New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1877-01-16
FRAUD IN INSURANCE.
cpc1rp1Tv MANAGERS ARRAIGNED.

Irss THAN so PER CENT or THE LIABILITIES
The examination of tho Security Life In
surance and Annuity Company by Deputy Super
iutendent John A. Mccall jr, and the valuation oi
the company's policies have just been completed
The report of MIR. Mccall charges chicanery. fraud,
and perjury in the annual statements that have been
made by its officers and also the adoption by them
of q scheme by which the policy-holder were de-
ceIved as TO the amount of net surplus belonging to
those holding note policies. The available assets OF
the company amount to less than 80 per cent Oh
the liabilities. Following the statements OF the
report:
regret tho necessity which crmpels 70 relate at
length the causes of the companys insolvency but .e
last sworn statement Of its officials of Dec 3l iero,
showing surplus of Sol O3I III comparison with the
present deficiency of 1908 s2l makes IL paln u"tt
10 Mace ON the records of the department statement OF
the chicanery and fraud that characterize the previous
exhibits OF the company Commencing WIN tne III ~,
item their report of assets III the last stac
bv them lind real estate returned AT cost Vauc over
and above membranes OF SlbO,SIJ. inIs a Hn
covers two pieces of properly City OF Newl 9rk-
one beinc The companys building Nos. 81 ana SO Pine
st. the other, Al $500 acres OF lana al WiIldmsSu
and forming a part OF the territory recently annexed 10
New York County The aforementioned piece was rur-
chased IN 1873 for $4,000, $4,000 being pan III cs
and The balance REMAINING mortgage The secohd
niece was acquired in 1865 by cerain officials OF lhe
company of tnclr private fuids, ana Eioi ~ m
ms a gratnity to their Institution i'll December ISL 10
enable il TO make showing of acceptable assets on ae
count Of the disallowance III that eate2oiy " minis
ment OF agents balances aud c0nnuted con ON ~.
sons, to the extent OF sol 900. One hundred ana zen
Thousand dollars Isl 10000 OF these nianittsd a.
WAS closed out item OF real estate, ihhInS ~, ~,
spnarent tolal cost the $4,000, Instead OF
SiGs,s75, az sworn to by the officers r ,,s,,o 70
in relation to the lastnamed property ueho . "
state that the deed to the company although properly
executed had been placed on record III lhe cIAS
Office until alter my examination had Den w.
and nj INV suggestion OF the sum that was liiu ny
these officials their private capacity on VIC %
purchase tine property, find that PORTION va ,t
iained from the company certain MORTGAGES anu i
said mortgages released and dscnaiged Vi %
during my investigation WITHOUT pay ~ -, ,,o"a
pany of the principal sums lhest laclh nav % i;
known to the receiver, the Hon W. H. WickainIhoW l
Professionalism Will undoubtedly the piopoi "0''' "
t. the !, gality Of the transacu0Is' ,, oi o.,o,o
Regarding the value Of tese Two Items OF real
cost value III 1913 $4,000 over tie FlOOoO0 ineu
brancc the WIllamsblidge property at S3l-il as
reported by tHc department APPRAISERS =, -.
T, next principal item is mat designated as " stocks
and bonds owned by nc c0mpai! ana i1ioI,I ~ cr
ccmbcr, 1879, at LOO pSi Naue anu o ~ 80
tanned To be sl9j,75U find the olsciepahcy Oh %oI
$50 accounted Tor as follows: SsOOOo oil eno opI G
were sold aud the proceeds invested ia
600 were disposed of, or rather returned 10
Walker Co. OF Ncw.iork, from whom IL Is aieEe' 'aoS
the balance S1302j0, converted into csh 10 pay
inc.mcIGe receipts being S7J5,GC3 43, aud the dis
bulscmcnts SSJ3UlG -. Inc bonus hclu ny N'lhCi ~
CO. Uhe senior member being director IN lIe oecu!
and chairman Of the hhahce .olnte , NM t Nm
never in tie company possession, Dul hclu ~ lh' n
mentioned collateral Tor the unpaid purchase llog
seven per cent beng chaIgcH Ior te 0a, " tc r
pauy cIeditcd with tue Interest lhdt lhc securities o
duced which was never more than per cent ana III
the OF tine District OF Columbia DOls Ol 90, PcL
cent. The bonds purchased" III tls way were rcOt cu
"A
statement was made IN lte ines " ''lo po ~ ,e
money that cOnlgentE paced mem as asse's III c
sworn report of the president aud secretary. -,
The next item, where N! examination IeEcacu u
crtpancy between the statement a. made to the dedi
lncnt aud the facts found theni was the return oi
cash III bank ANA oiice S-OJ'Vs OK. Al 10 tii' uii
Ing 1870 did any such balance exist as All sct VI nc
company has II cXsl,d as suth since. by lhc!hu's
the receipts up 10 the 2Oh oil JANUARY $50 lo pooAh
were la show balance OF S1J,'OS oS Dul, as
matter Iac II is doubtful II al any tline diS We
period mentioned lhel "as Ui ''' iai,
tcct TO the check the officers To the forced cNlDt
above described %l5UOuO was added to gave gOOd a-
peara the statement, although ihe trt'ul il.u 10
foundation in fact and ilN9iHSt i PG,JIS vi
the item ot unooilected and deferred premiums,
on inc proper amount by AT least F0GoOOJ. come To
tue conclusion after aSccrtdling from HF SchCuuicS
giving items III detail ana Itpiitd during ia, OK.
