FRAUDULENT CLAIMS RACKET

Timaru Herald, Volume CXLIV, Issue 21001, 1 April 1938, Page 7

FRAUDULENT CLAIMS RACKET

Sensational Disclosures “ FAKED ” INJURIES Casual Watersiders Imprisoned By Telegraph—Press Association AUCKLAND, March 31. Sensational disclosures of a systematic plan to defraud shipping and insurance companies were made in the Police Court to-day, before Mr F. K. Hunt, when six young men pleaded guilty to a number of charges of obtaining sums of money by falsely representing that they were entitled to- draw compensation for injuries received while working on ships. The accused were:— ’"William Arthur Reilly (261, 21 charges; amount received £l2B/18/-. Edmund Percy Freeman <26>, 12 charges; amount received £7l/19/-. Peter Freeman (231. 14 charges; amount received £59,12/-. ‘John Freeman (29), 8 charges; ainount received £39/18/-. Robert Varney (27), 5 charges; amount received £2O/10/-. Kenneth Charles Parsons (20), 3 charges; amount received £45/12/-. Sentence Passed “I look upon this as a very serious matter,” said the Magistrate in sentencing the six men this afternoon. "No doubt they got the idea from an American paper describing a fraudulent claims racket. I am going to punish them severely and check this matter in the bud so that it does not go any further.” Parsons was admitted to probation for three years and ordered to make restitution of £5l. Peter Freeman, who had no previous convictions, was sentenced to six months’ imprisonment with hard labour on one charge, and three months on another, to be cumulative, and on the third charge he was fined £4O. "If you don't pay when you come out you will go to gaol again,” the Magistrate told him. The other four men, the Magistrate said, all had previous convictions and had stolen considerable sums of money. Each was sentenced to months’ imprisonment on two charges, the sentences to be cumulative, and on the third were fined £4O.

"If there is any more of this,” said Mr Hunt, "the offenders will get more severe punishment. The offences were deliberately planned. We have got to stop American methods.” “These men are all casual waterside workers, and not members of the Waterside Workers’ Union, said De-tective-Sergeant Nalder. "They have been doing what is known on the waterfront as ’double up,’ that is, on receiving an injury while working on a ship a man would report the injury and be placed on compensation. While still in receipt of compensation he would go to work on another ship, and under a different name and report a similar injury. Some of these men were not satisfied with ‘double up,' but worked 'treble up.’ The most they would work in a ship would be one or two hours.” Methods of the Accused Mr Nalder then gave particulars of the cases. Dealing first with William Arthur Reilly, Mr Nalder said that on November 8 Reilly obtained work on the Union Company’s Kairanga. That day he reported an injury to his right thumb, and after receiving treatment from a doctor he was placed on compensation at the rate of £3/18/3 a week. These payments continued until December 20 last. The total amount he received from this company was £25/10/8.

"On November 2:’, while still in receipt of this compensation, accused got employment on the Northern Company’s ship Ranganul,” continued Mr Nalder. "That day he reported an injury to his right thumb and was attended by a different doctor and placed on compensation at the rate of £3/18/2 a week. These payments continued until January 11 last, and on February 25 he received a final payment of £29/8/4. The total amount he received from this company was £52/17/4. On December 9. 1937, while still receiving on two claims, Reilly obtained employment on the Blue Star ship Napier Star, and the same day he reported an injury to his right thumb. Again attended by a different doctor Reilly was placed on compensation at the maximum rate of £4/10/,a week. Payments continued to February 28, and he was still attempting to claim up to the time Of his arrest. The total amount received from this company was £49/10/-. In

I addition to this Reilly, under his correct name, obtained a job on the New Zealand Shipping Company’s Tekoa on January 21. That day he reported an injury to his left little finger and gave as witness the accused E. P. Freeman, who was working under the name of J. Munro. In this case Reilly was attended by a different doctor again and got compensation at the rate of £3/18/- a week. Payments were continued until March 4, when Reilly was still claiming. He received from this company a total of £24/9/6.

