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5 hours ago
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Seven people have been charged over an alleged fraudulent sexual abuse compensation claims scheme that allegedly netted more than $1bn.
New South Wales police alleged that “claim farmers” approached former young offenders, inmates and public school students, encouraging them to file fraudulent compensation claims for historic child sexual abuse while in care.
The claims were brought against the NSW Department of Communities and Justice and the NSW Department of Education.
Police said the claim farmers had coached prospective claimants on how to make fraudulent claims through various Sydney law firms.
The proceeds were reportedly known as “bum money” within criminal syndicates. Police said they suspected “a significant portion” of the $1.3bn worth of claims were fraudulent.
A detective superintendent, Gordon Arbinja, told reporters on Thursday the charges were just the “tip of the iceberg” and “we’ve got a very, very large problem here”.
“One-third of inmates at the Cooma correctional centre have submitted claims, which I’m going to investigate,” he said, adding that “several” law firms were being investigated.
On Wednesday detectives executed a search warrant in Girraween and arrested a 55-year-old man who was charged with 21 offences, including nine counts of dishonestly obtaining financial advantage through deception. He was refused bail to appear in Parramatta local court on Thursday, where police will allege he was a claims farmer in the scheme.
Arbinja alleged that the man had submitted compensation claims on behalf of others and took a cut for each claim he referred – with 100 claims amounting to $220,000 pending, as part of “a very lucrative business”.
Some claims would have been refused because there was a “low threshold, but there still is some threshold”, the detective said. Police were not attempting to raise the threshold and strengthen the process.
“The NSW police support legitimate victims,” he said. “They should be compensated, and that’s why the system was introduced in the first place. The problem is, is the system is porous, and the system needs to be strengthened.”
Five other people were arrested and charged with publishing false or misleading material to obtain advantage. This includes a 53-year-old Granville woman, a 32-year-old Pendle Hill man, a 52-year-old Horsley woman, a 35-year-old Pendle Hill woman and a 42-year-old man, who was arrested at Gladesville police station.
A 23-year-old man from Mermaid Beach in Queensland has also been issued a future court attendance notice for the same charge.
Arbinja alleged that the father of the 23-year-old had also been involved as part of a “victim advocate group” and had been under police investigation since last February, but was now deceased.
Police will allege in court the seven people charged stood to make $3.75m in fraudulent compensation claims but that the scheme had been uncovered before these were paid out.
Arbinja alleged that the 55-year-old had made “hundreds of thousands of dollars, if not a million dollars” through the scheme and was “the syndicate head, as is the other 23-year-old Mermaid Beach man”.
The Guardian understands it will be alleged that the 55-year-old made his own compensation claim, on top of taking a cut for each claim he allegedly referred.
Police also executed a search warrant at a law firm in Sydney, seizing documents they said were relevant to the investigation.
They said investigations were continuing and more arrests were expected.
