In August 2009, a commercial fishing boat called the Alexander II set out from Cape May, New Jersey, and was reportedly making good progress. The ship’s log showed that the fishermen had caught more than 50 fish with a total weight of 3,000 pounds. About 86 miles from the coast, the boat began taking on water. They sent a distress signal to the U.S. Coast Guard, but the captain and crew were forced to escape on life rafts before they could be rescued.

When the owner of the Alexander II filed an insurance claim for $400,000, however, it was denied. The insurance company claimed that the owner and three members of the crew intentionally destroyed the boat. The owner filed a civil suit against the insurance company, and he and the three crew members have now been indicted by a federal grand jury on charges of insurance fraud. The crew members have also been charged with attempting to destroy the vessel.

Would you risk your life and destroy your livelihood for $400,000?

A grand jury is not intended to determine whether someone is guilty. Its purpose is merely to determine whether the prosecution has enough evidence to charge the defendant with a crime. Grand jurors typically only hear the prosecution’s case — no defense is presented.

In the article on Westlaw News & Insight, scant detail was presented about why the insurance company and the U.S. Attorney concluded the sinking of the Alexander II was an intentional act of insurance fraud. The key pieces of evidence appears from the article to be:

• Despite the entry in the ship’s log that there were nearly 3,000 pounds of fish on board, the U.S. Coast Guard found no fish aboard the boat.
• The fishing boat filled with sea water and quickly sank — sending the crew into the sea in lifeboats — but the boat’s pumps appeared to be in order.

The owner of the fishing boat, along with crew member described in the indictment as the owner’s “right-hand man,” were arrested yesterday morning. The other two crew members accused of taking part in the insurance fraud scheme remain at large.

If convicted, each one could face up to 10 years in federal prison, along with a fine of either $250,000 or double the amount of any financial losses caused by the staged accident.

Source: Westlaw News & Insight, “New Jersey boat owner and crew charged in sinking plot,” Terry Baynes, June 15, 2011