The insured was 82 years old and bored. She had been born shortly after the turn of the century to a wealthy family of Connecticut merchants. She'd been a debutante and had lived most of her life in luxury. Now, at 82, she was a widow living alone.
She had a small income from her husband's estate and 82 years' worth of things. But things bored her. Living alone bored her. Simply passing the days exhausted her. Her life needed something to keep her interest.
She recalled that shortly before World War II, when she and her husband lived in New York City, they got all their fine things appraised by Leo McCarthy, the foremost pre-war art appraiser. The appraisal was written on sheets of 11 1/2- by 14-inch artist's vellum, and a pen-and-ink drawing illustrated each line of fine descriptive script. She took one sheet to the local stationery store and had them order 50 sheets of similar paper. When the paper arrived, she sat at the kitchen table for weeks, meticulously copying with a fountain pen each sheet of McCarthy's work. She lightly traced the line drawings with a very soft pencil and then drew over the pencil lines in ink. The only thing she changed were the values-to reflect what she believed to be modern prices. She cautiously erased all the pencil lines with a soft gum eraser. Each page was a masterful copy, as ably illustrated as any Bible page illuminated by a medieval friar.
Now that she was familiar with McCarthy's style, she began to describe the things she had in her home. She described a needlepoint pillow she had made the year before as an antique design, handmade in the south of France in the 17th century. A porcelain creamer that she bought at J.C. Penney became a Meissen porcelain figurine from the early 19th century. She described a landscape print she had bought at a garage sale as an Andrew Wyeth oil, signed by the artist in 1932.
When she was finished, she had 20 sheets listing 130 items with a total value of $275,000. She signed McCarthy's name to each sheet and dated it.
The imitation of McCarthy's style and penmanship was masterful. The 20 pages of appraisals she had created were a work of art. She felt a need to put this art to work.
The original McCarthy appraisal had been the basis for an insurance policy that had lapsed more than 50 years earlier. The insured concluded that she could get a new policy and put her artful forgery to use.
On a fine Tuesday afternoon, she dressed in a long black dress, reaching to her ankles and buttoned high on her neck. She tied her pure white hair in a tight bun at the top of her head. She picked up her cane and walked briskly out of her home and into the Southern California sun. She walked two blocks and entered a storefront insurance agency. She introduced herself and said:
'Young man, can you get insurance for my fine art?'
'Of course, madam, but you must first have an appraisal.'
'I knew you would ask, so I had my friend Mr. McCarthy prepare one.'
She then handed the agent the appraisal she had forged. Impressed by its detail, the line drawings, and the obvious literacy of the author, the agent said:
'The values you have on this appraisal are higher than my normal markets will accept. I must submit them to other markets for you-but to do so, I need a signed application.'
The insured agreed and honestly answered questions concerning her residence, her loss history (she had none) and her insurance history (she had last been insured 50 years before). She then signed the application the agent put before her.
The agent submitted the application and a copy of the appraisal to a Lloyd's correspondent with whom he was familiar. The Lloyd's correspondent forwarded the appraisal and application to a London broker who submitted it to certain underwriters at Lloyd's. The risk seemed a good one. The appraisal was more professional than the underwriters had come to expect from the United States. Lloyd's quoted a 3% rate, and the insured accepted. The policy was issued.
No one asked before the issuance to look at the fine art. No one visited the insured's home. The agency and the insurers accepted her representations in good faith.
Excited by the ease with which she had obtained a policy, she decided to put her forgery to the test. She would claim that all of the insured items, very few of which actually existed, were stolen. She did not consider the act criminal. She saw it as a means to relieve boredom. Even if caught, surely no one would prosecute a little old lady.
About 30 days after the Certificate of Insurance was delivered to the insured, she telephoned her agent and said:
'I am so embarrassed. I've been burglarized.'
The agent responded with sympathy. 'Being burglarized is nothing to be ashamed of. It happens every day. That's why you bought insurance. What was taken?'
'Everything. All of my fine things. They are all gone.'
After reassuring her, the agent immediately called the correspondent. Lloyd's directed a local adjuster to investigate the claim. When he arrived at the insured's home, he found minimal furniture in relatively poor condition. He found the insured to be a pleasant old lady who stood only five feet one inch tall. She was thin and frail looking and could not have weighed more than 90 pounds. She offered him tea and biscuits. She was gracious as she answered all the questions he posed to her. She seemed to enjoy retelling the story of the burglary. Her voice, a faint contralto, cracked with emotion as she came to the moments before the loss. She said:
'I had hired a lady from El Salvador to help me clean my silver. It's just too big a job for me now that I'm 82. Her name was Juanita. I don't know her last name. I believe her name and number were on a card on the bulletin board at the Alpha Beta store.
'Juanita and I had been cleaning the silver for about an hour using very strong ammonia when the fumes began to bother me and I became faint. I really don't know what happened, but the next thing I remember I was waking up on the kitchen floor. Juanita was gone. I trusted that woman. I fed her. She broke bread with me and then robbed me when I was incapacitated by the fumes. Imagine that!'
The adjuster believed her-she seemed so honest. She looked him straight in the eye and answered every question. Indignant at the perfidy of the El Salvadoran domestic, the adjuster wanted to help. He promised to complete his investigation rapidly. He would make sure her claim was paid as promptly as possible.
The adjuster had been well trained. He knew that Lloyd's underwriters expected him to verify the appraisal with McCarthy. He knew that they also required the claims handler to verify the values of the things claimed stolen.
He began his investigation. The insured had told him that McCarthy's office was in New York. He immediately dialed the information operator in New York seeking the offices of Leo McCarthy, appraiser. There was no listing. He contacted a local art appraiser who, impressed by the detail of the appraisal, wanted to meet McCarthy. The appraiser, however, had never heard of McCarthy. She searched the list of the American Association of Art Appraisers and did not find his name. She called several friends. McCarthy was unknown. She called an appraiser she knew in New York and asked if he had ever heard of an appraiser by the name of Leo McCarthy.
He replied: 'Of course-a dear man, one of the finest art appraisers who ever lived.'
'Where can I find him? A friend needs to speak to him about an appraisal he did.'
'That will be difficult. He died on Midway Island in 1943.'
The insured had made only one mistake: She had used the signature of an appraiser long dead.
Underwriters instructed the adjuster to deny the claim because of fraud. They further instructed the adjuster, because of the insured's advanced age, not to report the attempted fraud to the police or the Bureau of Fraudulent Claims.
A month later, a lawyer called to inquire about a potential settlement. He implied that it would be unwise for an insurer to litigate against a poor little old lady. The adjuster merely repeated the denial and asked that before counsel filed a lawsuit, he determine the date of McCarthy's death and the location of his coffin. He explained to the lawyer that it's difficult for a man who died in 1943 to sign a fine-art appraisal in 1991.
The lawyer did not file suit and a fraud was thwarted. The insurance company put some excitement into the dull life of an 82-year-old widow. Little harm was done and the adjuster has a story about a fraudulent claim that will top those of all his contemporaries. Because they rescinded the policy, Lloyd's returned the premium.
People from every level of society, every race, creed, age group, or country of origin commit insurance fraud. Few people look like thieves. The most innocent looking present fraudulent claims while the most criminal looking will be honest. Insurers must conduct a thorough investigation without bias, to stop the criminal actions of sweet old ladies. If not, crime will succeed: The innocent ex-con will lose the indemnity to which he is entitled, and the criminal grandmother will recover.