over your account or steal your money. Yikes!

Here are four popular scams that should set off your warning bells as soon as you see them.

1. Free giveaways The easiest scam to fall for on Facebook is a free giveaway. You’ll see everything from gift cards to free tablets, laptops and smartphones. Who doesn’t like free? Just one catch! You have to give the “company” your information. Or you have to download a program to qualify. This is a variation on a classic survey scam. These trick users into giving out their information or downloading malicious files onto their computers. With the information you enter, a scammer has a foothold i n t o stealing your

Click here to learn more about cellphone bill “cramming” and how to put a stop to it. It’s true that some companies do give away free stuff through Facebook. When they do, however, it’s promoted on that company’s official Facebook page. If you check the company’s page or website and don’t see the giveaway, steer clear. Even if it’s real, only enter through the company’s official page. And only if it’s a company you trust. Scammers like to set up fake sites and pages that mimic the real thing.

2. Viral videos Almost as exciting as free gadgets is seeing the latest viral video. However, many supposedly salacious celebrity “videos” posted on Facebook aren’t videos at all. When you click to watch, you’ll be asked to update your video player first. You’ll even be provided with the updated program file. How helpful! Of course, the program is really a virus. Plus, it will automatically share the scam with all of your friends. This one is easy to avoid. Type the video’s title into Google. You should see a link to it on YouTube. If the video isn’t on YouTube or a legitimate news site, it’s a scam. See Kim Komando Pg 33

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Editor’s Note: A “bumbershoot” is an umbrella - apparently a variation on UMBrella + paraCHUTE; American in origin, it has become associated with British umbrellas, but has never been a Briticism.

in consequence of” the release or escape of pollutants and toxic chemicals. However, Starr and SGS had added to the policy a provision, commonly called a pollution “buyback,” which deleted the pollution exclusion and replaced it with the following:


n insurer sought a declaratory judgment that it was not required to show prejudice before denying coverage for liability arising out of a pollution occurrence which the insured did not report within thirty days, as required by a pollution buy-back clause in the policy. The district court granted the insurer’s motion for judgment on the pleadings and denied the insured’s motion for summary judgment. In Starr Indemnity & Liability Co. v. SGS Petroleum Service Corp., 12-20545 (5th Cir. 06/18/2013) the Fifth Circuit resolved the dispute.

Barry Zalma, Esq., CFE is a California attorney specializing in insurance coverage, insurance claims handling and fraud who serves as a consultant and expert for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published an e-book, “Getting The Whole Truth,” which is available at his Web site, Go to Zalma Books at htm.

BACKGROUND Starr Indemnity & Liability Company (“Starr”), a Texas-based insurance company, and Defendant-Appellant SGS Petroleum Service Corporation (“SGS”), a Delaware corporation that provides services to the petrochemical industry, including the transportation of toxic chemicals were involved in a suit where SGS sought defense and

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indemnity from Starr. Starr issued SGS an insurance policy that covered the period from December 31, 2009 to December 31, 2010. This was a bumbershoot (umbrella) policy that provided excess coverage beyond SGS’s primary insurance policy with Allianz Global Risks U.S. Insurance Co. (“Allianz”), which was limited to $2 million of coverage. Starr’s excess coverage policy contained an absolute pollution exclusion clause, which freed the insurer of “liability or expense arising . . . directly or indirectly

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Notwithstanding anything to the contrary, this policy shall not apply to any claim arising directly or indirectly in consequence of the discharge, dispersal, release, or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials, oil or other petroleum substance or derivative (including any oil refuse or oil mixed wastes) or other irritants, contaminants or pollutants into or upon land, the atmosphere, or any watercourse or body of water. This exclusion shall not apply, however, provided that the assured establishes that all of the following conditions have been met: … (4) the discharge, dispersal, release or escape was reported in writing to these underwriters within 30 days after having become known to the assured. (Emphasis by the court)

FACTS On November 7, 2010, an accidental release of the chemical meta-toluene diamine occurred while an SGS See Zalma Pg 31 The Underwriter’s Insider

OPERATORS OF TWO BOGUS TECH SUPPORT SCHEMES SETTLE FTC CHARGES One Operator Also Settles Charges He Illegally Telemarketed Debt Relief Services

These alleged violations were added, along with an additional defendant, Marczak’s corporation Conquest Audit, to the complaint against Marczak in April.

wo operators of alleged tech support scams have agreed to settle Federal Trade Commission complaints and give up their ill-gotten gains.

The stipulated final orders against Agarwalla and Marczak and Conquest Audit, prohibit Agarwalla and Marczak from advertising, marketing, promoting, offering for sale or selling any computer security or computer related technical support service and from assisting others in doing so. Marczak and Conquest Audit also are prohibited from marketing or selling debt relief services.


Mikael Marczak, doing business as Virtual PC Solutions, and Sanjay Agarwalla were among the subjects of a series of six complaints filed by the FTC last September as part of the Commission’s ongoing efforts to protect consumers from online scams. According to the complaints, the defendants posed as major computer security and manufacturing companies to deceive consumers into believing that their computers were riddled with viruses, spyware and other malware. The complaints alleged that the defendants were not actually affiliated with major computer security or manufacturing companies and they had not detected viruses, spyware or other security or performance issues on the consumers’ computers. The defendants charged consumers hundreds of dollars to remotely access and “fix” the consumers’ computers. Additionally, as part of its investigation into one of the schemes operated by Marczak, FTC staff discovered he was also telemarketing a debt relief program that the FTC claimed violated the Telemarketing Sales Rule.

In addition, both stipulated final orders impose monetary judgments. The final order against Agarwalla requires him to pay $3,000 – the total amount of funds he received for his role in the alleged scam operation. The final order against Marczak and Conquest Audit includes a $984,721 judgment, which is the total amount of money lost by consumers in the scams. Although the judgment will be stayed due to their inability to pay the full amount, Marczak and Conquest Audit will surrender almost all of their existing assets. Consumers affected by the debt-relief scams will also receive notification of the order as well as information from the FTC about how to settle credit card debts. While the stipulated final orders announced today resolve the FTC’s claims against Agarwalla, Marczak and Conquest Audit, litigation continues against the remaining defendants in each of these actions.

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he Federal Trade Commission is mailing 412 refund checks totaling more than $700,000 to consumers who were victimized by a telemarketing operation that allegedly tricked them into buying bogus health insurance. In August 2010, the FTC and the Tennessee Attorney General sued United States Benefits, LLC, and its principals, Timothy Thomas and Kennan Dozier in federal court in Nashville, Tennessee, charging them with deceptively marketing medical discount plans as health insurance, calling consumers on the Do-Not-Call Registry, and making illegal robocalls. In November 2011, the FTC and Tennessee announced a settlement of the lawsuit. The settlement order barred the defendants from selling healthcare-related goods or services and violating the Telemarketing Sales Rule, and required them to forfeit assets from which the FTC is issuing refunds. The checks are being mailed by an administrator working for the FTC, and will expire 60 days after they are issued. Consumers with questions about the United States Benefits refund checks should call the refund administrator, Gilardi & Co., LLC at 1-888-214-0638. For general questions about the FTC’s refund program, visit refunds. 11


By Spencer A. Lehmann, RHU, Guest Columnist


ithin two months of his inauguration, President Barack Obama went back on his most strident campaign promise, “Transparency.” ObamaCare was created using the most corrupt measures possible. Secret back room deals cut with Big Pharmacy, the AMA, the NEA, unions in general, bribes to Senators Ben Nelson and Blanche Lincoln, threats of loss of committee chairmanships by the leaders of both Houses (Representative Nancy Pelosi and Senator Harry Reid) to their members. Yet, that is NOT why ObamaCare will fail, and it will, soon. ObamaCare will fail because there is no mechanism in place to assure its stability. No insurance plan can survive if there is not an adequate “spread of risk”. The Individual Mandate in ObamaCare, designed to “force” all Americans to participate on threat of being severely financially “punished” if an individual or family refused to participate and create the needed healthy spread of risk, was created with no substantive “teeth”, as it would be too “hard to sell”. 

