Investigators find Karl Karlsen’s history of tragedies followed by payouts: Part 5

In addition to the deaths of his wife Christina and son Levi, Karlsen also suffered a car fire then a barn fire that killed the family’s horses. He got paid from insurance in all four incidents.
6:29 | 06/06/20

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Transcript for Investigators find Karl Karlsen’s history of tragedies followed by payouts: Part 5
I don't think he's alive. After Levi died -- Oh, my god. Life moved forward. Everyone went about their business. Time marched on. Karl collected a large insurance policy on Levi. If I had known that there was an insurance policy, I would have gone straight to the sheriff's department. Karl received approximately $700,000. He claimed that this money was going to be used for Levi's children, his grandchildren. Levi's insurance money is being spent by Karl and Cindy, not Levi's children. Reporter: What were they spending money on? Well, it looks like a lot of money went to a duck business, a gourmet duck business. It was just another one of Karl's daydreaming ideas, get-rich-quick schemes. The idea was he was gonna raise gourmet ducks to sell to restaurants. But what happened is Karl started right away ordering more ducks. We went from raising 10, 20 gourmet ducks to thousands. I mean, duck feed for thousands of ducks costs a lot of money. He doesn't know really what he's doing. He's just bailing water. It's losing money left and right. Dad and Cindy, their finances weren't making sense to me. There was also new vehicles quite frequently. They would constantly be going on vacations. I finally confronted her and I -- you know, I said, what is going on here? This doesn't make sense. But she just denied everything. Karl is the person responsible for spending the bulk of that money, and he kept Cindy in the dark. At this point he's keeping me blind. He doesn't want me to know anything. Because he knows I questioned everything. He's just going to do what he wants to do and that's just how it was with Karl. Reporter: Cindy Karlsen told us that it was about two years after Levi's death that she actually started to grow suspicious of the man she was married to. There was not one thing that, that I just said, "Oh my god, he did it." It happened over time. I would have these panic attacks. I would be in my living room and say, "Oh, my gosh. Did he have something to do with Levi's death?" Christina's family said he had something to do with her death. Reporter: Was she convinced there was a killer in her own home? I think that she suspected it. Cindy Karlsen says that during this time, she was so terrified of her husband, she started sleeping with a knife under her bed. And finally, she just had to move out. At the end, when there was very little money left and Karl kept spending and spending and spending, yes, I took some money because I needed to keep myself alive. I had nothing left, and I'm scared. She is concerned enough that she hires a private detective to look into it. It was self-preservation. She probably was concerned for her life when she realized that there was a policy on her. A private investigator started digging in and figured out I would be worth $1.2 million to Karl if I was dead. One night, I had called my cousin and told her my fears. "I think Carl might have killed Levi." She said, "Why would Carl kill Levi? There's nothing for him to gain from that." And I said, "Yes, there was. He gained $700,000." Cindy's cousin, Jackie Hymel, called in a concern that she had to the police. Reporter: And you get a phone call. And what are you told? I would ask if we'd investigated an accident involving Levi Karlsen's death. And I looked it up. This family member's got some suspicions, concerned that things just aren't adding up. Wherever Karl goes, tragedy takes place and financial payouts follow suit. Once we started looking into prior incidents, that was the first indication that something wasn't right here. Reporter: And so as investigators start to look into Karl Karlsen's past, it doesn't take them long to see what is a frightening pattern that dates back decades. The first thing that came up, was a car fire from 1986. It was a brand new mustang purchased by Karl Karlsen. Had $10,000 insurance on it and it burned up in his driveway. According to the report we heard, there was nothing in the trunk, nothing in the glove box. The car just burned up. So the insurance took care of the payment and he got out from under it. The barn fire is another one of those coincidental tragedies. One evening in 2002, I was asleep. And Karl sat up upright in bed and looked out the window, and said, "Oh, my gosh. The barn's on fire." I knew there were horses in there. There was our prize Belgian mare and two babies. It was devastating to see the barn burning down, which is part of our family's history. And then also to see the loss of these horses that were conveniently just put in the barn. Somewhere around $115,000 Karl's paid out on this barn and these horses. Here we go one more time. A tragedy and a payout. I call it blood money. He got an insurance policy from my daughter. He got another insurance policy when he had a barn burn down with expensive horses in it. It was our life. Yeah, it seemed like every couple years something was burning. So I feel like we kind of knew and just expected it. We choose to reach out to Cindy Karlsen to further the investigation. The first thing she said, "Thank god you called." When you asked her to help you out? She said yes. She agreed. And put a wire on. Part of me feels like I'm walking into a booby trap. Do you want to go through my purse? I thought, maybe I can get him to confess. That was my goal. If Karl did this, she wanted to get him. I'm terrified. I'm thinking, oh, my gosh. My husband is a murderer.

This transcript has been automatically generated and may not be 100% accurate.

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