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Extinguishing an arson fraud

CFEs gather evidence to thwart house insurance fraud

After Soviet Armenia booted career criminal Gagik Levonian out of the country, he took his small fortune and settled in the U.S. When he needed some ready cash to give to an Armenian anti-Turkish political party, he decided to blow up his house and claim the insurance money. A savvy investigative team gathered the evidence that eventually foiled his fraud.

Gagik Levonian, a career criminal in then-Soviet Armenia, was offered the choice of prison or emigration to the U.S. He came to the States as a “refugee” with 300 carats of diamonds, many antique icons, jewelry, Caucasian and Persian rugs and a large bank account in the Cayman Islands. He used what he brought with him to open a wholesale jewelry store and purchased three gas stations.

His obligations to the Soviet Union died with its demise. He became a U.S. citizen, purchased a 4,000-square-foot house in the hills over Los Angeles and became an officer of the Los Angeles Armenian Businessman’s Association.

However, Levonian never lost his Armenian patriotism. He hated everything Turkish because of what he called the Armenian genocide carried out by the Turkish government at the beginning of the 20th century. At one point a representative of an Armenian political party (whose purpose was to kill Turkish diplomats) approached him for a contribution. He wanted to donate to the cause, but his wealth was locked up in property. Right around this time, he decided to up the insurance on his house and its contents … just in case something were to happen.

His insurance agent, Hrant Aratian (a friend of Armenian descent who shared his attitude toward Turks) went to a representative of Goodfaith Insurance Company and acquired a policy for Levonian that insured the house for $2 million, its contents at $1 million and an itemized schedule of antiques and fine art he valued at $970,000. Goodfaith received an application signed by Levonian that represented the values of the property, that he had never had a claim before and that he had never had a policy canceled or non-renewed. Goodfaith didn’t inspect the property but — in good faith — accepted Levonian’s word.

Two weeks after the Goodfaith policy went into effect, Levonian’s house on the hill exploded into flames. A fire department helicopter saw the explosion and quickly dropped water on the property and put out the flames. City arson investigators determined the cause of the fire was arson. The next evening the house caught on fire again, and it was totally destroyed. The firefighters called it a “rekindle,” but the arson investigators concluded the second fire was also intentional.

After the second fire, Levonian presented a claim to Goodfaith. The adjuster, Martha Andrews, asked for my assistance as a consultant, investigator and CFE because she was facing a potential $3 million claim shortly after the policy was issued. I immediately contacted Levonian and made an appointment to meet with him at the fire scene.

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