One summer afternoon, the owner/captain of a 25 metre luxury motor yacht with an insured value of US$ 2,000,000.00, reported to his insurer that his yacht had collided with an unknown floating object in the early hours that morning and had sunk in deep water off a small Mediterranean island. He briefly described the incident, stated that he had been alone, delivering the vessel to a nearby island to pick up a group of American charterers who had paid to cruise the islands for a week.
The claimant said that once the yacht started to take water, he abandoned the vessel and was then surrounded by sharks. He had transmitted a “Mayday” signal with his portable VHF radio/telephone unit which was answered by the coastguard who dispatched an air rescue team to the area and rescued him from the sea.
The coastguard dispatched a fast motor boat which arrived on the scene within 20 minutes of the call. They reported no signs of any debris, the vessel itself or its remains. What they did find in the nearby sea area was a damaged small wooden fishing boat which was semi-submerged. This was recovered by the coastguard and when examined ashore, severe impact marks were found on its bow.
The insurance Underwriters instructed us to investigate the loss and to establish whether it was a recoverable claim under the marine policy.
Preliminary enquiries revealed that the vessel had recently been built by the owner and launched on its maiden voyage a few days before the alleged incident. We attended the island where the fishing boat had been recovered and examined the damage. Careful examination of the areas of impact suggested to me that this was not an impact caused by the subject yacht and more likely man made with the use of an axe or similar tool.
I was so convinced of these circumstances that I sought the services of a British forensic striations expert and flew him out to our location to accompany me on a further inspection. He formally reported that the impact damages sighted were indeed those caused by several physical impacts on the hull with the use of a sharp axe type tool.
Extensive enquiries in the area failed to identify an owner for the fishing vessel and more importantly, revealed that no fishermen had been out at sea that morning or indeed reported missing.
I then visited the Port Police office at the port of embarkation where the yacht had set off on its maiden voyage. I was provided with a document known as a crew list which all yachts are obliged to complete prior to passages in these waters. The crew list indicated that the owner/captain had first embarked from the mainland with a named engineer and that this engineer was disembarked a couple of days later on an island, prior to the owner purportedly sailing off on his own.
I was taken aback when I saw the name of the engineer that appeared on the crew list, since he happened to be one of the local trusted engineers who we employed on a regular sub contracted basis to assist us with repairs and maintenance on damaged yachts.
The engineer was immediately interviewed and he denied any knowledge of being on the yacht when it embarked on its maiden voyage; though he did know the owner and the yacht as he had performed some engineering work for him on the subject yacht in the past. He had never been approached by the owner to embark on a passage with him. To say the least, he was as surprised as us at seeing his name on the crew list.
Fraudulent Claim Suspected
By now we had gathered sufficient evidence to fairly assume that the claim was suspicious, to say the least. It was unlikely that the yacht had sunk in the manner described and had to be located afloat somewhere in the Eastern Mediterranean. We circulated full details of the vessel which were gathered from the engineer, then passed these on to the authorities and our local contacts in all neighbouring islands and bordering countries.
Within a few hours of circulating the information, our contact in a nearby country advised that he had identified the yacht from the information provided. He said he had seen the yacht ashore in a boatyard a couple of days before the alleged incident and that it was undergoing a change of name and a fresh paint job.
We travelled to the area and made enquiries with the local agents who looked after marinas in that part of the country. Whilst there we were approached by the local Mafia who asked to speak to us. Over a couple of drinks the spokesman advised us, in confidence, that they had control of the yacht which was leased to them by the owner and they were using it for their own covert purposes. They expressed their displeasure with the owner as it seemed that the story he had invented had led investigators to their country. By way of retribution the Mafia representatives stated they would return the yacht to us after they had finished with their tasks. This never happened and no further information was forthcoming from the Mafia. Needless to say, they would not provide any statements of the circumstances or reveal where the yacht was at that time. As far as they were concerned the conversation did not take place.
Having gathered the above evidence, in addition to many other factors along the way, which are too long winded to discuss, we interviewed the owner in our foreign offices. Suffice to say that the owner maintained his story and was now convinced that he must have collided with the wooden fishing boat which the authorities had found floating nearby causing the yacht to be sunk in very deep water. We withheld most of the information gathered to date as we still had a long way to go in the investigation. During the interview with the owner we obtained full details of the yacht from build to launch, together with documentation which included the main engine serial numbers.
Resources were drawn upon and we used low flying aircraft and helicopters as well as commercial satellite services to try to locate the vessel without success.
A number of months passed as we battled away on the investigation until we suddenly had the break we needed. One day I was performing a survey on another smaller vessel in a nearby port, which related to a machinery damage insurance claim. The main engines on this vessel were identical in make and size to those that were on the alleged ill-fated vessel. This was not at all unusual and it did not stir any suspicions at the time, however as is my practice, I recorded the serial numbers of these engines as a matter of course and placed them in a special data base amongst other engine serial numbers.
