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The Ministry of Social Development says less than $30,000 was paid out to eight alleged benefit fraudsters who police began rounding up in Napier this morning.
A joint operation between police and the ministry began weeks ago when staff became suspicious about applications for sickness benefits.
The group had made a fake doctor's stamp and were forging doctors' signatures in their quest for easy money.
"When people forge documents it's detection that counts. And we have got specialist people working in our sickness benefit areas who saw the stamp and thought `that's not quite right' so we talked to the doctors involved," ministry official Hilary Reynolds said.
"(These are) people with trained eyes and good knowledge."
She said where fraud was proven they would recover the cash.
"As a matter of principle, if people get money to which they are not entitled we get that money back."
Napier CIB Detective Senior Sergeant Bill Gregory said the eight involved were all connected to a local gang.
He said the scam was not especially original or sophisticated.
"This has been done before. The thing is, it's organised. It's a systematic attempt to rip off a system that is there to help people."
Mrs Reynolds said they had seen similar operations before.
"We pay benefits to a lot of people and the majority who come to us genuinely need our help. A few abuse (the system), and sometimes we get organised crime, and that's a trend we can see in other countries as well."
Mr Gregory said police would decide what charges the eight would face once they had interviewed them all.
"And that may take us a wee while, we have to just sift through the explanations that are given."
- NZPA
