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Dual fraud: lawyer calls for policy wording change

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A barrister who helped underwriting agency Dual Australia recover $17.4 million following a major scam says insurers should revise policy wordings that direct victims of fraud to contact police.

Specialist fraud lawyer Andrew Tragardh says if affected parties want to maximise the return of stolen funds, a civil case is far more effective.

“A victim’s first instinct is to go to the police, and the insurance industry encourages this,” he told insuranceNEWS.com.au. “But your first instinct is the wrong instinct, if you really want asset recovery.”

Mr Tragardh helped Dual obtain immediate freezing and search orders after the discovery of the deception carried out by former claims manager Josie Gonzalez and her husband Alvaro Gonzalez, who were jailed by the County Court of Victoria last month.

He says the swift civil action in 2013 caught the couple “red-handed”, and after a few weeks a settlement had been negotiated.

However, once police investigations are instigated any civil action usually has to wait for the conclusion of criminal proceedings.

In Dual’s case, this would have resulted in a six-year delay, and during that time the stolen funds could have been depleted, transferred overseas or hidden.

“It is disappointing that it took law enforcement three years to even charge them, but such delays are the norm rather than the exception,” Mr Tragardh said.

“We were in the Supreme Court within a week securing freezing orders over the fraudsters’ assets, and achieved a favourable settlement shortly after.

“If you go to the police it will take forever for them to investigate and finally bring the matter before the courts.

“But most importantly, victims of fraud need to know that it is not the job of police to recover stolen money. The focus of police is to get convictions.”

Mr Tragardh says the insurance industry should reassess policy wordings that direct clients to report fraud to police.

“If I was the insurer I would want to minimise the loss, and going to the police is the last thing that they should be recommending. Go civil. By all means once assets are recovered with the conclusion of a civil case, then report to police.

“People get recovery by taking civil action, not by making a criminal complaint. Why would insurers complain about a process that will recover the assets and minimise loss?”

Dual did not report the fraud to police, although this option was not precluded by the civil settlement in July 2013.

Police were contacted four months later by the Legal Services Board, which is responsible for regulating the legal profession.