New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1877-04-24
LIFE INSURANCE FRA I'D.

LIFE INSURANCE FRAUD.
The story Of the acknowledgement and fraud
of the officers of the Continental Life lnsur-
ance Company is now in definite shape. The
referee in the HOyt suit, Mr.. VIM. Allen
Butler, has within ninety days taken 1,5Oo
pages of testimony on the subject, and he pre-
sents with cOmmendable promptitude lucid
report. 1t is shocking story. The assets OF
the company are $2,681 800; the liabilities,
So, 100000 The difference. more than
$4,000, OOO has been lost, squandered, or
stolen. Exactly what part was hon
estly but foolshly thrown away, and
what was wickedly 'misapprOprated by the
officers, cannot yet be fully determined. There
are many facts given which serve to show
how largely the officers dipped into the till.
They voted themselves annuities and then
committed them for cash to the amount OF
$4,000. The president OF the company
received, during the ten years of its existence,
$685., 900, but about half million dollars OF
this was for commissions on policies, large
mart of which had been credited to him before
he became president. There seem to have
been also some pickings i'll the form OF stock
dividends and extra" dividends. Then
again, the company bought in large proper
ton of its almost worthless stock; and not
content with this, bought also the stock OF
another insovent concern at par-that con-
Germs stock having been chiefly owned by the
officers of the Continental.
Msmanagemcnt and misrepresentation went
hand in hand. The company was entirely in
the hands of its officers. The directors gave
., H.,ip fha tlt
ance Department still less The president, the
acting president, and the secretary had things
all their own way. All the familiar
devices for cooking accounts" were re-
sorted to. A bank was found that lent
itself to the nefalious business, and when
there was a necessity for making an annual
statement, gave the company credit for $lI5,-
900 as cash, for drafts to that amount Oh
agents: the drafts were afterward returned to
the company, pinned together, without any at
tempt at collection. When the company had
not a dollar lent on Government bonds its
statement declared that $27OO00 OF its loans
had such security, when in fact the money re-
ferred to had been lent to three insOlveut cor
porations-the New-Jersey Mutual and the
Empire Mutual companies and the Atlantic
National Bank. The asset OF premium
"notes" was Overstated by about
S5OOO0O; of uncollected and deferred
premiums by more than 100000. What
was actually done in the way of loans to the
Jersey Mutual Company, then known to
be in Il very precarOus condition, was to put
in the hands of Its officers 100000 of bonds
and mortgages and $4,000 of Government
bonds without taking pennywOrth of security
in return. The immediate object seems to have
been to enable the New-Jersey concern to
make favorable showing while under exami-
nation probably the securities were meant to
do double duty as assets of each company.
The referee calls attention to the temptation
the business offers to reckless and wrecking
management; the inability of pOlicy-holders
to protect their interests the inadequacy of
State supervision. The facts point the moral /;
it is not necessary to adorn the tale. Happily
what there is left is in honest hands with the
receiver Mr.. Grace but the referee alludes
with regret to the litigation still i'll progress
for the control of the company's assets. "'Ihe
"fate of the policy holders" says Mr.. Butler,
twill be hard indeed, if what has been saved
from Encouragement and fraud in the COM
"pany is to be Kept at risk in the courts"