Monday, March 27, 2017

No. 210: Halali and Others in a Federal Criminal Case Involving Phony Life Insurance Policies—An Update

In No. 149 (posted March 14, 2016), I discussed a criminal case filed in federal court in San Francisco against five defendants and involving the issuance of phony life insurance policies. Here I provide an update on the case. (See U.S. v. Halali, U.S. District Court, Northern District of California, Case No. 3:14-cr-627.)

In December 2014, the U.S. Attorney's office in San Francisco filed the indictment. The case was assigned to U.S. Senior District Judge Susan Illston. In February 2016, the judge denied a motion to dismiss filed by four of the defendants and set the case for trial early in 2017.

The defendants are Behnam Halali, Ernesto Magat, Kraig Jilge, Karen Gagarin, and Alomkone Soundara. They worked for several years as independent contractors selling life insurance for American Income Life Insurance Company. The indictment alleges that the defendants engaged in wrongdoing that caused the company to pay more than $2.5 million in commissions and bonuses.

In No. 149, I described the allegations in some detail. The essence of the allegations is 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.

Recent Developments
On December 19, 2016, Soundara pled guilty to all 16 counts against him, and he agreed to testify for the government. On January 11, 2017, the government filed a trial memorandum describing the charges and the evidence. On January 18, the judge filed an order that the trial was to begin on February 13, that Jilge intended to plead guilty on January 25, and that the trial defendants were Halali, Magat, and Gagarin.

On January 25, Jilge pled guilty to the conspiracy charge, the 14 wire fraud charges, and the identity theft charge, but he did not plead guilty to the two money laundering charges against him. The judge vacated the trial as to Jilge.

The trial began on February 15. It consisted of 14 trial days and ended on March 13. The jury found Halali, Magat, and Gagarin guilty on the conspiracy charge, the 14 wire fraud charges, and one money laundering charge. The judge said the defendants' motion for a new trial was due April 14, the government's opposition was due May 5, and the defendants' reply was due May 19. She set sentencing for July 21.

The Plea Agreements
Plea agreements often contain important information I share with readers. In this case, I have not yet seen the two plea agreements. They were filed in open court, are listed on the case docket, and are not marked as sealed. However, when I sought them, the message in each instance was: "You do not have permission to view this document." I asked a government attorney for either the documents or an explanation, but he did not reply. I think the problem is that the documents contain information prejudicial to the remaining defendants in any motion for a new trial, or in any appeal. I hope to see the plea agreements after the case is closed.

General Observations
When I wrote about this case in No. 149, I felt that the allegations revealed brazen behavior by the defendants, and that the evidence against them was overwhelming. That is why I expressed the belief that the case would not go to trial, and that the defendants would enter into plea agreements. As it turned out, I was partly right and partly wrong; two defendants pled guilty and three went to trial. I plan to report on any motion for a new trial, any appeals, and any sentencing.

Available Material
I am offering a complimentary 46-page PDF consisting of the indictment (19 pages), the denial of the motion to dismiss (8 pages), the government's trial memorandum (5 pages), the scheduling order (7 pages), and the jury's verdict form (7 pages). Email and ask for the March 2017 package about the Halali case.