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Fraud trial: Dual underwriter highlighted ‘strange’ invoices

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Dual Australia’s national underwriter complained of unexplained and excessive legal costs in emails to the company’s claims administrator in mid 2013, the County Court of Victoria has heard.

Frances Land, now the company’s Senior Operations Officer, said she was unable to find documents explaining legal expenses in excess of $50,000 in a number of cases when she pored over claims databases.

The court was shown emails from Ms Land to Olga Karakotina, then the claims administrator based in Sydney, querying amounts.

The messages were sent shortly after national claims manager Josie Gonzalez went on maternity leave in May 2013.

Gonzalez, 45, and her husband Alvaro Gonzalez, 50, have each pleaded not guilty to 14 charges of obtaining a financial advantage by deception.

It is alleged that Dual was defrauded of $17.4 million as a result of more than 400 false invoices for legal services in a period extending a little over two years from March 2011.

The invoices came from a company called Jaag Lawyers, which was established by Alvaro Gonzalez. Prosecutors allege that Jaag did not provide any services, but barristers for the defendants dispute this.

Ms Land’s first email related to a claim that Dual had denied. Ms Land understood the case only incurred Dual $4355 in legal fees, yet the file had $57,255 in legal fees introduced.

“I could not see anything on the file to see any work that had been carried out,” Ms Land told the court.

In the email she had said “it seems strange that we would spend that much on a fairly straightforward declinature”.

In a second email, she queried a charge of $76,542 in legal fees related to another claim, which she understood to have incurred only $2640 in claims management fees.

“I can’t find where this total has come from,” she said in the email to Ms Karakotina. “Can you please have a look into it for me and see where these costs have come from?”

As the trial entered its sixth day today, barrister John Larkins was called and testified he had never been retained by, or received payment from, Jaag Lawyers.

Mr Larkins could not explain an invoice for $78,430 that was said to have been remitted to him in a payment advice letter dated 14 March 2013 from Jaag Lawyers’ virtual office, at 480 Collins Street, to Josie Gonzales, at Dual Australia’s 520 Collins Street office.

Mr Larkins said he would be sure to remember had he received such a large fee.

Business Activity Statements sent to the Australian Tax Office by Jaag Lawyers were shown to the jury earlier today.

These revealed revenue in excess of $16.42 million between October 2010 and June 2013. Of 11 quarterly statements, five recorded revenue in excess of $2 million and a further four revealed revenue of more than $1 million.

Independent solicitor Sarah Coffey told the court today that she presented the couple with a search order on June 13, 2013.

Ms Coffey arrived at the Gonzalez home in Fellows Street, Kew, at 7.15am and a search of the two-storey property, garages and cars ended shortly after 2pm.

Numerous hard drives, phones, property deeds and other documents were seized, along with the pair’s passports.

The couple bought the French provincial property, which is situated on the edge of Studley Park and boasts a home theatre, salt-water pool, six-car parking and cellar, for $4.4 million in May 2012.

Prosecutor Andrew Grant also presented Bendigo Bank documents to the court, revealing the couple opened a 12-month term deposit for $1 million at 4.2% interest on May 7, 2013.

The trial continues.