ANIMATION, that at the present time flJS'lO II I'll tht
NJ now outstanding, ana that on Dee 81 1870, SlooOoO
would be generous estimate OF the same considerns
Inc company method Of chncrllaoH h annual lcluihS
SLOWING large number or revived lohclts' -, ,-,
In the four items gwen above are dt,cilord the ll,uu
notes pelug nearer correct lhdn any 0icr OF
tie principal sums comprising the sa'eeh's hoIe'ooic
DECEIT IN REGARD TO POLICIES
Missatng the assets in the manner detailed nec"Ss-
tatcd false return Of the income and expenditures. and
accordingly fictitious credit OF premium receipts To the
amount OF $3.50 900 made and sworn to falsely to
cover the incorrect returns real estate and cash In
disbursements interest paid on borrowed money Wds
returned as leash dividends paid policy holders" 10
avoid answering the inquiries That true exhibit would
have rendered necessary and considerable portion OF
salaries and advertising cxuenses was also returned as
paid for surrendered policies To prevent the criticism
that proper shoN ihs oi EXPENSES "nu ii nav
lind also that the mortality OF Tie company Was cA
and to conceal the fact large amounts expended
death losses CARED annually INTO expenses as
paid Tor forfeited pollcics.' 80
$jI3SO9 were fonnd lniccoded on cNahdtIoh poohs
wuicn had been annually prepared ny the actuiy oi tht
company H. L. Case, lr, and affirmed by his @i!a'it TO
contain al the pohcrs III iOfce Win tHe necessary
data for the valuation OF same"
During tie year 1873 scheme was set on foot by tie
officers To induce the IarucS holding P"cIoS from lhe
earlier years of the company 5 cXstcncc-did attached
10 which large rcscrVcs-tO renqusn the same,
ana receive III exchange similar po.'cts naNIit new
dates issue. The latter were returned To thc depart
ment without any statement 3i hcir beihS combinations
Oid contracts, several hundred THOUSAND dollars oI IT,
being thus Cancelled each Jear silce lac dale IN IL
toned Inis method Of reducing the liablucs became
practicable III te ihds Oh the onceir lil etcn D'
cinber they would To bc written large nuDcts OF
these substitute policies report inthi on Jan. a.
actually III force (nahg OIL the Oul, ana schd thth out
ensuing year 10 take ther chances Vi acceptance
return.
Premium note and loan policy have been dupcd
fer several yeas 10y the form Iecept gwen when their
premiums pai to TINS amount OF their Indebted
upon said notes and loans To explain \, holding
nUte policy with liens against 1t To the cXIch 81 $780,
the interest being payable III advance was Notified TO
pay his cash premium, with an additional amount of
~ 20 for interest notes TINS latter sun would lud
cate, at per cent interest 200 principal outstanding
and he concluded in consequence that $40 Of the notes
had been cancccd by profits. 1t is HOW shown that "a
small dividend was declared on note and loan policies
and applied by tic company III reduction OF interest To
deceive the policy iOdcTs 20 the amount al note III
debtedness and to make Tor the time being conviction
IN tEelr minds that what had been Promised to "Giyi
bends canoeing notes " WAS being realized.
In conclusion, tat the day the receiver
appoinJcd-Dec H. lS7G-thcre were outstanding 9,J43
poicIes covering ~ 100000 of insurance. o. these
policies there 4,1Jl on which tue premiums were
able entirely in cash, and the tincr the
mall note system. the actual condition Vi the company
was as follows:
Real estate and above 90
Bond AID mort JJ,Oo- %
BONDS.
Par Naue. Market Value.
L. g. currency g., tgstered. $4,000 $4,000
l. = lO4Os. reelstcied...-. 1000 sio00
L. =. ,. Us, registered. 81 uOJ 1850
Soutb Carolina 1898 bonds. $50 l4,J2O
CIV of BayOlue. Nj, bonds. LOCO 1000
Total. ;,.-....Sl9J S-OHJ1O-f20I95O 90