Beginning in 2014, the tax/fine for not carrying ObamaCare is 1% of AGI. Thus, if a family of four making $80K AGI fails to carry


ObamaCare, they will pay $800.00 in fines. By 2017 that fine will have increased to the maximum of $2,100.00. The cost of ObamaCare

Spencer A. Lehmann is a Registered Health Underwriter (RHU), whose company, Lehmann/Wood & Associates, Inc., specializes in Group and Individual Long Term Care insurance and Medicare Supplemental Coverage. Mr. Lehmann retired from his company in 2005 and now spends his time writing on Health Care Insurance and Political Issues, both of which have encompassed over 40+ years of his life. He has been an actively involved member of the National Association of Health Underwriters (NAHU) since 1978, and serves on the Board of Directors of several Charitable Organizations’ helping Special Needs Children, and Inner-City Children to experience and participate in the world of the Arts and Music. In his free time he plays golf with his wife, Fran, who usually wins.

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insurance will be somewhere between $15K and $25K for that family per year. Those not carrying insurance today will certainly not opt to pay $20K when they can skate by for $1000. 
Simultaneously, beginning in 2014, all insurance carriers must Guarantee Issue the policies. A person can wait until the doctor tells them they have cancer, apply for a policy, and (during the “open enrollment” period) be immediately covered. That’s the law. Therefore, while the companies will not get all of the healthy risks, yet must insure those not healthy, claims will skyrocket, as will premiums to the insurance purchasing public. There are already many components of ObamaCare in place, i.e., the MLRs (minimum loss ratios), meaning that the net profit to the companies has been greatly reduced (good by me, as long as the requirements for the public to participate are equally as strong… They are not). Primary care physicians on Medicare have already seen a severe reduction in their reimbursements by Medicare as Obama literally stole $716 Billion from Medicare to fund ObamaCare. I’m on Medicare and two of my Medicare Doctors have already left the system, one in Seattle, one in Palm Springs. Rx’s have been restricted on The Underwriter’s Insider

Part D of Medicare because of the Budget Office) told “US” that when loss of funds to Medicare. 

So, what Obama & Company first submitted happens now, as the Individual the numbers to actuarially compute Mandate, which was supposed the cost, important figures were not to be the “skeleton” that supports included, thus, “Garbage in, garbage ObamaCare has no out.”

 teeth, and is a façade “One plus one equals of stability instead I am probably two. That simple of a true system of among the lesson, which we are all “bones” to hold it in relatively few in taught as children, was place? ObamaCare America who not employed in the will implode. It will has read the vast calculating of the costs crumble within the majority of the of ObamaCare. Not next few years, and 2,700 page law. even the “new” math was I have not read America will be in very deep economic the “in excess” of employed. ObamaCare trouble when this 20,000 pages of was “erected” as a house several trillion dollar regulations, and of cards, and will fall program becomes a have no plans almost as quickly.” many trillion-dollar to do so. 

One loss to our economy, third of the many millions more law, literally people are left without coverage 900 pages, is IRS tax code. Many of than ObamaCare was created to those who were originally in favor help, and America will be facing of ObamaCare are now opposed to another incredibly serious recession, the law, as they finally found out if not a depression. “What’s in it,” which Representative Nancy Pelosi, then Speaker of the Remember, Barack Obama promised Democratic Party controlled House, “US” that the PPACA would cost no did NOT want anyone to know until more than $976 billion, and is now up it was made law. – 

http://www. to over 2 trillion dollars in anticipated costs. The CBO (Congressional Senator Max Baucus, considered to be the primary architect of the PPACA, recently stated that ObamaCare will be a “trainwreck”. That trainwreck is rapidly moving down the tracks, heading straight for US. HELP WANTED — POSITION




ObamaCare was an irresponsible, no “due diligence” performed, very poorly developed plan built on corrupt deals, and is a law that should never have seen the light of day. We

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needed serious insurance reform to address issues like cancellations, policy rescissions, and “Pre-existing” Condition clauses, as well as “Rate Increases” that were not justified. We most certainly did not need this horribly constructed mistake. This result really isn’t at all hard to compute. It’s simple math. One plus one equals two. That simple lesson, which we are all taught as children, was not employed in the calculating of the costs of ObamaCare. Not even the “new” math was employed. ObamaCare was “erected” as a house of cards, and will fall almost as quickly.

“When everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition. That is why buildings in the former Soviet Union -- like public housing in the United States -look decrepit within a year or two of their construction...” The late Milton Friedman Champion of Economic Freedom Slayer of Keynesian Theory




E-Commerce Trend Motivates Policy Makers To Modernize Insurance Laws

HICAGO – It is getting a lot easier in many states to show proof of insurance coverage during a traffic stop. In what has become one of the hot insurance-related legislative trends, 17 states passed laws this year allowing drivers to show proof of insurance using a smart phone. This brings to 24 the states that say “yes” to electronic proof of coverage, according to the Property Casualty Insurance Association of America (PCI). “In just two years policy makers in nearly half the country have changed their laws to enable consumers to use their smart phone to show they have insurance

instead of keeping that little piece of paper in the glove compartment,” said Alex Hageli, PCI director of personal lines policy. “It makes good sense to allow consumers and insurers to use increasingly ubiquitous technology to comply with the law.” The 17 states to approve electronic proof of coverage laws in 2013 are: Alaska, Arkansas, Colorado, Georgia, Indiana, Iowa, Kansas, Kentucky, Maine, Mississippi, North Dakota, Oregon, Tennessee, Texas, Utah, Washington and Wyoming. This list is likely to grow even longer in 2013 as legislation is awaiting signature by governors in Florida, Illinois, Missouri and Wisconsin.


PCI is supporting legislation still moving in Michigan, Ohio and Pennsylvania. “Increasing sales of tablets and other mobile devices are motivating consumers to want multiple communication platforms with their agent and insurer. The E-commerce trend is expanding and motivating other policy changes that will modernize insurance laws and ways of doing business,” said Kelly Campbell, PCI vice president for state affairs. “Three states have approved laws allowing electronic delivery of insurance documents, with five more states actively considering legislation during 2013 sessions. Electronic delivery of insurance documents will give consumers and insurers more choices and more flexibility in how policies are serviced. These laws are moving the interaction between customers and insurers away from the Pony Express and into the 21st Century.” Idaho, Kansas and Minnesota have approved e-Delivery laws in 2013, while Kentucky issued a bulletin allowing for it. E-Delivery legislation is moving through the legislature or on the governor’s desk in California, Florida, Missouri, Pennsylvania and Texas. “Public policymakers are also seeing the benefits of having


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insurance policies available electronically,” said Campbell. “Six states have approved laws in 2013 that will allow consumers to access their insurance policy through a website. Four more states are still actively considering these types of laws this year. This will enable a customer to see their insurance policy 24/7. This will be especially helpful when people are evacuated or suffer a loss following a natural catastrophe.” Posting policies on the Internet laws have been signed into law in Alaska, Arizona, Kansas, Minnesota, Oklahoma and Texas. Bills are the governor’s desk in Florida and Illinois. Legislatures are considering legislation in Missouri and Pennsylvania.



