United States v. Degeorge

380 F.3d 1203 (9th Cir. 2004)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

DeGeorge (D), an attorney, contracted for the construction of a 76-foot yacht for $1.9 million. Through a series of sham transactions, D inflated the price of the yacht. Other than the original contract with the builder, no money ever exchanged hands in the sham transactions. D attempted to disguise his connection with the sham transactions with stock swaps. The net effect of these transactions was to make Tridon, and not D, the owner of the yacht with a market value of $3.6 million. D had a rather extensive history of boat losses, - one alleged theft and two alleged sinkings- where he was fully compensated by insurance companies. D claimed he needed to disguise his name in that he was uninsurable. The insurance listed $ 3.675 million as the purchase price of the yacht and made no mention of D whatsoever. It listed the loss payee as Inbanco, Ltd. one of D's fake companies. When the yacht was delivered, it was eventually scuttled by D and two accomplices. The boat refused to sink. Italian authorities spotted the yacht and began to approach. D devised a story about being robbed at sea with the imaginary robbers attempting to scuttle the yacht and escaping on a speedboat. The Italian authorities finally allowed the three men to return home to the United States in February 1993. A claim seeking payment under the insurance policy was submitted. Cigna refused to pay, and it was rescinding the policy. Cigna filed a civil lawsuit against D et al. seeking rescission of the insurance contract. Polaris, one of the fake corporations, filed a counterclaim for payment under the insurance policy. Cigna prevailed, and the judge referred the matter to the United States Attorney's Office for a possible perjury investigation. The evidence of prior losses was a contested issue at trial, and the district court ultimately allowed P to show only that three prior vessels owned by D were insured; that he claimed the vessels were lost at sea; and that the vessels were not recovered. P was not permitted to elicit details of the incidents themselves or the fact that D had collected insurance proceeds on the losses. D was convicted and appealed on many grounds.