Monday, May 16, 2016

No. 162: A STOLI Criminal Case Is Dismissed Without Prejudice

On July 20, 2013, the U.S. Attorney in San Diego filed a 23-count grand jury indictment against four individuals in a case involving stranger-originated life insurance (STOLI). The defendants were Byron Arthur Frisch, Kristian Marcus Giordano, Kasra Sadr, and Brenda N. Barrera Merriles. They were charged with one count of conspiracy to commit mail fraud and wire fraud, eight counts of mail fraud, and fourteen counts of wire fraud. I wrote about the case in No. 19 (posted January 9, 2014). (See U.S.A. v. Frisch, U.S. District Court, Southern District of California, Case No. 3:13-cr-2774.)

The Judge
The case was assigned to U.S. District Judge Janis L. Sammartino. On January 29, 2016, she dismissed the indictment without prejudice (subject to possible reprosecution). Judge Sammartino was nominated by President George W. Bush in March 2007 and confirmed by the Senate six months later. She received her law degree in 1975 from the Notre Dame Law School. She served as a state court judge in San Diego from 1995 to 2007.

The Criminal Charges
The 12-page indictment charged 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 purchasers unaware of the fraud involved in the issuance of the policies. 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....
Brief Summary of Developments
Pleas of not guilty were entered and the defendants were released on bond. Initially the trial was scheduled to begin February 7, 2014. Later it was postponed to April 25, 2014, then to August 15, 2014, then to October 3, 2014, then to December 19, 2014, then to March 27, 2015, then to July 10, 2015, then to September 4, 2015, and then to May 2, 2016.

On December 31, 2015, Giordano filed a 17-page motion to dismiss the indictment based on violations of the Speedy Trial Act (U.S. Code § 3161). The motion included a discussion of the provisions of the Speedy Trial Act that supposedly were violated. Giordano also asked that the indictment be dismissed with prejudice (permanently). The other defendants joined in the motion. Here, without citations, is an introductory paragraph in Giordano's motion:
The indictment in this case was filed on July 13, 2013. From November 15, 2013 until September 5, 2014 the hearings in this case were continued without the Court making specific findings that the continuances were necessary to serve the ends of justice. As a result, the speedy trial clock expired without the parties noticing on Thursday March 6, 2014. By the time of the September 4, 2015 hearing when the trial date was set, 241 days of unexcused delay had already elapsed. Because Mr. Giordano was not brought to trial within the time limits of the Speedy Trial Act, the indictment must be dismissed.
On January 22, 2016, the government opposed the motion and also said that, if the indictment is dismissed, it should be dismissed without prejudice (subject to possible reprosecution). Here is an introductory paragraph in the government's 17-page opposition:
After requesting nearly two-and-half years of continuances for the purpose of reviewing discovery, filing substantive motions, and preparing for trial, Defendants now claim—for the first time—that their right to a speedy trial has been violated, arguing that they were entitled to a trial starting on or before February 3, 2014. Defendants' argument centers on a series of written continuance motions—each prepared by the defense—that moved the motions hearings date from November 2013 through September 2014. These motions and the corresponding continuance orders did not include the words "ends of justice" or otherwise explain the reasons for granting a continuance. As a result, Defendants argue that the orders failed to toll the Speedy Trial clock, and time expired well before substantive motions were filed. The record makes it clear, however, that the "ends of justice" fully supported each of the court's orders—given the complexity of the case, the volume of discovery, and the need for adequate preparation by all parties.
On January 26, Giordano filed an eight-page response to the government's opposition. On January 29, Judge Sammartino issued a one-page dismissal of the indictment without prejudice. She provided no explanation for her ruling.

General Observations
This is a disappointing end to a complex, hard-fought criminal action over serious charges of wrongdoing in the STOLI market. I say "disappointing" because it would have been preferable for the case to run its course until a determination was made on whether the defendants' outrageous scheme constituted criminal activity warranting prison time for the perpetrators.

This case is my first encounter with the Speedy Trial Act. I do not know whether the result here is what the drafters of the Act had in mind.

On the question of possible reprosecution, consider three points. First, the defendants moved not only for dismissal, but also for dismissal with prejudice. Second, the government argued not only against dismissal, but also for dismissal without prejudice if the indictment was dismissed. Third, although Judge Sammartino sided with the defendants by dismissing the indictment, she sided with the government by dismissing the indictment without prejudice, and she also provided no explanation for her decision. Those points suggest at least the possibility that the government will reprosecute the case. Thus far I have seen no filings to indicate whether or not the government will reprosecute the case.

Available Material
I am making available a 55-page complimentary PDF consisting of the indictment, the motion to dismiss the indictment, the opposition to the motion, the response to the opposition, and the judgment of dismissal. Email and ask for the May 2016 package relating to the Frisch case.