Petition for Writ of Certiorari — Michael Binday, Petitioner v. United States

Pet.App.1

S.D.N.Y. – N.Y.C.

17-cv-4723

12-cr-152

McMahon, C.J.

United States Court of Appeals

FOR THE

SECOND CIRCUIT

-----------------------------------------------------------------------

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 15th day of January, two

thousand nineteen.

Present:

Robert A. Katzmann,

Chief Judge,

Peter W. Hall,

Gerard E. Lynch,

Circuit Judges.

Michael Binday,

Petitioner-Appellant,

v.

18-2143

United States of America,

Respondent-Appellee.

Appellant moves for a certificate of appealability. Upon

due consideration, it is hereby ORDERED that the

motion is DENIED and the appeal is DISMISSED

Pet.App.2

because Appellant has not “made a substantial showing of the denial of a constitutional right.” 28 U.S.C.

§ 2253(c); see also Miller-El v. Cockrell, 537 U.S. 322,

327 (2003).

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk

[SEAL]

/s/ Catherine O’Hagan Wolfe

Pet.App.3

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

____________________________ x

MICHAEL BINDAY,

Petitioner,

-againstUNITED STATES

OF AMERICA,

17 Civ. 4723 (CM)

12 Cr. 152 (CM)

Respondent.

____________________________ x

DECISION AND ORDER DENYING PETITIONER’S

MOTION TO VACATE, SET ASIDE, OR CORRECT

HIS SENTENCE PURSUANT TO 28 U.S.C. § 2255

(Filed May 23, 2018)

McMahon, C.J.:

On October 7, 2013, following a twelve-day jury

trial before this Court, Binday and his two codefendants were found guilty of conspiracy to commit

mail and wire fraud, in violation of Title 18, United

States Code, Section 1349; mail fraud, in violation of

Title 18, United States Code, Section 1341; and wire

fraud, in violation of Title 18, United States Code,

Section 1343, in connection with a scheme to defraud

insurance companies which the defendants purported

to serve as agents.1

1

Defendants Kergil and Resnick were also found guilty of

conspiring to obstruct justice through destruction of records, in

Pet.App.4

On July 30, 2014, the Court sentenced Binday to

144 months’ imprisonment, to be followed by three

years’ supervised release. The Court also ordered substantial forfeiture and restitution.

On October 26, 2015, the Second Circuit affirmed

the convictions and sentences of Binday and his codefendants, directing only a limited remand, at the

Government’s request, for entry of an amended restitution order in a reduced amount of $37,433,914.17.

See United States v. Binday, 804 F.3d 558, 601 (2d Cir.

2015). On December 14, 2015, the Second Circuit denied Binday’s motions for panel and en banc rehearing.

On June 20, 2016, the Supreme Court denied Binday’s

petition for a writ of certiorari. On June 24, 2016, this

Court entered the amended restitution order that the

Second Circuit had directed be entered. Shortly thereafter, Binday began serving his sentence.

On October 2016, three years after the jury’s verdict, Binday filed a motion for a new trial based on purported “newly discovered evidence” pursuant to Rule

33(b)(1). On August 29, 2017, the Court denied the motion.

On June 20, 2017, Binday filed the instant motion

to vacate, set aside or correct pursuant to 28 U.S.C.

§ 2255, alleging that he was deprived of his federal constitutional right to the effective assistance of counsel.

On August 17, 2017, the Court issued an Order requiring the execution of a waiver of the attorney-client

violation of Title 18, United States Code, Section 1512(k) Binday

was not charged in that count.

Pet.App.5

privilege by Binday; for the Government to file its response to the motion within 60 days of defendant’s executed waiver; and allowing prior counsel to consult

with the Government to determine if testimony from

prior counsel is necessary and appropriate. The waiver

was executed, an affidavit from trial counsel was filed,

the Government tendered its response opposing the

motion, and defendant replied.

The motion is denied and the petition is dismissed—there is no need for a hearing.2

Binday’s Ineffective Assistance Claims

To establish an ineffective assistance of counsel

claim, “a defendant must show: (1) that counsel’s representation fell below an objective standard of reasonableness; and (2) that there is a reasonable probability

that, but for counsel’s unprofessional errors, the result

of the proceeding would have been different.” United

States v. Brown, 623 F.3d 104, 112 (2d Cir. 2010); see

Strickland v. Washington, 466 U.S. 668, 688-89, 693-94

(1984).

With respect to the first element—the “performance” prong—to eliminate the “distorting effects of

hindsight,” Strickland, 466 U.S. at 689, a reviewing

court “ ‘must indulge a strong presumption that counsel’s conduct falls within the wide range of reasonable

2

The Court presumes the reader’s familiarity with the trial

evidence and facts of the case.

