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Man faked worth in alleged insurance scam

Gilbert Eastin’s finances have fallen steeply from 2008, when the West Bloomfield man’s net worth was estimated at more than $2.5 billion. It was a dubious claim that would have made him richer than pizza baron Mike Ilitch — and wealthier than Detroit Lions owner William Clay Ford and auto magnate Roger Penske combined, good for 144th place on the Forbes list of richest Americans, sandwiched between Walmart and Hilton heirs.

Eastin, 82, is being sued for more than $2 million in U.S. District Court in Detroit, accused of inflating his net worth to obtain millions of dollars in life insurance. He’s accused of committing fraud and persuading John Hancock Life Insurance Co. to issue $50 million worth of life insurance policies.

Insurance industry experts say the allegations appear to match a pattern of fraud emerging nationwide. Senior citizens are recruited to inflate their net worth while applying for insurance and then transfer the policies to investors in exchange for money. The investors pay the premiums and cash in when the seniors die.

There have been more than 100 such lawsuits over so-called stranger-originated life insurance, or STOLI, policies filed nationwide in the past four or five years, said Steven Brostoff, spokesman for the American Council of Life Insurers in Washington, D.C.

More than 30 states have passed laws in recent years against such transactions. Legislation is pending in Michigan.

Eastin now admits he’s no billionaire. Or millionaire. The retired Chrysler plant supervisor says he’s a victim of shadowy businessmen from New York.
“Crooks will do a lot of things to develop a patsy,” Eastin told The Detroit News during a brief interview May 18. “They took advantage of my ignorance.” Now, he’s asking a federal judge for a freebie lawyer and hiding from a newspaper photographer behind a pillar outside U.S. District Court in downtown Detroit.

Alleged fraud starts in 2007

The alleged fraud dates to December 2007 and involves barrels filled with precious metals, a fake lawyer, exotic European locales, fantastical fortunes and the complex world of life insurance.

In late 2007, Eastin set up a trust. His daughter, Macomb Township resident Gail Welicki, was named trustee, according to federal court records.

Eastin and his daughter applied for a life insurance policy with John Hancock in mid-December 2007.

The application said Eastin’s gross annual income was $5 million and that he was worth more than $100 million.

A Brooklyn-based life insurance broker named Boruch Feder vouched for Eastin, saying he had signed a joint-venture agreement with the Ukrainian government worth 6 billion euros — or about $8.6 billion.

“Mr. Eastin’s dealings are at the highest level of government,” Feder wrote in a letter to John Hancock.

In a separate letter obtained by The Detroit News, Feder said Eastin was involved in oil exploration in Michigan, Kentucky, Ohio and West Virginia.

Less than two weeks after applying for the life insurance policy, John Hancock insured Eastin’s life for $20 million.

In early January 2008, John Hancock issued two $15 million policies.

In all, Eastin’s life was insured for $50 million.

His friend, Fenton resident Bobbie Everett, was named the beneficiary of the $20 million policy.

In mid-January 2008, Everett sold her interest in the trust to a company called American Heritage Enterprises LLC for $450,000, according to federal court records.

The company paid premiums on the policy with more than $2 million borrowed from a Connecticut-based firm, Ridgewood Finance Inc.Ridgewood is the sole member of a Delaware-based company called Dukes Bridge LLC.On Oct. 28, Dukes Bridge sued Eastin and his daughter in federal court in Detroit to recoup the more than $2 million loan plus damages.

Lawyers: Eastin got $300K

John Hancock claims American Heritage paid Eastin to obtain life insurance policies, according to federal court records.

During a recent court hearing, lawyers said Eastin’s cut was $300,000.

In April 2008, three months after all the policies were issued, Eastin’s third wife, Nancy, filed for divorce after 22 years of marriage. In pursuing a higher alimony payment during the divorce, she hired a financial sleuth to find out what her estranged husband did with the money.

The sleuth helped explain how Eastin and about six others helped convince John Hancock he was worth billions.

Gilbert Eastin’s assets were worth more than $2.5 billion, according to a March 2008 letter purportedly written by Commerce Township resident Eugene Buglak, who was identified as Eastin’s financial adviser and international legal counsel.

But Buglak is not licensed as an attorney in Michigan, according to the state bar association directory.

Among the documents used to support the claim Eastin was worth billions was a deed for barrels filled with a mineral called SPMG complex ore. The ore was harvested from a mine and stored in southwest Oregon and was worth more than $2.6 billion, according to the deed.

“It’s beyond ludicrous,” said Danny Taylor, chairman of the Mining Engineering Department at the University of Nevada-Reno

He has never heard of a metal ore called SPMG.

PGM, however, is an acronym used to refer to platinum group metals, which are mainly used in catalytic converters.

“Who knows what they’re taking about,” Taylor said. “It could be a dyslexic typo.”

Eastin claims he was victim

Eastin used the word “scheme” to explain his involvement in the life insurance deal.

During a May 18 court appearance, Eastin leaned on a cane as he entered U.S. District Judge George Caram Steeh’s courtroom. Eastin wore a bushy white goatee, tan Members Only-style jacket and blue University of Michigan hat, which he plopped on the defense table.

Eastin, whose pension and other benefits total about $60,000 a year, told Steeh he was an unwitting player in a Ponzi scheme.

It started with huge promises and hazy details, Eastin said.

He said he heard from friends that a group in New York was involved in selling life insurance policies.

Someone from New York — he didn’t say who — contacted him and sent him a blank life insurance policy application.

“I signed it, and they filled it out,” Eastin said.

Steeh questioned how the insurance deal went through without Eastin having to provide tax returns, bank account records or otherwise prove he was a billionaire.

Lawyer James Westerlind, who represents a company suing Eastin in federal court, mentioned due diligence being performed after Eastin applied for life insurance.

“Obviously not enough,” Steeh said.

Detroit News

Written by lordsinsurancelog

May 31, 2011 at 10:06 pm

Posted in Insurance News