ASHINGTON, D.C., May 21, 2013 – According to preliminary reports, the tornado that ripped through Moore, Oklahoma and the surrounding area has been estimated as an EF4 by the National Weather Service. With a wind range of 166 – 200 mph, the tornado is responsible for a significant number of lost lives and property damage. Property-casualty insurers are already actively engaged in helping policyholders recover. “Our thoughts are with those families who lost loved ones as a result of yesterday’s tornado, and indeed, with everyone who has been touched by this terrible event. “Insurance claims adjusters have already begun helping policyholders and will be within the disaster zone itself as soon as permitted while some insurers have already deployed their mobile claims units to the vicinity. AIA’s members are actively communicating with policyholders by a variety of means including social media platforms such as Facebook and Twitter. We encourage policyholders to immediately contact their insurer to report damage and begin the claims process.”

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hile America struggles under the dead weight of a so-called recovery, while our national debt hovers near $17 trillion, increasing at $2.44 billion per day, while we are shutting down White House tours, national parks, swimming pools for our active military and federal fire-fighting budget, our President, the one that spoke of “shared sacrifice,” has taken a large entourage, including his entire family (and mother-in-law!) on a $100 million junket to Africa. That’s enough to pay the annual salary of 2,857 average Americans earning $35K. The trip lasted from June 26th to July 3rd. The costs included hundreds of Secret Service agents (and we know how those guys love to party...), fighter jets, a Navy ship with a complete trauma center, a fleet of military cargo plans hauling 56 vehicles - that include 14 limos and 3 trucks loaded with bullet-proof sheets to cover hotel windows. It was reported that the President and First Lady cancelled plans to go on safari during the trip due to the additional expense of sharp-shooters to protect against wild animal attacks. Wow. Thanks for watching those taxpayer dollars. “For the cost of this trip to Africa, you could have 1,350 weeks of White House tours,” Rep. George Holding, a North


Carolina Republican, said last week. “It is no secret that we need to rein in government spending, and the Obama administration has regularly and repeatedly shown a lack of judgment for when and where to make cuts. … The American people have had enough of the frivolous and careless spending.” Or you could send 1 million impoverished kids to summer camp for one week, according to the NAACP website. Not every conservative is complaining. One blogger, Joseph Farah or put it this way: “Think about it. Do you really want Obama in Washington concocting more ways to “stimulate” the economy? Do you really want Obama in Washington doing more of what he has done since Jan. 20, 2009? Do you really want Obama in Washington dreaming up new ways to curtail our freedoms and empower big government? You know what I mean?”

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efore you make out a check for your next charitable donation, check this list of the 30 least deserving charities - ranked by the amount they paid to their solicitors. For most of the groups on this list, only a tiny fraction of the funds collected, no matter how sympathy-

Rank Charity Name

inducing their name, went to help the focus of the charity. Children’s Cancer Recovery Foundation, for example, had only .6% available to help those children after paying solicitors $27.6 million. Let the donor beware! See the complete report and an additional 20 charities on the worst list HERE.

Total Raised

Paid To Solicitors

% Direct Aid Paid

1 Kids Wish Network $127.8 million $109.8 million 2.5% 2 Cancer Fund of America $98.0 million $80.4 million 0.9% 3 Children's Wish Foundation Int’l $96.8 million $63.6 million 10.8% 4 American Breast Cancer Foundation $80.8 million $59.8 million 5.3% 5 Firefighters Charitable Foundation $63.8 million $54.7 million 8.4% 6 Breast Cancer Relief Foundation $63.9 million $44.8 million 2.2% 7 Int’l Union of Police Assoc.., AFL-CIO $57.2 million $41.4 million 0.5% 8 National Veterans Service Fund $70.2 million $36.9 million 7.8% 9 American Assoc. of State Troopers $45.0 million $36.0 million 8.6% 10 Children's Cancer Fund of America $37.5 million $29.2 million 5.3% 11 Children's Cancer Recovery Foundation $34.7 million $27.6 million 0.6% 12 Youth Development Fund $29.7 million $24.5 million 0.8% 13 Committee For Missing Children $26.9 million $23.8 million 0.8% 14 Assoc. for Firefighters and Paramedics $23.2 million $20.8 million 3.1% 15 Project Cure (Bradenton, FL) $51.5 million $20.4 million 0.0% 16 National Caregiving Foundation $22.3 million $18.1 million 3.5% 17 Operation Lookout for Missing Youth $19.6 million $16.1 million 0.0% 18 U.S. Deputy Sheriffs' Assoc. $23.1 million $15.9 million 0.6% 19 Vietnow National Headquarters $18.1 million $15.9 million 2.9% 20 Police Protective Fund $34.9 million $14.8 million 0.8% 21 National Cancer Coalition $41.5 million $14.0 million 1.1% 22 Woman To Woman Breast Cancer Foundation $14.5 million $13.7 million 0.4% 23 American Foundation For Disabled Children $16.4 million $13.4 million 0.8% 24 The Veterans Fund $15.7 million $12.9 million .3% 25 Heart Support of America $33.0 million $11.0 million 3.4% 26 Veterans Assistance Foundation $12.2 million $11.0 million 10.5% 27 Children's Charity Fund $14.3 million $10.5 million 2.3% 28 Wishing Well Foundation USA $12.4 million $9.8 million 4.6% 29 Defeat Diabetes Foundation $13.8 million $8.3 million 0.1% 30 Disabled Police Officers of America Inc. $10.3 million $8.1 million 2.5%

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Breaking Industry News


eter Foley, AIA vice president for claims administration, issued the following statement on yesterday’s release of the Center for Medicare and Medicaid Services (CMS) ALERT for property-casualty insurers on the implementation date for their conversion to reporting of ICD-10 diagnosis under Section 111 Medicare Secondary Payer mandatory reporting. The ALERT delays the ICD-10 implementation date for property-casualty insurers until April 1, 2015, while providers of medical services must convert to ICD-10 on October 1, 2014. “AIA first requested a time lag delay from the broader ICD-10 implementation date in 2011, and has continued urging CMS to release an ALERT with this delay. It is necessary in order to give property-casualty insurers adequate time to collect the codes that must be reported. We applaud this action by the CMS, and believe that the additional time will serve to benefit accurate Section 111 reporting.”


rown & Brown, Inc. (NYSE: BRO), along with its wholly-owned subsidiary, Hull & Company, Inc., today announced that Jeffrey B. Case, CRIS, MLIS, has been named Environmental Liability Practice Group Leader of the Company’s Wholesale Brokerage Division. Jeff joined Brown & Brown in 2005 with Brown & Brown’s acquisition of Hull & Company, where he served as Vice President.


he Florida Office of Insurance Regulation (Office) issued a Consent Order yesterday allowing Bermuda-based MS Frontier Reinsurance Limited to post reduced collateral and operate as the 21st eligible reinsurer in Florida offering property catastrophe reinsurance. MS Frontier Reinsurance Limited

reported capital and surplus exceeding $836 million on their most recent year-end financial statement as of December 31, 2012, which exceeds the $250 million requirement under Section, 624.610(3)(e), Florida Statutes. The reinsurer also indicated secure financial strength by demonstrating favorable ratings from two statistical rating organizations deemed acceptable by the Commissioner as having experience and expertise in rating insurers doing business in Florida.