“We have this accused not only drawing compensation for an injury received on the Kairanga, which might have been genuine, but at the same time drawing compensation from other companies for faked injuries,” said Mr Nalder. "The average income received by Reilly from the frauds was approximately £9 a week. Reilly has a conviction list and has served two years in the Borstal for theft. Letters were found in his possession from Wellington stating 'plenty of work on wharf,’ 'all the boys on compo and doing pretty well,’ 'how is the compo, everything O.K.?'” Drawing £l4 a Week Concerning E. P. Freeman, Mr Nalder said he was drawing from four companies at the same time and averaged £l4 a week over a period of between three and four months. He had to produce his levy book as proof of his identity. To overcome this difficulty the accused applied for and received levy books in the names of "J. Munro,” “E. H. Fraser” and “G. Dobson” as a result of giving false particulars to the issuing officer. Before his arrest, the accused was sharing a room in Franklyn Road with Reilly.

"When searched by detectives Brady and Jones,” said Mr Nalder, "they found a local anaesthetic spray gun containing a drug. This stiffens the finger joints, making them less pliable, and it cannot be detected by doctors, who say the joints could only be bent with difficulty.

“Also found in the same room was an illustrated overseas detective magazine which dealt fully with bogus insurance claims and contained the following heading, ‘Fraudulent claims racket,’ ‘millions a year paid on faked claims,’ 'sponsored by reputable physicians acting in good faith,’ 'here’s a supreme challenge to the police.’ This article gives inside information on how false claims were brought in America in a much bigger way. “This accused,” said Mr Nalder, “had a list of convictions and had previously been before the Court for making false statements under the Employment Promotion Act.” Peter Freeman's average weekly income from the frauds had been £lO a week. He had no previous convictions. There were 14 charges age’net him and he obtained £59/12/3 from January 21 until the time of his arrest. There were eight charges against John Freeman, who obtained a total of £39/17/6, in addition to £54/2/- he received from another company. He was not charged with this. The accused was at present on probation. Varney was not quite as bad as the others, said Mr Nalder. A single man, who had only been in the country six months, he had been keeping company with the other accused. He drew £B3/19/1 from the Union Steam Ship Company for an injury to his little finger, and while in receipt of this compensation he obtained £2O. Varney was not charged in respect of the £B3. He had a previous conviction for gaming and fighting.

“These men don't have to pay their own medical expenses,” Mr Nalder said. “They are paid by the shipping

companies. These men are really strangers to Auckland. The Freemans came here from Wellington a few months ago and immediately started this fraud racket.” Mr Hunt: They have finished now for a while anyway. Mr Nalder said Parsons was only 20, and was charged on three informations with obtaining sums of £3O and two lots of £7/16/4. He had also stolen jewellery valued at £6. Complainant was drinking in a city hotel in company with some young men and on arrival home he missed an 18 carat gold watch, a woman’s silver wrist watch and an imitation gold chain and drop-pin. Parsons admitted the theft. Plea By Counsel A special plea on behalf of Parsons was made by Mr Robinson. This accused, he said, suffered a genuine injury by losing the top of a finger. There was some doubt about the other men. Parsens had got into trouble through associating with the other accused. He came from his father's farm at Halcombe, near Feilding, 12 months ago. “His father is now in Court and is anxious to take him back and give him a good job if your Worship will give him a chance,” said counsel. “He stole the jewellery while under the influence of liquor and disposed of it next day when he was sober. As for Varney, he also suffered a genuine injury to a finger. He has arranged for a passage on the Mahana sailing hl a fortnight for England.” Mr Hunt: He won’t leave by the Mahana. Mr Robinson said John Freeman inflicted his injuries on himself, and although he was paid compensation he did not “double up” like the others. Reilly had not been in trouble for three years. Apparently he was one of the instigators of the scheme. "He is engaged to be married and his fiancee's parents will help him when he comes out of gaol.” (Laughter.) Counsel said Peter Freeman was good to his mother, whom he supported, and he was in a position to return to Wellington after his time was up. The last position E. P. Freeman held was as an employee of the Wellington City Council, but he lost it when he was convicted for assault in November last.

Before passing sentence. Mr Hunt called for a report from the Probation Officer concerning Parsons.