The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-08-21
NEW JERSEY MUTUAL LIFE.

INTENDENr KELSEY, OF NEW JERSEY-THE
REINSURANCE SCHEME REVIEWED
Secretary of State Kelsey. of New jersey has made
a special report the New Jersey Mutual Life Incur
ance Company, in advance OF his regular annual re-
port He sums up a number OF the larger instances
of fraud which the failure Of The company disclosed,
and prefaces them as ioows:-
Developments made subsequent TO tho date of my
special report the examination OF this company
have fully justified and sustained tho action takon TO
wind It up. and disclosed degree oil corruption and
crime in connection With its management that has
rarely been paralleed. For years the annual state
mcnts of the company had been deliber-
ately falsi6ed worthless and fraudulent seeuri.
ties reported and exhibited, and the moneys which
they represented aropriatcd by those control TO
their Fictitious balances IN bank had been
created Just the close oil December and extingushed
at the very beginning OF January. Stocks ana bonds
and bouds and mortgages had been reported owned
to which the company had no claim, and mortgages,
in single instance to the amount oil $S4 0OO reported
and exhibited, which not only had no value whatever,
but were created and carried by the company
cover Tor valuable assets distracted and msappro-
prated. Securities which had value were hypothe-
Gated to secure loans securities being reported
possession Of the company. and no record or report
OF the liability Tor the l0an Fraud was the rule
honesty the exception
In particu,arizng, Mr.. kelsey begins with the
fraudulent mortgage transactions Niddesex county,
tho first expose of which was made in the HERALD,
before the companys insolvency. He then refers to
the fictitious balances which at different times they
claimed to have In bank, the borrowed bonds which
they called their own, their unreporied liabilities 10
the extent Of $780, 900 ana the expensive nature OF
some OF their business He says the manager OF the
Made D, partmeut Mr.. Henry w. BALDWIN, was paid
exorbilanty for his scrvIces-hs commissions
premiums collected in some cases reaching the extra
ordinary figure OF sixty.hve per cent OF tho gross
premium-besides Receiving stated salary with Ofiice
rent, clerk hire, and Incidental expenses paid. In
this manner he says some portions Of Mr. Baldwn's
business cost the company more than the total
premiums collected thereon.
THE NATIONAL CAPITOL.
OF the reinsurance OF the New Jersey in the National
Capitol, Mr. Kelsey speaks IN denuncatory terms.
He says was intended and had the effect of getting
all tue valuable assets OF the company, which re-
NAMED In their control beyond the reach OF the Court
OF Chancery. The committee which elected 1t, he
says appointed by but por ion OF the Board Of
Directors, those who were cooperating with the
authotit es tor the protection OF the policy holders
having retired from the meeting before the subject Of
q committee on reinsurance was mentioned. The
National Capitol Company he states, Is wholly nnder
the control OF Benjamin Noyes, aud has neither the
ability nor the intention to pay any liabilities what
ever, He says:-"It has issued no new policies under
Noyes administration but is IN the receipt OF renewal
premiums IRON the policy holders In thS company u
nna r. H Wsr"n xhc as a.o
Noyes' company, and into which No had previously
reinsurcd' the American Mutual Lilo, OF New Haven.
| and the National, OF New YORK. Those reinsured
companies had deposits Tor the benefit OF their policy
holders iollows-rhe National, of New York,
500, 900, at albany; tho Connecticut companies,
$1OO, O00 AT Hartford, in the shape OF mortgage In
trust TO the Treasurer OF Connecticut on the real cs
tate at New Haven now claimed by Moves AS the prop
the only protection the policy holders have IN case OF
death or maturity IN any manner OF their policies 1t
grave scandal that Noyes should DO permitted to
receive the premiums these policies, when must
be paid IN order to preserve their status and prevent
their lapse"
THE REINSURANCE RING.
Speaking OF the New Jersey Mutual, Mr. Kelsey
says:-''lt seems clear Of chain OF COM
paries which mad fallen into the control OF an organ
ization of shrcwd unprincipled and dangerous men.
Others OF this chain the National Capitol tho
New YORK and New Haven companies, which IL had
(srnff
Hope, Commonwealth and the Continental Noyes
his National Capitol Company evidently were not
taken into recognized by the combination until the
very last extremity, and then as dertcr resort to
escape the nterposton OF the courts and the appca
ton OF the law. The process OF rcinsurlng the Con
tinental, which was tho only one OF thc New York
companies remaining, was gong on when began the
examination OF the New Jersey Mutual 1t was
audacious scheme OF fraud, and an idea Of the
qucnces OF It's success TO the people may 90 had by
glance at the last report, December 81, 1875, OF the
Continental IL had "a 1913 policies in force, amounting
| to SOL, l79, 234; It's premium income In 1873 WAS
"a 43 IN cash, besides notes, &c, $674 $40 90
total assets SO, 2294S4 S3. Could this business
have been transferred 10 the New Jersey Nutua and
! the two combined have gone on for u lmc the Marin
the community and the loss to policy holders would
have been vastly augmcntedthe longer the time the
greater tho dsastcr. The Continental, once IL the
hands OF friendly receivef-onc OF It's own people
the scheme to transfer it bodily 10 the Now Jersey
Mutual developed, aud Its contamination was only
frustrated by the examination OF the latter pany.
The report then reviews the manner In which the
ola Hope reinsurance was effected and the examina-
iion OF the New Jersey Company In 1874 by Elizrr
Wright and W. y. McNichacl and declares that these
gentlemen deliberately and wofuly deceived
In his concluding remarks MI. kelsay says.-"The
Immediate OF the downfall OF this company was
It's criminal management The crime once uetcc cd
and exposed 1t became the duly of the officers OF the
Law 10 bring the guilty. persons to trial aud punish
vclopipg fraud are robbed oil much oil their vaue
when those to DO responsible Tor the wrong arc
not brought to punishment | yet have confidence
that the persons guilty of this crime Will be brought
10 Justice and secure that result proper effort