orth Carolina Ins. Commissioner Wayne Goodwin today announced the arrest of Darron Terrell Monroe, 22, of 302 McIver St., Fayetteville; he was charged with one count of obtaining property by false pretense. Wayne Goodwin Department of Insurance criminal investigators allege that Monroe


emember TWA Flight 800 that crashed off the coast of Long Island 17 years ago? Remember how the NTSB assured us that it blew up as a result of a short-circuit in a fuel tank? Now a group of whistle blowers from the original investigative team have come forward claiming the official explanation for the crash was wrong - however they have stopped short of saying the plane was shot down. If the plane was taken down by terrorists - or by an errant U.S. Navy missile, it could have an enormous impact on millions of dollars of long -settled insurance claims. 18

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submitted a fraudulent insurance claim to Omni Insurance Company on Oct. 11, 2012, in an attempt to obtain payment for injuries he allegedly sustained in a motor vehicle accident. Monroe was arrested June 6 in Cumberland County and was placed under a $25,000 secured bond.


he South Carolina Department of Insurance is pleased to announce the appointment of Kendall R. Buchanan as the Deputy Director of the Market Services Division. The new Market Services Division will consist of the Offices of Consumer Services, Market Analysis and Product Regulation. Kendall graduated summa cum laude from the University of South Carolina with dual degrees in Finance and Insurance and Risk Management in 2006. She comes to the Department from Richardson and Ritchie, a government relations consulting firm in Columbia, South Carolina. She has business and insurance regulatory experience having worked as the Legislative Liaison for the South Carolina Department of Insurance. Kendall succeeds James Byrd who retired from the Department in February after more than 30 years of distinguished service. The Department is pleased to welcome Kendall.


federal court in Orlando, Fla., permanently barred Carlos A. Cabrera from preparing federal tax returns for others, the Justice Department announced today. The permanent injunction order was signed by Judge Charlene E. Honeywell of the U.S. District Court for the Middle District of Florida. Cabrera, whose business was in Kissimmee, Fla., consented to the permanent injunction order without admitting the allegations against him. The government complaint in

the civil injunction action alleged that Cabrera and his business— Cabrera Financial Group—prepared federal income tax returns for customers that claimed improper losses for non-existent businesses and fabricated education credits in order to unlawfully understate customers’ tax liabilities. According to the complaint, Cabrera prepared over 17,000 tax returns for 2009 and 2010, with an average tax understatement of $4,222 per return for returns the Internal Revenue Service examined. The government suit alleged that the total losses to the Treasury Department from Cabrera’s misconduct could be tens of millions of dollars for those two years alone.


ccording to a recent report from PEW Research: “An overwhelming share of America’s lesbian, gay, bisexual and transgender adults say society has become more accepting of them in the past decade and just as many expect it to grow even more accepting in the decade ahead. At the same time, however, about half say there is a lot of discrimination against LGBT adults and just 19% say there is a lot of acceptance of LGBT adults today.”


ased on a study of 10,000 U.S consumers, USAA has earned the most trust from its customers. In the third annual Temkin Trust Ratings of 246 companies across 19 industries, two of USAA’s business areas —insurance and banking— topped the list of companies. USAA’s credit card business was also ranked sixth. The other companies in the top 10 of the ratings are credit unions, Publix, H.E.B.,, Trader Joe’s, Charles Schwab, and Sam’s Club. Not all companies have earned their customers’ trust. HSBC earned two of the bottom three spots for its credit card and banking businesses. TV service providers and Internet service

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providers dominate the bottom of the ratings, collectively taking 10 of the bottom 15 spots. The other companies in the bottom 15 are US Airways, CareFirst, and T-Mobile.


n early July, Stephen Zielezienski, AIA senior vice president and general counsel, issued the following statement on the Federal Reserve Board’s final Basel III capital rule: “During the public comment period, AIA urged the Federal Reserve Board to not apply bank-centric rules to the insurance industry. We are pleased that the Board’s final rule provides a temporary exemption for savings and loan holding companies that derive more than 25 percent of their total consolidated assets from insurance underwriting activities. We hope that, as the Board further reviews its action, it will make this exemption permanent so that companies that are actively engaged in the business of insurance and subject to Board supervision will not be forced to adopt an inappropriate capital framework that could weaken their ability to compete.”


ccording to a recent report in Business Insurance, “Legislation introduced in the House of Representatives last week would exempt thousands of small employers from a key health care reform law provision that will require employers to offer coverage or pay a stiff fine. Under the Patient Protection and Affordable Care Act, effective in 2014, employers with 50 or more fulltime employees will have to provide qualified coverage or pay a $2,000 penalty for each full-time employee, minus the first 30 employees. Under H.R. 2577, introduced last week by Rep. Luke Messer, R-Ind., that requirement to either offer coverage or pay a financial penalty would only apply to employers with at least 100 full-time employees.” [MORE] 19



ALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty announced today that a multi-state, multi-agency life claim settlement agreement has been reached with TIAA-CREF Life Insurance Company (TIAA) and its affiliates.

Practices Task Force, established by the National Association of Insurance Commissioners (NAIC) in 2011 and chaired by Commissioner McCarty. Florida, California, Illinois, North Dakota, New Hampshire and Pennsylvania serve as lead states for examinations.

This settlement with TIAA marks the sixth life claim settlement for Florida and these six insurers represent more than 36% of the market for life and annuity products. Nationally, the focus continues to be the examination of the 34 remaining top national life and annuity insurers.

This agreement is between TIAA-CREF and the Florida Department of Financial Services (DFS), overseen by Chief Financial Officer Jeff Atwater, the Florida Office of the Attorney General (AG), overseen by Attorney General Pam Bondi, and the Florida Office of Insurance Regulation (Office) and the other lead states.

Specifically, the settlements focus on the insurers’ appropriate use of the U.S. Social Security Death Master File (DMF) to locate beneficiaries and then promptly remit payment to the unclaimed property division of each state for beneficiaries that cannot be located. TIAA has represented that a year prior to the start of the multi-state examination, they cross checked their system with the DMF and have already returned more than $10 million to beneficiaries located as a result of this process. This agreement also requires payment of $6.2 million to the participating states with Florida’s share of the allocation expected to be more than $304,000. The multistate examination process is guided and coordinated by the Life/Annuities Claim Settlement 20

“Several of the major life insurers in the country, and now TIAA-CREF, have demonstrated industry leadership in the effort to revise practices in the life insurance industry. These companies have agreed to actively look for beneficiaries of dormant policies, to pay their claims to beneficiaries if they can be found and, if not, to pay to unclaimed property units as required by law. We are optimistic that the remaining insurance companies which have not yet signed similar agreements will decide to do so,” stated Commissioner McCarty. “The credibility of the life insurance industry is a valuable asset that took years to build. People must be confident

