Fraudulent Arson: Operation Nero and Beyond
| Date | 01 March 1998 |
| Published date | 01 March 1998 |
| Pages | 66-68 |
| DOI | https://doi.org/10.1108/eb025865 |
| Author | Michael Clarke |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 6 No. 1 — Insurance
INSURANCE
Fraudulent Arson: Operation Nero and Beyond
Michael Clarke
The scries of trials arising out of the Metropolitan
Police investigation into arson and other insurance
frauds under the name Operation Nero concluded
in early 1998. The central figure was loss assessor
Peter Scott, who was convicted, along with various
associates, at two trials in 1996 and 1997 for a
number of offences going back to the early 1990s.
He received three years' imprisonment for several
offences of conspiring to defraud involving bogus
burglaries, and another assessor and
a
jeweller who
provided fake valuations received one year each.
He was then sentenced to seven years, to run con-
secutively with his earlier sentence, for organising
the arson of a clothing warehouse in the East End
of London, and a further five years on charges of
conspiracy to defraud insurers, to run concur-
rently. The owner of the warehouse also received
seven years, and three co-conspirators who rented
space in the warehouse received three-year sen-
tences. A number of other co-conspirators gave
evidence for the Crown. Scott was acquitted in a
further trial where he was accused of a £400,000
mortgage fraud which police described as complex
and clever. The value of the fraudulent arson at
the warehouse was £5m and the police estimated
that Scott was responsible for at least £30m of
insurance claims, half of them settled by the time
his business was raided and records siezed in
1992.1
The Scott case is not significant just because he
was an energetic, intelligent and resourceful fraud-
ster with a penchant for arson, in the manner of
the infamous Leopold Harris in the 1930s how-
ever. Loss assessors act for insurance claimants, but
are required to have no qualifications nor to regis-
ter with any authority before setting up in busi-
ness.
Loss adjusters, who are instructed by
insurers, are professionally trained, and accredited
by a chartered institute. Scott undoubtedly learned
his fraudulent trade from other assessors, some of
whom have had even more successful careers.
Recent research on arson among adjusters revealed
an awareness of a number of assessors who were
believed to be unscrupulous or active fraud pro-
moters especially in the South East of England,
though it should be said in defence of assessors
that there was a general acceptance that most are
reasonably honest, if by no means always compe-
tent.2 The significant point in this connection is
that the warehouse fire for which Scott was con-
victed was not identified by insurers or the fire
service. Police interest in Scott arose as a result of
receiving information about a dozen fires in North
and East London, which were alleged to be arson.
Further enquiries led to a promising line of inves-
tigation and a small squad of officers was formed
who initially put him and his associates under
observation and then raided business premises.
Police were then faced with the arduous task of
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