908 F. Supp. 2d 485
S.D.N.Y.2012Background
- Life insurance brokers Binday, Kergil, and Resnick are charged with conspiracy to defraud providers and related fraud and obstruction offenses tied to a STOLI scheme through Straw Buyers.
- Indictment alleges misrepresentations in universal life policy applications to conceal third-party financing, STOLI purpose, and resell intent, affecting providers’ pricing and cash flow.
- Defendants allegedly funded Straw Buyers’ accounts, had third parties pay premiums, and deceived providers about insureds’ assets, funding sources, and policy purposes.
- Count Five (obstruction) against Binday is later dismissed as constitutionally insufficient under United States v. Aguilar; Counts One-Three remain, alleging similar fraud theory.
- Kergil and Resnick seek suppression of pre-indictment recorded statements; Binday seeks Rule 17(c) subpoenas; Defendants move for a bill of particulars; Brady/Giglio and timing/disclosures are addressed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of Counts 1–3 | Indictment properly alleges a fraud scheme harming Providers via misrepresentations. | Counts 1–3 track Shellef deficiencies; must fail absent materiality to the contract object. | Counts 1–3 are sufficient; Shellef distinguished; misrepresentations tied to provider harm satisfy materiality. |
| Rule 17(c) subpoenas breadth | Subpoenas are limited trial tools, not broad discovery. | Binday seeks broad exculpatory documents to test materiality. | Rule 17(c) subpoenas denied as overbroad/fishing expedition; narrow, tailored requests may be entertained later. |
| Suppression of pre-indictment statements under Rule 4.2(a) | Undercover recordings of represented targets are permissible in pre-indictment prosecutions. | Rule 4.2(a) prohibits counsel- represented communications; suppression warranted. | Kergil and Resnick suppression denied; established precedents permit undercover recordings pre-indictment. |
| Bill of particulars | Indictment contains detailed counts; no bill of particulars needed. | Need precise Straw Buyers and misrepresentation specifics. | Bill of particulars denied; substantial discovery already provided, including Straw Buyer folders and indices. |
| Disclosure obligations (Brady/Jencks/404(b)) | Government will disclose Brady and impeachment materials timely. | Timeliness and notice need explicit compliance. | Court requires timely Brady/Jencks/404(b) disclosures; define schedule and witness notice procedures. |
Key Cases Cited
- United States v. Aguilar, 515 U.S. 593 (U.S. 1995) (requires awareness that actions may impact an official proceeding for obstruction claims)
- United States v. Shellef, 507 F.3d 82 (2d Cir. 2007) (indictment must tie misrepresentations to contract object; materiality is key)
- United States v. Stavroulakis, 952 F.2d 686 (2d Cir. 1992) (indictment sufficiency and language tracking §1341/1343 analysis)
- Fountain v. United States, 357 F.3d 250 (2d Cir. 2004) (elements of mail and wire fraud; same analysis for both statutes)
- United States v. Schwartz, 924 F.2d 410 (2d Cir. 1991) (same language for mail and wire fraud analysis)
- Hamling v. United States, 418 U.S. 87 (U.S. 1974) (elements of fraud offenses; evidentiary considerations)
- United States v. Nixon, 418 U.S. 683 (U.S. 1974) (three-pronged Nixon test for Rule 17(c) subpoenas (relevancy, admissibility, specificity))
- United States v. Goldberg, 756 F.2d 949 (2d Cir. 1985) (indictment controls analysis at pretrial stage)
- United States v. Panza, 750 F.2d 1141 (2d Cir. 1984) (bill of particulars usefulness in providing defense clarity)