Friday, May 14, 2021

Jewel Theft Not Covered

A denial of insurance coverage was affirmed by the New York Appellate Division for the First Judicial Department

Plaintiff, a high-end jeweler in Manhattan, was insured under an all-risk, jewelers block policy issued by defendant. The policy excluded from coverage "[l]oss, damage or expense caused by or resulting from sabotage, theft, conversion or other act or omission of a dishonest character . . . on the part of any person to whom the Interest Insured may be delivered or entrusted by whomsoever for any purpose whatsoever . . . " (dishonest entrustment exclusion).

On Tuesday, March 21, 2017, plaintiff was contacted by one Paul Castellana, who represented that he worked for Sony Pictures International, was shooting a video with Jennifer Lopez, and wanted to borrow pieces of plaintiff's jewelry for the shoot, which was to be in Miami the coming weekend. Plaintiff and Castellana communicated via email, Castellana using a Sony Pictures International email address. After the two settled on five pieces of jewelry totaling $2.09 million, Castellana sent plaintiff a certificate of insurance for the items. He also gave plaintiff the contact information for someone who could confirm the authenticity of the certificate of insurance; the contact information matched the person's contact information on the insurance group's website. The person confirmed to plaintiff that Castellana was "a good client of his" whose "reputation in the industry [was] stellar." Plaintiff then gave the jewelry to an associate of Castellana's who had come to plaintiff's store to collect it. When Castellana failed to return the jewelry the following week, plaintiff contacted law enforcement, hired a private investigator, and filed a claim with defendant.

It turned out that Castellana was an alias for one James Sabatino, a member of the Gambino Organized Crime Family of La Cosa Nostra (United States v Sabatino, SD Fla, Case No. 16-20519-CR-JAL, Case Management/Electronic Case Filing [CM/ECF] Doc. No. 231, "Stipulated Factual Proffer," at ¶¶ 3, 30). While in federal prison in Miami, Sabatino managed to obtain several cell phones, which he used to create the Sony Pictures International email address and communicate with plaintiff by voice call and email (id. at ¶¶ 28-30). His co-conspirators then collected the jewelry and transported or sent it to others in south Florida or elsewhere for resale (id. at ¶¶ 32, 34). The jewelry at issue in this case was never recovered (id. at ¶ 32). Sabatino was only caught when federal prison officials went to his cell to search it and found him on the phone; a search of the phones themselves uncovered his scheme (id. at ¶ 40). Sabatino ultimately pleaded guilty in federal court to one count of conspiracy to violate the RICO Act and was sentenced to a term of 240 months in Florence ADMAX in Colorado (id., CM/ECF Doc Nos. 287 and 306, judgment and amended judgment, respectively).

Defendant, meanwhile, denied plaintiff's insurance claim, relying on the dishonest entrustment exclusion, and plaintiff commenced this action for breach of contract.

The Miami Herald had a story about Mr. Sabatino and other victims

Goodbye, Jimmy Sabatino.

Federal prison officials in Miami, who consider the legendary con man a royal pain in the you-know-what, were more than happy to see that Sabatino will soon be sent off to a maximum security facility in Colorado. It’s a notorious Supermax prison for murderers and terrorists held in isolation.

Sabatino, a wiseguy wannabe from New York, was sentenced Monday to a maximum 20 years in prison, showing no remorse for his $10 million rip-off scheme from behind bars in Miami — right up until the end.

“I don’t apologize to nobody,” Sabatino told U.S. District Judge Joan Lenard, after blaming the U.S. government and other defendants who snitched on him in the FBI investigation.

“They [the government] allowed this to happen,” he said. “They should be ashamed of themselves. ... All of this is about rats.”

Sabatino, a 40-year-old perennial inmate, pleaded guilty in September to a racketeering charge that featured a signature bit of audacity: Using cellphones purchased from federal corrections officers, he tricked luxury retailers such as Jimmy Choo, Tiffany & Co. and Van Cleef & Arpels into loaning out fancy jewels, watches and handbags for placement in music videos shot in Miami.

Of course, Sabatino fenced the high-end goods, valued at millions of dollars, through South Florida pawn shops with the help of another inmate at the Federal Detention Center in downtown Miami and two other outsiders. He kept some of the illicit profits for himself, but gave a piece to an associate of the Gambino organized crime family.

The Herald provided background information

Sabatino is a legendary Miami con artist whose past crimes have included posing as a music executive while running up hundreds of thousands in unpaid tabs at Miami resorts and pretending to be an entertainment mogul to acquire hundreds of free Super Bowl tickets.

For years, the Staten Island native has captivated connoisseurs of flim-flam artistry with his brazen crimes. These have included calling the FBI from a prison cell in England and threatening to kill then-President Bill Clinton, which got him brought back to the United States, and running a scam from prison several years later that defrauded the phone provider Nextel out of about $3 million.

He even managed to convince Miami-Dade corrections officials three years ago to pay to repair a lazy right eye after falsely complaining he’d suffered a stroke and was experiencing severe headaches.

His latest scheme began in the fall of 2014: Through emails and phone calls, the pudgy prisoner posed over the phone as a Sony executive and reached out to about 20 luxury store managers to convince them to turn over their jewelry, watches and other goods to be displayed in splashy music videos, according to federal prosecutor Christopher Browne.

Sabatino’s real plan, however, was to enlist a fellow inmate and others on the street to redirect the expensive items and take them to pawn shops, according to a statement filed with his plea agreement.

Pudgy prisoner? (Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2021/05/a-denial-of-insurance-coverage-was-affirmed-by-the-new-york-appellate-division-for-the-first-judicial-department-plaintiff.html

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