INSURANCE FRAUDS

Gisborne Times, Volume LXX, Issue 11196, 3 May 1930, Page 7

INSURANCE FRAUDS

—■ - - “AirSHEOOAI COAIPANTES” SYDNEY INYESTIG ATIOX. Sydney detectives are at present investigating the questionable standing of nearly a score of * "mushroom' ’ companies established in Sydney during recent years, and their discoveries are understood to have astounded them. Few (if any) of the companies under investigation bv the police have any financial standing whatever, and the deeper they delve the more convinced are the police becoming that most of the companies are connected in some way, and that when one falls definitely all must fall. Two or three men are prominently associated with each company, either as directors or in some other, official capacity, and detectives have found the financial affairs hopelessly involved one with the other. Credulous investors are beginning to realise that they have purchased gold bricks in taking shares in the companies. The method of the promoters has been to register a company with a capital of £1.000,000 (nominal, of course) and then, with high hopes, perhaps, start out to sell business oil an actual capital, in one instance, of 10s. They have employed “gogetter” salesmen to hawk their. scrip from door to door in tho suburbs and in the country districts, and bv painting a rosy picture of . profits, all purely imaginary, they have induced crediflous investors to ipart with thorn money for the scrip. Some huge sums have been handled by the promoters of some of the companies, but they have been dissipated in huge salaries and .direct-, ors’ fees, while claims against the companies they are supposed to direct and manage are stacked high, with little (if any) hope of ever being mot. though tho premiums are paid and the claims are perfectly legal ~ Detectives Lave ffound that the men selling shares in these companies have criminal records (for fraud in many instances, are entirely unscrupulous, and that many of the officials of the companies have questionable records for honesty. ' So parlous is the position of many of them that* recently two of the companies now under investigation were unable to pay the salaries of their staffs. ■ ' “When the full story is told,” said an insurance expert, in commenting on the position, “it will be found that the position closely approaches tho Hatrv .frauds.”