Pet.App.6

professional assistance,’ bearing in mind that ‘[t]here

are countless ways to provide effective assistance in

any given case’ and that ‘[e]ven the best criminal defense attorneys would not defend a particular client in

the same way.’ ” United States v. Aguirre, 912 F.2d 555,

560 (2d Cir. 1990) (quoting Strickland, 466 U.S. at 689).

Regarding the second element—the “prejudice”

prong—a defendant must meet the “heavy burden” of

showing “actual prejudice”; in other words, a defendant

“must show that there is a reasonable probability that,

but for counsel’s unprofessional errors, the result of the

proceeding would have been different. A reasonable

probability is a probability sufficient to undermine

confidence in the outcome.” Strickland, 466 U.S. at 692,

694. A defendant cannot establish prejudice by merely

showing that counsel’s errors had “some conceivable effect” on the result, for “not every error that conceivably

could have influenced the outcome undermines the reliability of the result of the proceeding.” Id. at 693.

To warrant a hearing on an ineffective assistance

of counsel claim in a Section 2255 petition, a defendant

must show that he has a “plausible” claim of ineffective

assistance of counsel. Armienti v. United States, 234

F.3d 820, 823 (2d Cir. 2000). “Bald allegations” unsupported by evidentiary facts do not warrant a hearing.

Puglisi v. United States, 586 F.3d 209, 213 (2d Cir.

2009) (quoting Newfield v. United States, 565 F.2d 203,

207 (2d Cir. 1977).

Pet.App.7

Trial Counsel

Binday argues that his trial counsel’s performance

was constitutionally deficient because they fundamentally and “obviously” “misunderstood” the law governing mail and wire fraud. (Mot. at 17). Binday asserts

that there were three “permissible defenses” to the

fraud charges against him: “(1) the defendant’s lack of

intent to defraud; (2) that any misrepresentations

were not material, and (3) that the misrepresentations

could not result in tangible economic harm, or stated

another way, the victim was not deprived of ‘potentially

valuable economic information.’ ” (Mot. at 10-17).

Binday then complains that his trial counsel, instead

of crafting a defense around questions of intent, materiality, and economic harm, erroneously argued only

that there was no “actual economic loss,” even though

such a fact “was irrelevant to Mr. Binday’s case.” (Mot.

at 11-17).

It is true that an absence of “actual economic loss”

(Mot. at 11) to an Insurer’s bottom line is not in fact a

viable defense to mail or wire fraud, since the Government is not required to establish that the economic

harm that the defendants’ contemplated was in fact realized. See Binday, 804 F.3d at 569 (“It is not required

that victims of the scheme in fact suffered harm, but

‘the government must, at a minimum, prove that defendants contemplated some actual harm or injury to

their victims.’ ” (quoting United States v. Novak, 443

F.3d 150, 156 (2d Cir. 2006)).

Pet.App.8

But the absence of “actual economic loss,” by itself,

was not the gravamen of Binday’s defense at trial. Rather, as he himself described in his Rule 33 motion,

“Binday’s argument at trial” was “that Prudential and

the other insurers had engaged in a wink and a nod

practice of bashing STOLI publicly, while secretly letting such policies ‘slip through the cracks’ so that they

could earn the hefty premiums that the policies generated.” Binday Mem. in Support of Rule 33 Motion at 13

(“Rule 33 Mem.”) (Dkt. No. 395). Binday’s defense focused on the following interrelated propositions: that

the defendants’ “conduct was not fraudulent because

the insurers happily issued STOLI policies while paying lip service to weeding out STOLI policies for public

relations reasons” (i.e., an argument as to materiality

and lack of a cognizable scheme to defraud); and that

the defendants “did not intend to inflict, and the insurers had not in fact suffered, any harm” (i.e., that there

was no intent to defraud) because “their deceit had

caused no discrepancy between the benefits reasonably

anticipated by the insurers and what they actually received,” given that there is “no meaningful economic

difference between STOLI and non-STOLI policies”

(i.e., that the misrepresentations were not material

and that there was no cognizable economic harm).

United States v. Binday, 804 F.3d at 568.

Each reference Binday makes to support his

characterization that his defense focused on a purported lack of “actual economic loss” distorts what the

defense in fact argued to the jury: that, in light of the

Insurers’ willingness to accept STOLI policies from the

Pet.App.9

defendants, (1) there was no cognizable or tangible economic harm, (2) the defendants could not have intended any such harm, and (3) any misrepresentations

made by the defendants were immaterial to the bargain at hand. These were the legally viable theories of

the defense case, which the defense argued from pretrial motions to summation. (See, e.g., Binday’s Opposition to Government’s Motions in Limine and Federal

Rule of Evidence 404(b) at 3 (Dkt. No. 233) (noting that

the defendants “intend to present evidence concerning

the Insurers’ institutional awareness and encouragement of the Defendants’ activities to demonstrated not

only that the Insurers were not defrauded, but that

there was no scheme to defraud anyone here”).

