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Convictions of Life Insurance Producers for Mail and Wire Fraud Result in Lengthy Sentences and Millions in Restitution

Earlier this week, the United States District Court for the Southern District of New York sentenced Michael Binday, James Kergil, and Mark Resnick, and ordered the payment of millions of dollars in restitution. The sentencing order is the latest example of the continuing efforts of state and federal authorities to combat STOLI-related conduct.

Binday, Kergil, and Resnick were sentenced to 12, 9, and 6 years, respectively, for their involvement in an alleged STOLI scheme resulting in the placement of approximately $100 million in life insurance. In October, a jury convicted Binday, Kergil, and Resnick on counts of mail fraud, wire fraud, conspiracy to commit both offenses, and conspiracy to obstruct justice. Sentencing was originally scheduled for January 2014 but was continued several times for various reasons, including the withdrawal of Binday’s trial counsel.

In addition to the prison sentences, the defendants must pay restitution totaling $39,308,305.63. The court deemed the defendants jointly and severally liable. The restitution award will be divided among eight life insurers with amounts ranging from $147,499.59 to $14,725,156.00. The court also entered orders of forfeiture against the defendants in the amounts of, respectively, $13,522,424.64, $13,522,424.64, and $12,214,555.

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About this Author

Nolan Tully, Insurance lawyer,Drinker Biddle

Nolan B. Tully advises clients in the insurance and financial services industries in litigation, regulatory and compliance matters. He represents insurers with respect to regulatory compliance issues, policy, insurance benefits, policy lapses, bad faith and fraud. In litigation, Nolan has represented clients on issues relating to policy lapses, the secondary market for life insurance, premium financing, fraud, and stranger-originated life insurance (STOLI).

Nolan is the co-leader of Drinker Biddle’s long term care insurance practice. He has...