Having studied the subject vessel’s documents for some time with a fine-tooth comb, I had without realising memorised the latter part of the serial numbers of the yachts engines. This detail had remained in my subconscious mind and did not rear itself until I looked at the serial numbers of the current yachts engines which quickly drew my full attention. I realised that the latter digits of the serial numbers were familiar, which prompted me to check these numbers against the numbers of the ill-fated yacht. Well would you believe, I certainly could not at the time, but they matched. I was then beginning to have doubts as to whether there was some mistake as this was just too coincidental to be true.
I checked with the engine manufacturers in Germany and this was all found to be correct. The engines I had seen on the small yacht belonged to the yacht we were searching for.
We now had a situation whereby we physically knew where the allegedly lost vessels engines were, but did not know where the yacht itself was. Discreet enquiries with the crew of the current yacht revealed that they had recently changed their engines for this set. The owner of that yacht however, very suspiciously declined to comment on where, when and from whom he had obtained these engines.
One would believe that at this stage we surely had enough evidence to contest the claim and that may or may not have been so. It was indeed sufficient to delay any further negotiations pending further enquiries. The insurance company were keen for us to continue our enquiries to try and find the hull so that we then had conclusive evidence of fraud. A little similar to the procedures of the “Habeas Corpus” act in a murder case.
A few weeks passed and one night, unexpectedly, we received an anonymous telephone call from a disgruntled worker who stated that he had been working on the claimant’s boat for some time and he had not been paid. He just wanted us to know that the yacht had been extended, had new engines fitted and that it was ashore in a covered in area on the mainland within a few miles from our office. He then put the phone down before we could ask him for any further information.
The area he described was an industrial/agricultural countryside estate, but geographically large, being around 5 square kilometres in area. We hired a helicopter and performed a grid by grid search of this area, photographing and noting the GPS position of each and every covered in area within the perimeter of the estate. This was followed by many days of foot work across difficult terrain. We were only able to identify two possible locations that had covered in areas large enough to house what was now believed to be an extended 30 metre yacht. Careful examination of these two locations revealed that they were not the location we were seeking.
We were no further forward in our search for the vessel, but we did know from the anonymous phone call that the claimant was currently working on the yacht somewhere in that area and we knew his address.
We transported several members of our surveillance team from the UK to join our existing team and I led a very early morning surveillance on the claimant. We plotted up all around his home, with vehicles static at all exits and waited. At 09:00 hours that morning the claimant walked out of his house dressed in a white boiler suit, got into his powerful sports car and drove off. The surveillance commenced.
A few miles down the road, we were caught up in a traffic jam and the eyeball was lost permanently. Very disappointing but this was the country we lived in and the driving techniques and road conditions were pretty poor.
The following morning, we plotted up again and this time he did not leave the residence. We continued and the following day, once again in his white boiler suit he emerged and drove off.
This time we were one step ahead. Knowing the initial part of the route we had vehicles ahead as well as behind. After approximately 5 miles the eyeball observed the target turn left and park in a layby next to a closed in aircraft type hanger. We continued by and stood the surveillance down. We were hopeful that our search had finally come to fruition.
Late that evening we travelled to the site and needless to say, we sighted the vessel inside the building, having been extended by 5 metres. We obtained photographic evidence of all sections of the yacht.
We reported back to the insurance underwriters who agreed that it was time to approach the yacht owner and confront him with the evidence, with a view to obtaining a retraction of his claim.
The next morning, we asked the owner to kindly attend at our offices. I believe he was under the impression that we were going to settle his claim. He was full of joy and confidence when he first entered the interview room until I told him that we knew where his boat was, where his engines were and that the game was now well and truly over. He was asked to consider exonerating his insurance underwriters by providing us with a fully signed disclaimer, which he did immediately to avoid any further complications. He shook my hand and walked away disappointed, with his tail between his legs.
The Underwriters were consumed with joy at the news and the fact that they did not have to pay out US$ 2,000,000.00 on what they believed was a fraudulent claim from the beginning. The investigation may have cost a great deal, however had it reached the levels of the courts, the costs would have reached two-fold with no guarantee of recovery.
What appears to have actually happened, in brief, is that the yacht had been taken to another country prior to when the incident was reported. It was to be used by a local drugs baron for some dubious deliveries. The yacht was later returned to the homeland and taken out of the water so as to change its appearance. During this time the engines were sold to another yacht and the subject yacht was re-engined with different serial numbered machinery. The yacht was also being lengthened by 5 metres, with a view to launching and insuring as another yacht altogether.
It also appears that on the date of the incident, the owner took a small wooden fishing boat across to the island and set off into midstream. He had a VHF radio with him and before jumping into the water, he hacked away at the bow of the boat with an axe to make it look as if it had been the cause of the sinking of his vessel. Once he had made “Mayday” contact with the authorities he jumped into the water and pretended that he was a victim of the loss at the time that he was rescued. Just one of many such successful cases and an absolute joy to wake up in the morning to face the next one.