Thursday, January 9, 2014

No. 19: A STOLI Criminal Case in Federal Court in California

On July 20, 2013, a federal grand jury in San Diego handed up a 23-count indictment against four individuals in a case involving numerous stranger-originated life insurance (STOLI) policies. The defendants are Byron Arthur Frisch, Kristian Marcus Giordano, Kasra Sadr, and Brenda N. Barrera Merriles. The defendants are charged with one count of conspiracy to commit mail fraud and wire fraud, eight counts of mail fraud, and fourteen counts of wire fraud. The case, which I learned about only recently, has interesting connections to my blog post No. 16 about a STOLI civil case in federal court in Utah. (U.S.A. v. Frisch et al., U.S. District Court, Southern District of California, Case No. 3:13-cr-2774.)

Nature of the Charges
The indictment charges the defendants with deceiving life insurance companies into issuing large life insurance policies to unqualified applicants, obtaining millions in commissions, and selling the fraudulently obtained policies to innocent purchasers. To accomplish those purposes, the defendants, among other things, 
recruited elderly individuals to apply for life insurance policies with death benefits ranging from $1.5 million to $9.5 million with the promise that there would be no cost to the applicant; promised applicants that they would receive two years of coverage at the face value of the life insurance policy, followed by a payment of a part of the sale price of the policy when it was sold to a third party after two years; [and] prepared and submitted to life insurance companies applications for life insurance that intentionally contained false representations and omitted material facts regarding the applicant's net worth, income, source of premium payments, and intent to sell the policy....
Companies and Individuals
The indictment shows in tables the names of certain companies and individuals who sent or received funds by mail or wire. They are "Lincoln B Life Insurance Co.," "Principal Life Insurance Co.," "Producers Group," "Advanced Planning Services," "Cavalier Associates," "Sadr and Barrera," "Washington Mutual Bank," "Principal Financial Group," "Spartan Marketing," "Byron A. Frisch," "Gio3 Group," "K. Giordano," "Bank of America," "Wells Fargo Bank," "US Bank," and "California Bank & Trust."

Names of insureds are not shown but are indicated by initials. Applications are mentioned for policies of $8 million for RMG, $9.5 million for GH, $5 million for DG, $6 million for VC, $4 million for LP, $4 million for TSF, $1.5 million for JDA, $3 million for KH, $3 million for SDC, $3 million for VL, $3 million for RM, and $1.5 million for WS. In addition to fraudulent applications, the examples mention concealment of the identity of the party paying the premiums.

Status of the Case
Pleas of not guilty were entered and the defendants were released on bond. The case was assigned to District Judge Janis L. Sammartino. The trial date is February 7, 2014. 

Connections to a Civil Case in Utah
In my blog post No. 16 dated December 30, 2013, I discussed a civil case in federal court in Utah. The plaintiff was PHL Variable Insurance Company, a unit of Phoenix Companies, Inc. Here are some connections between the PHL case and the Frisch case:
  • In my discussion of the PHL case, I mentioned the San Diego law firm of Sadr & Barrera. The principals of the firm are defendants in the Frisch case. 
  • Frisch was deposed in the PHL case. Unfortunately the transcript is under seal in the court file on the PHL case.
  • Frisch played football at Brigham Young University (BYU) in Provo, Utah. (Later he played professionally with the Tennessee Titans, Dallas Cowboys, New York Giants, and San Francisco 49ers.)
  • Sheldon Hathaway, whose family trust was the defendant in the PHL case, lives in Payson, Utah, near Provo.
  • In my discussion of the PHL case, I mentioned Brock Diediker. He played football at BYU.
  • In my discussion of the PHL case, I mentioned Gabriel Giordano. He played football at BYU.
  • Kristian Marcus Giordano is a defendant in the Frisch case. It seems likely that he is related to Gabriel Giordano.
The Indictment in the Frisch Case
I am making the 12-page indictment in the Frisch case available as a complimentary PDF. Send an e-mail to and ask for the Frisch indictment.