Monday, Apr 23, 2018
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Ill defendants, video testimony set local insurance-fraud case apart

For Magistrate Vernelis Armstrong, the arraignment at the federal courthouse in Toledo was anything but typical.

Ronald Meshy, a 42-year-old defendant in a $105 million insurance and investment fraud case, was too ill to travel here from Philadelphia.

Instead, he appeared by video conferencing technology from a courtroom there.

Ms. Armstrong briefly halted the hearing after Mr. Meshy said: “I'm a little short of breath and need some water.”

Later, in a discussion of his health, he told the magistrate that he had recently contracted pneumonia and planned to go to a hospital emergency room after the hearing.

“Do you want to stop and go [to the hospital] immediately?” Ms. Armstrong asked.

“I want to make my plea,” he said and later formally denied guilt.

The case involving Toledo's collapsed Liberte Capital Group LLC includes 15 defendants who either have AIDS or have tested positive for human immunodeficiency virus, the precursor to AIDS.

Unless charges are dropped or they plead guilty or win separate trials, they are scheduled to be tried together in late January with the main defendants: Toledo businessman J. Richard Jamieson and Akron-area accountant James Capwill.

Already, the case has crossed one historical milestone. Mr. Meshy, a burly 42-year-old former purchasing executive with a military-style haircut, became the first defendant in the history of the Toledo court to be arraigned by video conference last month. The equipment has been used twice to take trial testimony, but never to accept a plea, court personnel said.

Seth Uram, an assistant U.S. attorney overseeing the prosecution, concedes the case is unusual. “If a defendant was very ill, it would pose some challenges,” he said. Prosecutors don't have a plan for handling that situation.

Defendants have been charged in the 2000 collapse of Liberte Capital, a downtown Toledo business that persuaded 2,900 people nationwide to invest $105 million in rights to collect insurance death benefits of people with terminal illnesses.

Most of the money was lost when life insurance policies held by the Toledo firm lapsed for nonpayment of premiums or were cancelled by insurers because of alleged fraud in policy applications.

A federal indictment alleges that Liberte knowingly purchased life insurance policies from people who were HIV-positive when they obtained the coverage but didn't disclose it on policy applications.

Charged in the case are Mr. Jamieson, Liberte's owner, and Mr. Capwill, the firm's escrow agent, and 15 men and women who sold policies to Liberte Capital.

Most of the accused policy sellers were arrested by the FBI in various cities around the country in the days after the Jan. 18 indictment.

However, authorities have been unable to find Michael Filippone, 40, of Fort Lauderdale, Fla.

The others, who face 18 to 33 months in prison under federal sentencing guidelines, have pleaded not guilty. Prosecutors say each of the policy sellers obtained tens of thousands of dollars in coverage from between five and eight separate insurers after testing positive for HIV.

Mr. Meshy isn't the only ill defendant. Court records show that at least six have stopped working because of disability.

That group includes Jaeson Krug, 54, of Daly City, Calif. After reading a Blade story about Liberte Capital investors who lost their life savings, he penned a letter expressing regret for his involvement in the case.

“I am so crushed by what has happened to you,” he wrote.

In the letter, he denied knowledge of the scheme.

He said he got involved after attending a seminar in a San Francisco church which described legal loopholes that permitted people who were HIV-positive to buy life insurance and then re-sell the policies for cash.

He had no direct contact with Liberte Capital or its principals, he said. “To me it was just a name on tons of legal documents full of legalese,” he wrote.

He believed the policies were re-sold not to the mom-and-pop investors who actually purchased them but to “a wealthy gay guy buying policies to help gay brothers with AIDS.”

The first he learned of allegations of wrongdoing, he said, was in early February when “the FBI broke into my house and I was awakened from a deep sleep to staring at guns in my face.”

Mr. Krug was released after agreeing not to flee and to make all required court appearances.

Policy sellers charged in the case include two women and a married father of four.

Other defendants are Teddy Brindle, of Chatsworth, Ga.; I.B. Butler, 47, of Mineola, Texas; Scott Jackson, 36, of Hobbs, N.M; Michael Kasten, 39, Fort Lauderdale, Fla.; Darlene Lauderdale, 36, Brooklyn, N.Y; Robert Leonberger, 51, of Guerneville, Calif; Richard Nelson, 49, of Salem, Ore; Trevor Palmer, 42, of Brooklyn, N.Y; Orrett Ricketts, 29, of Brooklyn; Linsey Savage, 38, of Lynwood, Ill.; William Schade, 48, of Salem, Ore; and Richard Sisson, 30, of Atlanta.

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