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that their intended beneficiaries will receive the benefit of their purchases or they will not continue to buy life insurance policies.” "This settlement is another win for Florida's consumers," CFO Atwater said. "I will continue to fight this underhanded practice by insurance companies until every company does right by the Floridians they serve." "This settlement includes requirements that TIAA-CREF complete its due diligence in locating life insurance beneficiaries and paying them the money that they are owed in a timely manner," stated Attorney General Pam Bondi. "I am pleased that the company has taken the appropriate steps to honor its obligations to policyholders and the State of Florida." As part of the agreement, TIAA agreed to: · Perform comparisons of all insureds in its company records against the complete DMF within 12 months from the Agreement effective date, and continue this practice on a monthly basis. · Provide the lead states quarterly reports about the implementation and execution of the requirements of the Agreement for 36 months following its conclusion. · Allow the lead states to conduct a follow-up examination to determine compliance 39 months following the conclusion of this Agreement. The Underwriter’s Insider



ot long after the 9/11/2001 terrorist attack on Manhatten, one Richard C. Reid, a 29-year-old British Muslim flew on American Airlines flight 63 from Paris to Miami. The date was December 22, 2001 - and Mr. Reid was wearing high-top sport shoes packed with enough plastic explosives to tear a hole in the jet’s fuselage and send 197 passengers and crew members to an almost certain death. The radical Muslim’s plan was thworted when Reid failed to light a sweat-soaked fuse attached to his shoe. The hapless terrorist was quickly set upon by fellow passengers who restrained him until the plane landed and authorities took him into custody.

Judge Young: 'Mr. Richard C. Reid, hearken now to the sentence the Court imposes upon you. On counts 1, 5 and 6 the Court sentences you to life in prison in the custody of the United States Attorney General. On counts 2, 3, 4 and 7, the Court sentences you to 20 years in prison on each count, the sentence on each count to run consecutively. (That's 80 years.) On count 8 the Court sentences you to the mandatory 30 years again, to be served consecutively to

The Court imposes upon you an $800 special assessment. The Court imposes upon you five years supervised release simply because the law requires it. But the life “I’ve known warriors. sentences are real You are a terrorist. A life sentences so I species of criminal need go no further.

that is guilty of multiple attempted murders. In a very real sense, State Trooper Santiago had it right when you first were taken off that plane and into custody and you wondered where the press and the TV crews were, and he said: ‘You are no big deal.”

Prior to sentencing, the Judge asked the defendant if he had anything to say.

the 80 years just imposed. The Court imposes upon you for each of the eight counts Reid admitted his a fine of $250,000 guilt to the court as that's an aggregate well as his ‘allegiance fine of $2 million. to “Osama bin Laden, The Court accepts to Islam, and to the the government's religion of Allah,’” recommendation defiantly smurking, “I with respect to think I will not apologise restitution and for my actions, I am at Richard C. Reid orders restitution in the war with your country.” Inept Terrorist amount of $298.17 to We reprint Judge William Young’s Andre Bousquet and $5,784 to American Airlines. rebuke to Reid below:

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This is the sentence that is provided for by our statutes. It is a fair and just sentence. It is a righteous sentence.

Now, let me explain this to you. We are not afraid of you or any of your terrorist c o - c o n s p i r a to r s, Mr. Reid. We are Americans. We have been through the fire before. There is too much war talk here and I say that to everyone with the utmost respect. Here in this court, we deal with individuals as individuals and care for individuals as individuals. As human beings, we reach out for justice. You are not an enemy combatant. You are a terrorist. You are not a soldier in any war. You are a terrorist. To give you that reference, to call you a soldier, gives you far too much stature. Whether the officers of government do it or your attorney See Shoe Bomber Rebuke Page 30 21



tlanta – Georgia Insurance Commissioner Ralph Hudgens announced today that his Fraud Investigation Unit has issued an arrest warrant for a South Georgia insurance agent on six counts of felony insurance fraud and seven counts of identity fraud charges. The arrest warrant, executed in cooperation with the Dodge County Sheriff’s Department, alleges that David Marcus Jones, Jr., 50, of Douglas, Ga., submitted applications for insurance coverage for six employees of the Dodge County Tax Appraiser office without their knowledge or authority.


and life insurance were issued and employee salaries were deducted without their permission.” Hudgens said. “Such actions constitute a violation of a trust between an agent and policyholder, a violation we take very seriously.”

Georgia Insurance Commissioner Ralph Hudgens

“Our investigation has determined that policies for disability, critical illness

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At the time the alleged crimes occurred, Jones was employed by Taylor Insurance Services in Valdosta, Ga., who is the Benefits Plans Servicing Agency for Dodge County. Jones allegedly used his position as an Employee Benefits Specialist to obtain the employee’s personal information and submit the applications to American Heritage Life Insurance Company for commission. The Underwriter’s Insider

“The Final Authority on Everything!” Scamming the Scammer


enforcement can do little about this international fraud once the money One must ne of my employees recently fell has been transferred. turn up the sensitivity on one’s B.S. victim to what law enforcement calls the “Nigerian Scam.” She received detector and beware too-good-toan email from a “Mokata Muboto,” be-true offers of any sort. If you have allegedly the son and only heir of the the time and the inclination, however, former Finance Minister you can have some of some small African fun with the would-benation. The story went scammer while bogging that Mokata’s late father down their whole rotten was able to squirrel away enterprise. The Advisor about $15 million of was selling a bike on public funds into a private Craigslist recently for bank account. “Mokata” $250.00. We received an claimed he needed my email on the item that employee to help him read: move the money into a U.S. account and would pay her generously (about $5 million!) Hello,i am interested in the posted item. Kindly get back for her assistance. All she had to do to me with your final asking was sign and scan a little form and price and the current congive Mokata her banking info and dition. I await your quick she would receive the entire $15 million into her account. Mokata only wanted $10 million back when the funds cleared. What a deal! As it turned out, the $1200 she had in her account disappeared within 24 hours of her sending back the transfer authorization and, obviously, Mokata was never heard from again. Lesson learned, but more people should be aware. T.J. Valdosta, GA.


reply. I will be glad if you can contact me via here royxxx at gmail dot com or via text here (732) 730xxxx. (NJ area code) Please strictly text due to my kind of work. I hope to read from you soon. Thanks, Roy

What were the clues this may have been a scam? First, “Roy” referred to “the posted item” rather than the bike. Since “Roy” is working this scam on dozens of Craigslists posts simultaneously, he doesn’t want to be bothered by having to type in a different item for sale every time he cuts and pastes his message into an email. The language and grammar is stilted and awkward - English is probably not “Roy’s” first language. Further, he asked almost nothing See Stupid Scammer Page 36

P.T. Barnum was right on when he said, “There is a sucker born every minute.” The “Nigerian” scam is one of the oldest out there - and it’s difficult to believe anyone would still fall for such an obvious rip-off. The advisor receives some variation of this scam weekly in our email inbox. Unfortunately, law

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SAY WHAT? Notable Quotes You May Have Missed!

Deafening Silence... “It’s been just under two months since the attacks in Boston and in those intervening weeks, the silence of Muslim leaders has been deafening…and that is sad, but most importantly, it is dangerous.” - U.S. Congressman Mike Pompeo (R-KS/4th) reacting to the dead silence coming from the so-called “moderate Muslims” after the Boston Marathon attacks. [MORE]

Affordable Care Act = Drastic Increase In Georgia Health Insurance Cost...

No Room In ObamaCare For Agent Commissions

“I am very concerned that the full implementation “The Patient Protection and Affordable Care Act of ObamaCare will drastically increase the price Georgians pay for health insurance.” - Georgia Insurance Commissioner Ralph Hudgens.

Blame America First...

