The Criminal Charges
On October 3, 2012, a federal grand jury indicted Bazemore on four counts of mail fraud in a scheme to obtain commissions by inducing insurance companies to issue stranger-originated life insurance (STOLI) policies to unqualified applicants. The counts relate to three policies issued by Principal Life Insurance Company and one issued by Transamerica Occidental Life Insurance Company. Other companies mentioned in the indictment are ING Annuity and Life Insurance Company, John Hancock Life Insurance Company, Sun Life Assurance Company of Canada, and Metropolitan Life Insurance Company. (See U.S.A. v. Bazemore, U.S. District Court, Northern District of Texas, No. 3:12-cr-319.)
According to the indictment, the applications Bazemore submitted contained materially false and fraudulent representations. They include but are not limited to these seven areas: (1) false and grossly inflated statements of the applicant's net worth and income, (2) forged and fraudulent letters from Certified Public Accountants verifying the false financial information in the applications and related financial documents, (3) forged signatures of the applicant, (4) false statements that the purpose of the insurance policy was for estate planning, (5) false statements that the policy was not to be transferred to third parties, (6) false statements denying third parties had promised to pay premiums in return for an assignment of the policy, and (7) false statements that the applicant was not borrowing money to pay the premiums.
Bazemore was arrested shortly after the indictment was filed, and he has been in custody ever since. In July 2013, after a three-day trial, the jury found him guilty on all four counts in the indictment.
In March 2014 the district court judge sentenced Bazemore to 240 months in prison on each of the four counts, to run partially concurrently and partially consecutively for an aggregate sentence of 292 months, followed by three years of supervised release. The judge ordered Bazemore to pay restitution of slightly more than $4 million and a special assessment of $400. The judge did not order a fine because Bazemore does not have the resources or future earning capacity to pay a fine.
Bazemore appealed the verdict, the sentence, and the restitution. The appellate panel affirmed the verdict, vacated the sentence and the restitution, and sent the case back to the district court for proceedings consistent with the appellate opinion. The appellate panel ruled that the district court judge had erred in the calculation of the length of the sentence and the amount of restitution. The appellate opinion explains the panel's reasoning. (See U.S.A. v. Bazemore, U.S. Court of Appeals for the Fifth Circuit, No. 14-10381.)
Bazemore's actions that led to the indictment and the guilty verdicts are outrageous. However, my impression, based on my review of actions taken by the defendants in many other STOLI cases, most of which were civil rather than criminal cases, is that Bazemore's actions are typical of actions taken by STOLI defendants.
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