Opinion ID: 3014083
Heading Depth: 2
Heading Rank: 1

Heading: Pursuant to these agreements, Teale

Text: assumed 100 percent of the liability Appellants Michael Miller and associated with World Life’s four group Philip Rennert were convicted by a jury of medical insurance policies in exchange for conspiracy, wire fraud, and securities receipt of 92 percent of the premiums paid fraud; Appellant George Jensen was by World Life’s insureds on those policies. convicted by a jury of securities fraud. Appellants supplied Teale with stocks Their convictions resulted from their from offshore companies that Teale could involvement in a complex scheme under list as putatively valuable collateral which they leased the worthless stocks of backing the company, though the stocks several public companies to the Teale were essentially worthless. Yeaman, 194 Network (“Teale”), a fraudulent network F.3d at 447. of offshore and domestic companies. The details of the operation of the Teale In 1990, Rennert created Forum Network, through its principal Alan Teale, Rothmore to serve as an intermediary are set forth in our earlier opinion in between Teale and the publicly traded United States v. Yeaman, 194 F.3d 442 corporations that desired to lease their (3d Cir. 1999), and we repeat only such stock to Teale. This arrangement created details as are necessary to decide the issues the appearance of legitimacy in two ways. before us in this appeal. First, Forum Rothmore helped the Teale Network comply with Pennsylvania 2 reinsurance regulations that require Teale. Although Ecotech’s shares were u n l i c e n s e d o f f s h o r e r e i n s u r a n ce virtually wo rthless, A ppellants companies, such as Teale, to deposit in fraudulently over-valued Ecotech’s shares escrow accounts collateral (in the form of on the company’s financial statements. corporate stocks) equal to the liability Members of the conspiracy manipulated associated with its reinsurance contacts. the market for Ecotech and other Second, Forum Rothmore entered into corporations’ stock in order to maintain “surplus contribution agreements” with the inflated trading prices. Teale, which gave Teale the appearance of Miller, a lawyer, was corporate b e i n g b a c k e d b y in d e p e n d e n t counsel for Forum Rothmore and a stockholdings. Id. shareholder in Ecotech. The Ecotech Teale and Rennert first met and stock at issue was not tradeable and carried discussed this fraudulent scheme in August a restrictive legend to that effect. Miller 1990 and executed the first of their surplus issued opinion letters stating that Forum contribution agreements on September 1, Rothmore could remove that legend from 1990. Under the terms of these stock certificates so that it falsely appeared agreements, public shell corporations that the stock could be freely traded and leased their stock to Teale and authorized leased to Teale. The Government the sale of the stock, if necessary, to pay submitted evidence that Miller was paid claims under insurance policies that Teale $130,208 for representing the company had reinsured. Teale then listed these and $104,000 from leasing Ecotech stock shares at inflated values on the financial to Teale. statements presented to World Life. After In 1991, the Pennsylvania Insurance receiving insurance premiums from World Department discovered W orld Life’s Life, Teale paid monthly leasing fees to insolvency and ordered its liquidation. Forum Rothmore, which in turn split the Because Teale had been paying insurance fees with the stock providers. Id. The claims with recently-received premiums Teale Network was Forum Rothmore’s and had no other significant assets to draw sole client, and Forum Rothmore was the upon, this liquidation deprived Teale of the Teale Network’s only consistent source of ability to pay further insurance claims. assets. World Life’s policyholders thus were In particular, Forum Rothmore unable to receive insurance payments as entered into surplus c ontribu tion needed. agreements with Ecotech Corporation Following World Life’s liquidation, (“Ecotech”). Jensen was at various times the Pennsylvania Life and H ealth in control of and president of Ecotech. On Insurance Guarantee Fund, a state fund December 15, 1990, Jensen manipulated through which Pennsylvania insurance Ecotech’s stock price and then leased one companies pay the outstanding liabilities million dollars worth of Ecotech’s stock to 3 o f i n s o l v e n t c a r r ie r s , p r o v i d ed Court had erred in finding that there was approximately $6.4 million for group no loss caused by the fraud, in failing to medical reinsurance claims left unpaid as increase Miller’s offense level because he a result of the fraud. had used special (legal) skills in furtherance of the conspiracy, and in