“A country has to look back before it can move

forward. Instituting a doctrine of the mea culpa would enhance our credibility by showing that American decision-makers do not endorse the sins of their predecessors. Some anti-Americanism derives simply from our being a colossus that bestrides the earth, but much anti-Americanism derives from the role U.S. political, economic, and military power has played in denying such freedoms to others.” President Obama’s recent appointee as our Ambassador to the U.N., Samantha Power actually endorsing a doctrine of “mea culpa;” of apology. She doesn’t see Ronald Reagan’s “Shining City on a Hill.” Power sees the United States only as the problem - never the solution. We have, apparently, only committed sins against the world and now must continually and constantly apologize. Power, of course, is aligned perfectly with Obama’s philosophy, once having his world travel described as an “apology tour.” Yet Power’s charge that the U.S. has been instrumental Samantha Power in “denying freedoms to others” No Cheerleader is so far out there, so blatantly For America false on its face, that any rebuttal is unnecessary. Nevertheless, let her walk through the American cemeteries in Normandy, France and dare to repeat that slander. Yes folks, this is America’s Ambassador to the United Nations. We now face the prospect of this pathetically unqualified, America-blaming non-patriot, hobbled by “the sins of her predecessors,” tasked with articulating and defending our national interest in the already rabidly anti-American U.N. Sadly, she’ll fit right in.


[ObamaCare] dictates that health insurers must spend at least $0.80 of every $1.00 in premiums collected on health care in the individual and small group markets, and $0.85 in the large group market. Insurance agents represented by National Association of Health Underwriters tried hard for the government to define their commissions as part of the medical We Don’t Need expense and failed. No Stinkin’ Agents... The argument by insurance agents was a senseless argument. Obviously, financial constraints are such that health insurance companies are being forced to develop new products that are suitable for the 30 million uninsured Americans who will soon be insured under the law. There will be no room for commissions in the new lower cost products.” - From an insightful column in Forbes magazine by Nigam Arora, engineer, nuclear physicist and founder of two Fortune 500 companies predicting the demise of the health insurance agent in America. Don’t worry about the jobs lost - 100’s of thousands of them - Obama plans to make up for the displaced insurance agents by hiring thousands of new IRS workers so that you can be properly audited and penalized when you fail to participate in the dismantling and destruction of the best health care system the world has ever seen. [MORE]

Another Billion Dollar Bureaucracy!

“The Obama administration granted a whopping

$910 million to California to set up its insurance exchange. That money is not for bandages, surgery, nurses and doctors to care for the sick. Nor is it for insurance plans, though $910 million could buy generous coverage for at least 113,000

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people! Shockingly, the $910 million is slated for bureaucracy, including rich compensation packages for exchange employees ($360,000 a year for the executive director) and contracts for computer equipment, public relations and ‘outreach.’” - From an article on by Metsy McCaughey revealing that the lion’s share of half a billion dollars of taxpayer money is going for what the exchange calls “outreach.” Right. [MORE]

Why California Is On The Left Coast...

“Frankly, I don’t know what it is about California,

but we seem to have a strange urge to elect really obnoxious women to high office. I’m not bragging, you understand, but no other state, including Maine, even comes close. When it comes to sending left-wing dingbats to Washington, we’re Number One. There’s no getting around the fact that the last time anyone saw the likes of Barbara Boxer, Dianne Feinstein, Maxine Waters, and Nancy Pelosi, they were stirring a cauldron when the curtain went up on ‘Macbeth’. The four of them are like jackasses who happen to possess the gift of blab. You don’t know if you should condemn them for their stupidity or simply marvel at their ability to form words.” - From “The New And Improved Iron Curtain” by Burt Prelutsky, former L.A. Times Reporter, blogger and political pundit.

Nationwide Overplays Its Hand

“For any insurer to expect all shops to operate by

the same rates, procedures and charges regardless of training, manufacturer certifications, equipment and facilities is ludicrous. We found that shortpay litigation was necessary to stop insurer underpayments and provide our customers with the factory-certified repairs their policy affords them,” Bradshaw said. I hope our actions and results encourage other quality-minded repairers to seek similar actions against the less than ethical insurers. I know such actions are necessary to stop such behavior and to best serve our community members, our employees and our company,” Bradshaw said. “We’ll continue to share our efforts with others so they may know that they no longer have to accept insurer dictation of repairs, rates, materials and charges.” - Michael Bradshaw, vice president of operations for K&M Collision, Hickory N.C., after winning a lawsuit against Nationwide Mutual claiming underpayment for several “reasonable and necessary repair costs.” This ruling could result in acrossthe-board repair cost increases for auto insurors. The judgement in the lawsuit was small (more than $2500) but the precedent it sets could be very expensive.

Commercial Insurance Online Soon?


most of the mainstream commercial lines, it’s not a reality yet, but given the proclivity of people who want to spend more of their personal and professional time online and the number of financial transactions completed online, we think it is inevitable that this will take a significant share down the road. About one in five people are perhaps very likely to [buy commercial lines product online]. We consider these the eager beavers. About onethird are what we call the fence sitters—they are somewhat likely to do this online under the right circumstances. It’s a significant portion of the population that is open to doing this. - Sam Friedman, research team leader at the Deloitte Center for Financial Services predicting the migration of commercial insurance online - within 3-5 years. [MORE]

Premium Growth Up Rate Increases Moderate


growth held up well given the challenging economic environment. The nonlife market was supported by steady increases in risk exposures in emerging markets and by selective premium rate increases in some advanced markets, particularly in Asia. Low interest rates continue weigh on insurers’ profits. However, rate increases likely will be moderate given the prevailing surplus capacity in the markets.” - Daniel Staib, a senior economist at Swiss Re and one of the authors of a recent report on P&C profitability.

Milton Friedman...

“There is all the difference in the world, however,

between two kinds of assistance through government that seem superficially similar: first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent -- William Graham Sumner’s famous example of B and C decided what D shall do for A. The first may be wise or unwise, an effective or ineffective way to help the disadvantaged -but it is consistent with belief in both equality of opportunity and liberty. The second seeks equality of outcome and is entirely antithetical to liberty.” The late, great economist Milton Friedman - who, like most conservatives, advocates the concept of equal opportunity - not equal outcome.

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MAR 2013

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MAY 2013

APR 2013

FEB 2013

JAN 2013

2012 Issue 10

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2012 Issue 5

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Continued From Page 21

SHOE BOMBER REBUKED does it, or if you think you are a soldier, you are not-----, you are a terrorist. And we do not negotiate with terrorists. We do not meet with terrorists. We do not sign documents with terrorists. We hunt them down one by one and bring them to justice. So war talk is way out of line in this court You are a big fellow. But you are not that big. You're no warrior. I've known warriors. You are a terrorist. A species of criminal that is guilty of multiple attempted murders. In a very real sense, State Trooper Santiago had it right when you first were taken off that plane and into custody and you wondered where the press and the TV crews were, and he said: ‘You are no big deal.” What your able counsel and what the equally able United States attorneys have grappled with and what I have as honestly as I know how tried to grapple with, is why you did something so horrific. What was it that led you here to this courtroom today?


that to us is most precious. You hate our freedom. Our individual freedom. Our individual freedom to live as we choose, to come and go as we choose, to believe or not believe as we individually choose. Here, in this society, the very wind carries freedom. It carries it everywhere from sea to shining sea. It is because we prize individual freedom so much that you are here in this beautiful courtroom, so that everyone can see, truly see, that justice is administered fairly, individually, and discretely. It is for freedom's sake that your lawyers are striving so vigorously on your behalf, have filed appeals, will go on in their representation of you before other judges. We Americans are all about freedom. Because we all know that the way we treat you, Mr. Reid, is the measure of our own liberties. Make no mistake though. It is yet true that we will bear any burden; pay any price, to preserve our freedoms. Look around this courtroom. Mark it well. The world is not going to long remember what you or I say here. The day after tomorrow, it will be forgotten, but this, however, will long endure.

