Josie Gonzalez sobbed in the witness box today as she spoke of her trauma when media published a photograph of her husband and allegations of fraud in mid 2013.

A June 29, 2013 Herald Sun article saying “Alvaro and Josie Gonzalez face allegations they duped $17m from insurance honchos” detailed allegations the married lawyers set up a law firm and she then invoiced $17 million worth of legal advice to her employer for fictitious work.

“It has had a devastating affect on me as a mother, wife and professional. I don’t think anyone could recover from seeing these allegations and lies printed, and a photo of a family member, for the world to see,” Gonzalez said when asked what affect public exposure had had on her.

The court took a break while Gonzalez, 45, stepped down to calm her emotions. Alvaro Gonzalez, 50, comforted her.

Gonzalez denied allegations that Jaag, an acronym for Josie and Alvaro Gonzalez, was created with the specific intent to defraud. Each has pleaded not guilty to 14 charges of obtaining a financial advantage by deception.

It is alleged that Dual was defrauded of $17.4 million as a result of more than 400 false invoices for legal services in a period extending a little over two years from March 2011 after Mrs Gonzalez was brought in as national claims manager.

“The process (of setting up Jaag) began months before I began at Dual,” she said. Gonzalez started at Dual at the start of November 2010. Jaag was formally incorporated on November 5 that same year.

The first invoice from Jaag to Dual was received on March 15, 2011 for just under $10,000. Gonzalez said she received the invoice at her home office directly from Alvaro, with whom she shared a home office.

This invoice was then submitted to Dual's accounts payable in Sydney.

Gonzalez had arranged to work from home in her $145,000-a-year job at Dual, as did Alvaro in his role at Jaag, and they shared a laptop and desktop computer. They worked at their home in Rathdowne Street, North Carlton, which Josie Gonzalez had bought in 2004 for $425,500. At the end of 2012 they moved to a house in Fellows Street, Kew, bought by Alvaro for $4.4 million.

In March 2011, at the time of the first Jaag invoice, Josie Gonzalez emailed accounts payable in Sydney, telling a staff member to refer to Jaag Lawyers as “counsel” for all accounting and reporting purposes.

Gonzalez said work done by Jaag and billed to Dual mostly involved verbal advice from Alvaro to her, explaining her requirements in a given claim as the national claims manager.

“It was always face-to-face as we would both be working in the same home office,” she said. “I needed someone I trusted who could work around me and condense the material in a manner I could use for my requirements.” She told the court. “Often it was verbal advice.”

The invoice amounts were “reflective of the timesheet prepared by Alvaro”, Gonzales told the court. She completed the Jaag template invoices herself before they were submitted to her at Dual and sent on to accounts payable.

She agreed a number of barristers mentioned in Jaag invoices had never been briefed. There had been an “intention” to brief those barristers, she said.

Gonzalez was required by Dual to take six weeks maternity leave in late May 2013. During this time she was shut out of Dual's computer system and had no access to any files.

After the couple’s second child was born on May 8 2013, Jaag did no further work. In June 2013, after accounting anomalies were detected in her absence, a freezing order was put on their finances and a caveat placed on the property of Josie Gonzalez’ parents, which prevented any sale.

After an asset freeze in June 2013, the couple agreed to return monies to Dual after legal advice suggested they settle the matter quickly and “move on with their lives”.Legal representatives did not recommend they challenge a freezing order on their assets, she told the court.

In evidence yesterday, Gonzalez said she met with Dual Australia MD Damien Coates at the Intercontinental Hotel in Melbourne’s Collins St in May and June 2010, when she was still with Proclaim, and discussed new arrangements for claims and legal work.

She said she had initially proposed a “one-stop shop” that would allow a firm being established by the couple to handle both requirements.

A “middle ground” was reached at the second meeting where it was agreed she would join Dual to handle claims while her husband would do legal work through the proposed new firm, she said.

“Damien’s words were ‘go for it’,” she told the court. “I remember going home and telling my husband that Damien was sold on the idea.”

Gonzalez said her income at Dual was “slightly higher” than the level of around $125,000 she had earned at Proclaim.

“The incentive to go to Dual was that we could start our own law firm, as agreed with Mr Coates,” she said.

Earlier in the trial, Mr Coates denied ever agreeing to a firm associated with the couple doing legal work, and he said he had raised concerns over a conflict of interest.

The trial is continuing.