Herbert Insurance founder's 'money-go-round' likened to Ponzi scheme
UPDATED: Herbert Insurance Group (HIG) founder Grant Malcolm Herbert operated a "money-go-round" akin to a ponzi scheme, the Auckland District Court has heard.
Crown lawyer Todd Simmonds opened the Crown's case today against Mr Herbert who is charged with 18 counts of theft by a person in a special relationship under the Crimes Act, and eight counts of corruptly giving an agent money as an inducement under the Secret Commissions Act.
Mr Simmonds said it is the Crown's case that HIG came under "very real financial pressure" and witnesses will testify it was struggling to stay afloat.
He said Mr Herbert's response to the pressure was to use insurance premiums to prop up his business, using funds that were meant to be held separately for clients to meet operating expenses of the business.
The lawyer said in some cases, while HIG was saying to customers they had insurance cover, in actual fact no insurance cover had been taken out.
"The premiums were coming into HIG but the customer, unbeknownst to them, did not have cover in place," he said.
One way of doing this was to not attribute received funds to insurance cover; another was to represent to the client that Mr Herbert was writing out insurance when he was really using a fake or expired temporary insurance policy, known as a binder, the lawyer said.
He said the theft was done with the knowledge and on the instruction of Mr Herbert. The insurers, which include IAG, Vero, Lumley and Chartis, were "kept in the dark."
"It involved an ongoing calculated course of deception, it wasn't a spur of the moment thing, it was far from it, it took a considerable amount of time and was deliberate."
The trial continues and is set down for four weeks. Mr Simmonds said 54 witnesses will give evidence for the Crown.
Mr Herbert has pleaded not guilty .
The case follows a Serious Fraud Office Investigation in which search warrants were executed during a raid at Mr Herbert's East Tamaki home.