I have listened respectfully to what you have to say. And I ask you to search your heart and ask yourself what sort of unfathomable hate led you to do what you are guilty and admit you are guilty of doing? And, I have an answer for you. It may not satisfy you, but as I search this entire record, it comes as close to understanding as I know.

Here in this courtroom and courtrooms all across America , the American people will gather to see that justice, individual justice, justice, not war, individual justice is in fact being done. The very President of the United States through his officers will have to come into courtrooms and lay out evidence on which specific matters can be judged and juries of citizens will gather to sit and judge that evidence democratically, to mold and shape and refine our sense of justice.

It seems to me you hate the one thing

See that flag, Mr. Reid? That's the flag

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of the United States of America . That flag will fly there long after this is all forgotten. That flag stands for freedom. And it always will. Mr. Custody Officer. Stand him down.

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ZALMA employee was conducting unloading operations at a Bayer chemical plant in Baytown, Texas. SGS learned of the release that same day. Based on the initial report and information Bayer provided SGS, the preliminary estimate for the clean-up costs was between $600, 000 and $1 million. Because this was within the $2 million coverage limit of its primary policy with Allianz, SGS did not inform Starr of the release. However, on December 20, 2010, Bayer presented SGS with invoices reflecting clean-up costs of over $4 million. Only in late December did SGS first realize the costs exceeded $2 million and would trigger coverage beyond the limits of its policy with Allianz. On January 5, 2011, fifty-nine days after SGS learned of the chemical release, SGS sent an email reporting the release to Starr.On June 30, 2011, Starr sought a declaratory judgment that its insurance policy did not cover SGS’s claim because SGS failed to notify Starr of the chemical release within thirty days after learning of it.

Around the same time, SGS moved provided “a narrow exception to the for summary judgment, alleging that absolute pollution exclusion.” Matador (1) the 30-day requirement must be reported the incident to the insurance construed as a covenant and not as a company 38 days later and requested condition precedent; (2) failure to strictly coverage under the policy for resulting comply with the 30damages claimed “To extend the 30-day day requirement by adjacent notice period would have did not excuse landowners. St. Starr’s performance Paul declined the exposed the insurer “to absent prejudice; request because a risk broader than the (3) Starr was not Matador had risk expressly insured prejudiced as a failed to report the against in the policy matter of law; and pollution incident Both the insured and the (4) in the alternative, within 30 days, as the policy was insurer were sophisticated required by the ambiguous and the endorsement. commercial parties with Court must construe comparable bargaining any ambiguity in Matador’s key power, that the language favor of the insured. argument in that of the endorsement was case was that St. The trial court Paul suffered no plain, and that timely granted Starr’s prejudice from the reporting of the claim motion for delay of eight days was one of the events judgment on the in receiving notice necessary to trigger pleadings. of the incident coverage.” and, therefore, St. Paul should not DISCUSSION have been relieved In Matador Petroleum Corp. v. St. Paul of its obligation to provide coverage. Surplus Lines Ins. Co., 174 F.3d 653 (5th The Fifth Circuit noted that the basic Cir. 1999) the insurer, St. Paul, issued insurance contract in Matador, which an insurance policy containing an excluded pollution coverage, was absolute pollution supplemented by the endorsement, exclusion clause constituting additional coverage for that, among which the parties had bargained. other things, specifically did not cover any injury or damage from pollution resulting from several sources, including waste pollution. In addition to this basic policy, Matador, the insured, purchased an endorsement that

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To extend the 30-day notice period would have exposed the insurer “to a risk broader than the risk expressly insured against in the policy.” Both the insured and the insurer were sophisticated commercial parties with comparable bargaining power, that the language of the endorsement was plain, and that timely reporting of the claim was one of the events necessary See Zalma Pg 35 31

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KIM KOMANDO 3. Custom profiles

Another common scam offers to change your Facebook profile look or layout. A famous version was the Facebook Black scam. It supposedly gave you a slick, black color scheme.

works after you’ve activated one of the tracking services. These are the most popular scams, but it’s really just the tip of the iceberg. I keep you updated on the major ones on my Facebook page, so be sure to “Like” me. If you want to keep track of every scam happening on Facebook, the site Facecrooks is updated with scams as they break.

Copyright 2013, WestStar Multimedia Entertainment. All rights reserved. Kim Komando hosts the nation’s largest talk radio show about consumer electronics, computers and the Internet. To get the podcast, watch the show or find the station nearest you, visit: http://www. To subscribe to Kim’s free email newsletters, sign-up at:

These scams try to trick you into installing a rogue Facebook app. If you do, you give the scammer access to your personal data. It will also spam your friends to try and trick them. Again, this scam is easy to avoid. Just remember that there’s no official, or unofficial, way to change your Facebook layout. A program like Social Fixer can change the way you see it, but nothing will change the way other people see it.

4. Who viewed your profile? Knowing who views your profile is the Holy Grail of social media. Who doesn’t want to know who is cyber-stalking them? That’s why this scam has been around almost as long as Facebook. No matter how often Facebook says it isn’t possible, people still want to believe it is. So they gladly download apps or visit websites that turn out to be malicious. And they give full access of their Facebook profile to strangers. No good can come of that. The best you can do is see who has unfriended you. Of course, that only

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ZALMA to trigger coverage. We concluded that whether the insurance company suffered prejudice as a result of the late notice was irrelevant because the insurance policy was being enforced according to its terms. The pertinent provisions of the insurance policy are virtually identical in Starr’s policy to those in Matador. The “assured,” SGS, did not report the triggering incident to Starr until fiftynine days after it learned of the chemical release. The holding in Matador clearly dictates that Starr was justified in denying coverage under the specific terms of the buy-back provision which the parties had negotiated to replace the original pollution exclusion. SGS apparently acknowledges the precedential impact of Matador, but argues that the opinion is “no longer tenable” and its reasoning is “deeply flawed.” It maintains that the Texas Supreme Court has now changed the law pertaining to notice requirements

in insurance contracts, citing PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. 2008) and Prodigy Communications Corp. v. Agricultural Excess & Surplus Ins. Co., 288 S.W.3d 374 (Tex. 2009). The Fifth Circuit did not agree because neither PAJ nor Prodigy involved a specifically negotiated buy-back provision, such as the one involved in this case and in Matador. As discussed above, Matador found that the notice provision in that case was an essential part of the bargained-for exchange because it was a specific provision negotiated by two sophisticated commercial parties in order to supplement the main insurance policy. It is clear then that PAJ and Prodigy do not disturb the holding in Matador since neither one reached any conclusion regarding notice requirements for this type of supplemental coverage. In fact, PAJ cited Matador approvingly to explain why a general notice requirement in an occurrence-based policy is not an essential part of the bargained-for exchange. In this case the Fifth Circuit is dealing with a specific endorsement, separately negotiated by the parties, and with a clear notice requirement. Following an inquiry similar to the one outlined in PAJ and Prodigy, Matador concluded that a notice requirement in this type of supplemental pollution endorsement is essential to the bargained-for coverage. The Fifth Circuit concluded that it was bound by the Matador precedent. SGS’s remaining arguments: The Fifth Circuit found no basis for applying a different rule to excess carriers when interpreting the meaning of a contractual provision. While Condition C was obviously considered an appropriate notice provision for the main policy, that policy excluded

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pollution coverage. When the pollution endorsement was added, the parties specifically inserted a 30-day reporting requirement, which would necessarily trump the notice provision of the main policy. Since endorsements to a policy generally supersede and control over conflicting printed terms within the main policy.

