Victorian couple accused of $17m insurance fraud

A Melbourne court has been told a couple created a law firm so they could defraud an insurance company of more than $17 million.

Husband and wife, Alvaro (left) and Josie Gonzalez arrive to the County Court of Victoria in Melbourne. Source: AAP

A Melbourne couple allegedly set up a law firm as a front to defraud an insurance company of more than $17 million.

Josie and Alvaro Gonzalez are standing trial in Victoria's County Court charged with 14 counts each of obtaining financial advantage by deception, between March 2011 and April 2013.

Prosecutor Andrew Grant on Wednesday told the jury the couple set up Jaag Lawyers in 2011 as a way to defraud underwriting agency Dual Australia, shortly after the agency hired Josie Gonzalez to manage its insurance claims.

"One of the reasons it (Jaag) was set up, if not the sole reason, was to be involved in this alleged fraud," Mr Grant said.

Alvaro Gonzalez. Source: AAP

The barrister said the couple wrote up invoices for legal services purportedly provided to Dual, which were then sent to Josie Gonzalez to approve under the names of legitimate clients.

"At no time was Jaag Lawyers employed directly or indirectly to provide work for Dual," Mr Grant said.

"The invoices were false invoices."

Mr Grant said Dual had paid Jaag more than $17.4 million when the alleged fraud was uncovered, after Josie Gonzalez went on maternity leave in May 2013.

Some of that money was allegedly used by Alvaro Gonzalez to buy a $4.4 million house in the exclusive suburb of Kew.

There was no mortgage on the property.

In a subsequent civil settlement with Dual, Mr Grant said the couple agreed to repay more than $15.8 million.

"It's a pretty powerful piece of evidence," he said.

The jury also heard that before Dual Australia hired Josie Gonzalez, she suggested the company could get her husband, Alvaro, to manage insurance claims, because he was looking for legal work.

Dual's then-chief operations officer, Damien Coates, said he shut down this suggestion because he was concerned about a conflict of interest.

Dual was unaware Josie or Alvaro Gonzalez were involved in Jaag before the couple's alleged fraud was discovered.

The duo denies the allegations.

Alvaro Gonzalez's barrister, Peter Kilduff, said his client was not aware of, and did not create, fake invoices for Dual, and believed there was an agreement between the couple and the insurer.

He also denied Jaag was established for the sole purpose of defrauding Dual.

The trial is continuing.