Background
In December 2014 the U.S. Attorney in San Francisco filed an indictment against Karen Gagarin, Behnam Halali, Kraig Jilge, Ernesto Magat, and Alomkone Soundara. They had worked for several years as independent contractors selling life insurance for American Income Life Insurance Company.
The indictment alleged that the defendants engaged in wrongdoing that caused the company to pay more than $2.5 million in commissions and bonuses. Specifically the indictment alleged that the defendants paid recruiters to find individuals willing to take a medical examination in exchange for about $100, took personal information and submitted applications for life insurance in many cases without the individual's knowledge, in some cases created fraudulent drivers' licenses, opened hundreds of bank accounts from which to pay premiums, typically paid one to four months of premiums before allowing the policies to lapse, returned verification calls to the company purporting to be the applicants, used phony addresses on many applications in an effort to avoid detection, and fabricated the names of policy beneficiaries.
The indictment charged each defendant with one count of conspiracy to commit wire fraud, 14 counts of wire fraud, and one count of aggravated identity theft. The indictment also charged three of the defendants with money laundering: three counts against Magat, two counts against Jilge, and one count against Halali. In February 2016 U.S. Senior District Judge Susan Illston denied a motion to dismiss. In December 2016 Soundara pleaded guilty and agreed to testify for the government. In January 2017 Jilge pleaded guilty to most of the charges against him but did not plead guilty to the two money laundering charges against him.
Trial and Sentencing
On February 15, 2017, the trial of Halali, Magat, and Gagarin began. It consisted of 14 trial days and ended on March 13. The jury found them guilty on the conspiracy charge, the 14 wire fraud charges, and one money laundering charge.
On January 5, 2018, Judge Illston sentenced Halali, Magat, and Gagarin. On February 16 she sentenced Jilge. On March 23 she sentenced Soundara. Here is a brief summary of the sentences:
- Halali: 60 months in prison followed by three years of supervised release, special assessment of $1,600, restitution of $2,837,791.93 (joint and several with the co-defendants), no fine, self surrender on March 30, 2018.
- Magat: 48 months in prison followed by three years of supervised release, special assessment of $1,600, restitution of $2,837,791.93 (joint and several with the co-defendants), no fine, self surrender on March 30, 2018.
- Gagarin: 36 months in prison followed by three years of supervised release, special assessment of $1,600, restitution of $2,837,791.93 (joint and several with the co-defendants), no fine, self surrender on March 30, 2018.
- Jilge: 12 months and 2 days in prison followed by three years of supervised release, special assessment of $1,600, restitution of $2,837,791.93 (joint and several with the co-defendants), no fine, self surrender on May 15, 2018.
- Soundara: Time served, three years of supervised release, special assessment of $1,600, restitution of $2,837,791.93 (joint and several with the co-defendants), no fine.
Gagarin's Appeal
On January 22, 2018, in the district court, Gagarin filed a notice of appeal. The next day the appellate court docketed the case. Two assistant federal public defenders in San Francisco represent Gagarin. Five assistant U.S. attorneys in San Francisco represent the government. Gagarin's brief was due May 23, but has been rescheduled for July 9 because the district court reporter needed additional time to prepare the transcripts that are to be used in the appeal. The government's answering brief is due August 8, and Gagarin's optional reply brief is due 21 days after the filing of the government's answering brief. The three-judge appellate court panel has not yet been assigned. (See U.S.A. v. Gagarin, U.S. Court of Appeals, Ninth Circuit, Case No. 18-10026.)
General Observations
Life insurance performs important social functions, not the least of which is to provide financial protection for the insured's loved ones. Yet, as often said, life insurance is sold, not bought. Thus it is necessary to pay commissions to agents who perform the many functions associated with the sale of life insurance including, most importantly, what I call the "antiprocrastination function."
It is disgraceful when agents engage in criminal behavior to increase their commissions. This case involved atrocious activity by the defendants. The evidence was so overwhelming that I thought the case would not go to trial, and that all five defendants would plead guilty. I was wrong; two pleaded guilty and the other three went to trial. I was not surprised by the jury findings or the judgments imposed on the defendants.
I plan to provide another update after the appellate court panel hands down its decision on the Gagarin appeal. However, I may provide an earlier update if I find Gagarin's appellate brief interesting.
Available Material
In Nos. 149, 210, and 251 I offered complimentary PDFs containing some important case documents. Those three packages are still available.
Now I offer a new complimentary 20-page PDF consisting of the judgment against Jilge (8 pages), the judgment against Soundara (8 pages), and the docket in the Gagarin appellate case (4 pages). Email jmbelth@gmail.com and ask for the April 2018 package about the Halali case.
Now I offer a new complimentary 20-page PDF consisting of the judgment against Jilge (8 pages), the judgment against Soundara (8 pages), and the docket in the Gagarin appellate case (4 pages). Email jmbelth@gmail.com and ask for the April 2018 package about the Halali case.