ZALMA OPINION As I said in an earlier post on the same issue in a post “Report Promptly or Lose”, at report-promptly-or-lose/ it is possible for an insurer, whether primary or umbrella, to avoid the notice-prejudice rule by entering into a specific “buy back” of an exclusion agreement See Zalma Pg 38 35

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about the bike other than “its current condition,” which was fully described in the ad. We knew it was a scam, but we thought we’d have a little fun with “Roy” while pointing him out to law enforcement. We replied with a quick scam test: Hi Roy - There has been so much interest in the posted item, I was forced to raise the price to $350. Interested?

“Roy” didn’t even flinch at the extra $100 - pretty much confirming the scam. The Advisor even used the last name, “Ontou” (On - To - You!), but “Roy” never caught on: Hello, Thanks for the response,I really appreciate it and am ready for its purchase . I Would have love to come over for viewing but I’m afraid that might not be possible due to my work frame.I am willing to pay you via cashier check.I don’t mind adding an extra $30 for you to take the advert down from Craigslist, so that I can be rest assured that am in hand of the bike. I’ll be responsible for the pick-up and the movers fee will be included in your payment to avoid delay. My movers will move down to your place for the pick up as soon as the check clears and you have the cash in hand. Hope to read from you soon so we can proceed with the details needed for the check. You can ignore this message Thanks, Roy

And that’s the scam in a nutshell. “Roy” is going to send a (fake) cashier’s 36

check that will include $350 payment for the bike, an extra $50 to take the ad down and extra $ for the “movers.” I’m supposed to deposit it and hand cash to the movers along with the bike. We continued to reel him in: Hi Roy -Sounds like a deal. When will you be sending the cashier’s check? What will be the exact amount? Please send to: Post office Box XXXXXX Palm Beach Gardens, FL 33420 Best, Mr. Ontou

And “Roy” responded in his now familiar, awkward fashion: Thanks,do get back to me with your details in the form below to facilitate the mailing of the payment. Full name to be on the check: Full contact address with your apt#: Contact numbers: Zip code: Once again, I will like you to know that you will not be responsible for shipping of this bike. I’ll be responsible for the pickup and the movers fee will be included in your payment to avoid delay. My Mover will move down to your place for the pick up as soon as the check clear.


Shortly thereafter, “Roy’s” check for $2,900 showed up in my post office box. In a series of text exchanges, “Roy” explained that I was to cash the check, deduct the $400 for the bike, and have $2,500 cash ready to hand to his “movers” when they arrived to pick up the bike. The minute I had the cash ready, “Roy” was ready to grab it - and he texted me every hour to see when that happy moment arrived. “Roy’s” check came from a Washington State tractor equipment business - which didn’t quite match his NJ area code or the Kansas City location in which he mailed his check - all more evidence

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revealing the obvious scam. The clincher came during a conversation with the tractor equipment company where they revealed that their checking account had been hacked, several fake checks had been presented without success and they had subsequently closed and replaced the account. The Advisor had also contacted the U.S. Postal Inspector which opened an investigation as well as the Palm Beach County Sheriff’s office Economic Crimes Unit - who also took a report and opened an investigation. Law enforcement informs, in the classic version of this scam, the scammer never attempts to pick up the “posted item,” but sends a courier to pick up the cash. But this was the fun part as The Adviser’s text exchange reveals: Advisor: Hi Roy - ok - was able to get $2500 cash quick due to good relationship with bank. “Roy:” Okay good, good. So the cash is with you now? Advisor: No there is a small problem. “Roy:” What is the problem? Advisor: I used the money to buy cruise tickets for me and my girlfriend. Haven’t been on vacation in a long time... “Roy:” What? I don’t think I understand you? Where is my money? Advisor: I’ll have to owe you. Sorry Roy. You shouldn’t be so trusting. Putting all that cash in the hands of a perfect stranger is just not smart. Haven’t you heard about all those Internet scams? “Roy:” So what’s gonna happen to the kayak? The Underwriter’s Insider

Advisor: I think you mean the bike. Gets confusing, doesn’t it? [Note: “Roy” was busy scamming so many people at once - he couldn’t remember what he was buying from me!]

Don’t take it personally. A few of days later, the Advisor grabbed a couple of cruise images off the Internet and texted them to “Roy.” “Thanks Roy! Wish you were here!” You da man!


“Roy:” Are you trying to rip me off because I want to buy a bike from you? I don’t believe this s--t.

ordon Zemlock, 50, the owner of Jay-Zee Financial Group in E. Brunswick, N.J., was sentenced to 10 years in prison for defrauding 20 clients out of more than $1.4 million.

Advisor: I’m really sorry Roy. Just haven’t had that much money in my hands in a long time. We always wanted to go on a five day cruise Roy. We got a really nice cabin and we leave Monday. “Roy:” How much do you have left with you? Advisor: Not a penny left. You can understand, right? “Roy:” All of the money is gone? I trusted you here!!! Advisor: Every penny Roy. “Roy:” You crook! I will have to contact my account officer to put a stop payment on the check. You are in big trouble!!


Of course we really had handed the check over to the US Postal Inspector - but in “Roy’s” scammer mind, the cash was already in his hot little hands - and the Advisor yanked it away. It was almost as satisfying as pulling real money out of his pocket.

Zemlock held himself out to be a financial advisor. He took funds from clients and promised to invest, however, he used most of the money for personal needs. He plead guilty to operating the scheme between 2009 and 2012. Zemlock was also orderd to pay restoration of the funds to his clients - but actual payment is unlikely.


Advisor: Too late - already paid. You are really just too trusting Roy you should be more careful who you are dealing with on the Internet. “Roy:” I’ll stop payment! You are a filthy filthy crook! You are to have that cash ready for my movers immediately! Advisor: The money’s all gone Roy.


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ZALMA with a clear and unambiguous notice provision. A specific endorsement, separately negotiated by the parties, and with a clear notice requirement will be enforced in the Fifth Circuit and probably across the country.


Insureds, faced with such a buyback endorsement must always report the loss immediately to the insurer even if they believe the loss will not reach the bumbershoot insurer. © 2013 – Barry Zalma Barry Zalma, Esq., CFE, has practiced law in California for more than 40 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally, for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Mr. Zalma recently published the e-books, “Zalma on Insurance Fraud – 2013”; “Zalma on California Claims Regulations – 2013; “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Insurance Fraud – 2012; “Zalma on Diminution in Value Damages – 2012,”“Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,” “Arson for Profit” and others that are available at

(1) Allstate’s survey of the 200 largest cities in America based on car collision frequency. (2) For example, drivers in Fort Collins, CO are 28.6 percent less likely to experience a car collision while drivers in Washington, DC are 107.3 percent more likely to experience a car collision


Mr. Zalma can also be seen on World Risk and Insurance News’ web based television programing.


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