United States v. Carpenter
190 F. Supp. 3d 260
| D. Conn. | 2016Background
- Defendant Daniel Carpenter, an experienced insurance lawyer and operator of the Benistar entities (including Grist Mill Capital, GMC, and the Charter Oak Trust (COT)), ran a program that obtained high‑value universal life policies on elderly insureds and funneled them through COT with third‑party premium funding.
- Insurance carriers had explicit anti‑STOLI (stranger‑originated life insurance) policies and used application questions, SOCI forms, inspections, and underwriting to detect and block STOLI.
- COT recruited straw insureds with promises of “free” insurance for ~2 years and potential profit on a later sale; applications and related forms routinely answered STOLI‑indicator questions falsely (source of premiums, inducements, intent to sell, third‑party interests, life‑expectancy reports).
- Funding was provided by Ridgewood (a Plainfield affiliate) to GMC under a $35M facility; COT policies were often illustrated to conceal minimal‑funding reality and documents showing funding arrangements were withheld from carriers.
- After a bench trial the court found beyond a reasonable doubt that Carpenter directed and controlled the scheme, caused material misrepresentations to be made to carriers, and therefore was guilty on all counts (mail/wire fraud, money laundering, illegal monetary transactions, and related conspiracies).
Issues
| Issue | Government's Argument | Carpenter's Argument | Held |
|---|---|---|---|
| Mail/Wire fraud (18 U.S.C. §§1341, 1343) | Carpenter ran a scheme to defraud insurers by making material misrepresentations and omissions that deprived carriers of information needed to decide whether to issue policies (money/property objective), and used mails/wires in furtherance. | He was deceived by subordinates/agents and lacked requisite intent; some conduct was lawful (policies transferable; split‑dollar characterization). | Court: Guilty — scheme, material misrepresentations, fraudulent intent, and use of mails/wires proven beyond reasonable doubt. |
| Money laundering (18 U.S.C. §1956) | Proceeds from fraud (Spencer death benefits) were the proceeds of specified unlawful activity; Carpenter knew this and used financial transactions to promote the scheme (repay Ridgewood, fund premiums). | Carpenter disputed knowledge/role in some transfers and asserted legitimate business uses. | Court: Guilty — proceeds were criminal, Carpenter knowingly conducted financial transactions to promote unlawful activity. |
| Illegal monetary transactions (18 U.S.C. §1957) | Carpenter knowingly engaged in monetary transactions >$10,000 using criminally derived property (Spencer proceeds) in financial institutions. | Argued tracing/commingling and legitimate transfers could negate §1957 liability. | Court: Guilty — transactions met statutory elements; tracing/commingling issue unnecessary because withdrawals exceeded any clean funds. |
| Conspiracy (18 U.S.C. §§1349,1956(h)) | Carpenter agreed with others (Waesche, Westcott, Trudeau, Bursey, etc.) to defraud carriers and to launder proceeds; he oversaw execution and gave instructions. | Carpenter claimed lack of agreement, delegated acts, or that co‑conspirators acted independently. | Court: Guilty — sufficient evidence of agreement, tacit understanding, and specific intent to commit the conspiracies. |
Key Cases Cited
- United States v. Binday, 804 F.3d 558 (2d Cir. 2015) (STOLI fraud — misrepresentations that conceal investor intent can constitute mail/wire fraud)
- United States v. Schwartz, 924 F.2d 410 (2d Cir. 1991) (wire/mail fraud scienter and scheme elements)
- United States v. Fountain, 357 F.3d 250 (2d Cir. 2004) (elements of mail/wire fraud)
- United States v. Rybicki, 354 F.3d 124 (2d Cir. 2003) (materiality standard: tendency to influence victim)
- United States v. Carlo, 507 F.3d 799 (2d Cir. 2007) (money/property element includes victim’s interest in controlling assets)
- United States v. Rossomando, 144 F.3d 197 (2d Cir. 1998) (depriving victim of information necessary for economic decisions satisfies property element)
- United States v. Bahel, 662 F.3d 610 (2d Cir. 2011) (foreseeability of mail/wire use by co‑conspirators)
- Schmuck v. United States, 489 U.S. 705 (U.S. 1989) (mail/wire in furtherance requirement)
- Pereira v. United States, 347 U.S. 1 (U.S. 1954) (mail/wire in furtherance principle)
- Pinkerton v. United States, 328 U.S. 640 (U.S. 1946) (co‑conspirator liability for reasonably foreseeable acts)
- United States v. Pierce, 224 F.3d 158 (2d Cir. 2000) (scheme, scienter, materiality breakdown)