Monday, May 2, 2005

Killing Two Husbands (Plus a Former Lover) Results in Mail Fraud Convictions

You just don't see opinions like the Fourth Circuit's in United States v. Gray (here) every day, or even every year.  As if recounting the plot from an episode of Law & Order (preferably one with Jerry Ohrbach), or worse, a law school exam, Josephine Gray told a friend that she had killed two of her husbands plus a lover (whom she caller her "cousin") who helped kill the second husband and had then tried to blackmail her.  For both husbands and the lover/cousin, Gray was the beneficiary of life insurance policies, which were eventually paid to her, totaling $170,000.  Her friend told the authorities about Gray's statement, and she was prosecuted for mail fraud for engaging in a scheme to defraud the insurance companies by applying for the death benefits under policies on the three victims.  Gray's argument -- which has all the appeal of the proverbial son who pleads for mercy after killing his parents because he's now an orphan -- was that the insurance companies were not the real victims of the fraud because they had a contractual obligation to pay out on the policies, and only the lawful beneficiaries were the victims of the fraud.  The Fourth Circuit rejected that argument, not surprisingly, stating:

Gray contends that the insurance companies were merely disinterested third parties that held the insureds’ money for the named beneficiaries. Thus, the only true victims of Gray’s fraud were the rightful beneficiaries under the policies, not the insurance companies. Whether or not the insurance companies paid the proper parties at the end of the day, they would not have been required to pay anyone had Gray not killed their insureds. In other words, the insurance companies were deprived of the use of their assets by Gray’s accelerating the necessity to pay benefits.

This appears to be the "float loss" theory for fraud, that the insurance companies would have been able to hold on to the premiums (and related investment gains) longer had Gray not killed the victims, and therefore suffered a loss.  Gray, nicknamed by the media -- here's a shocker -- the "Black Widow," received a 40-year term of imprisonment for defrauding the insurance companies, a sentence no doubt influenced by the three murders.  Gray had been charged earlier with the murders of both husbands, but those cases never even went to trial. Just to make things a bit scarier, after receiving the insurance proceeds on the second husband, Gray inquired about taking out an insurance policy on her newest boyfriend.  Thank goodness for the mail fraud statute. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/05/killing_two_hus.html

Fraud, Judicial Opinions, Prosecutions | Permalink

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