Binday’s attempts to establish his attorneys’ deficient

performance through misleadingly incomplete compilation of portions of the trial transcript are simply

without merit. See United States v. Binday, 12 CR 152

(CM), ECF Document #440, Government Memorandum at 15-20.

In regard to the Strickland’s prejudice prong,

Binday asserts that “[t]here is a substantial likelihood

that the evidence that Mr. Abramowitz neglected to

present and the examinations he failed to conduct

would have altered the outcome other case.” (Mot. at

18). Putting aside the fact that “[t]here is a ‘strong presumption’ that counsel’s attention to certain issues to

the exclusion of others reflects trial tactics rather than

‘sheer neglect,’ (Harrington v. Richter, 562 U.S. 86, 11112 (2011) (quoting Yarborough v. Gentry, 540 U.S. 1, 8

(2003))—especially where the attorney involved is an

Pet.App.10

esteemed criminal defense practitioner and a leader of

that Bar—each example Binday provides to establish

prejudice falls far short of the mark.

Binday attaches emails from January and February 2006, between himself and Lily Levith, Prudential’s Regional Brokerage Director, and argues they

should have been introduced by the defendant to

demonstrate that “Binday had no intent to harm the

insurance companies because together they achieved

an arrangement that he would continue to produce the

[STOLI] business they wanted privately but could not

accept publicly due to purely social and noneconomic

concerns.” (Mot. at 20 (citing Pet. Exh. A)).

These emails—sent near the very inception of

Binday’s business, when it was “still ramping up [its]

production with Prudential (Pet. Exh. A at 2 (Binday

Email dated Jan. 24, 2006))—make no mention whatsoever of STOLI, IOLI, or even premium financing

therein. Although Prudential was aware of STOLI’s existence at this time (cf. Tr. 499 (Avery testimony that

he first became aware of STOLI in approximately 2004

or 2005)), its efforts to combat STOLI over time

evolved, and in April 2007, Prudential started requiring proposed policyowners to execute a certified statement designed specifically to ensure that STOLI

policies were not issued by the company. (GX 2943 at

6-7 (Policyowner Statement containing questions to

identify STOLI policies); see also id. at 1 (noting that

“[m]ore recently, there has been a proliferation” of

STOLI policies “in which the intent, from the outset, is

to settle the life insurance policies”); id. at 4 (noting

Pet.App.11

that Prudential “will not issue insurance if it is determined that the policy is likely being applied for”

STOLI)).

After Prudential imposed the requirement of execution of the Policyowners Statement, Binday and his

co-conspirators continued to execute and submit Prudential applications with false answers as to these

STOLI-related questions, with an aim of collecting

commissions on Binday’s “large case” business by tricking the Insurers into issuing the policies. (See, e.g., GX

112 (Adler Prudential Application, dated Aug. 30,

2017); GX 118, 132 (Prudential Policyowner Statement

for Adler, with “no” answers, dated Jan. 2, 2008); GX

805, 806, 826 (Espinal Prudential Applications, dated

May 29, Sept. 20 and Dec. 14, 2007); GX 825 at 13, 827

at 8 (Prudential Policyowner Statement for Espinal,

with “no” answers, dated Sept. 20, 2007); GX 2350 at

25 (Robinson Prudential Application and Policyowner

Statement, with “no” answers, dated Dec. 14 2017)).

Against the extensive evidence at trial regarding

Binday’s business at Prudential (including Prudential’s investigation of Binday) in 2007 and 2008, it is

evident the jury would have readily rejected any arguments from Binday based on these early 2006 emails.

Thus, Exhibit A to Binday’s Motion cannot undermine

confidence in the verdict against him so as to establish

prejudice.

Binday next points to (speculative and hypothetical) evidence that could have been presented regarding “Binday’s knowledge of economic similarities

between STOLI policies and other acceptable forms of

Pet.App.12

life insurance,” such as those which use “hybrid premium financing” and “single premium immediate annuities.” (Mot. at 20). Binday further asserts that

“many carriers, including Lincoln, continued to generate the same business that non-recourse lending generated, STOLI, by fiction of “hybrid” loans.” (Mot. at

21). Assuming arguendo that there were evidence to

support these assertions, it would have done nothing

to tip the scales in Binday’s favor at trial.

First, Binday and his co-defendants in essence

made this same argument by highlighting the economic and behavioral similarities between STOLI policies on the one hand and policies sold in the secondary

life settlements market to argue that the anti-STOLI

policies of the Insurers were fiction. That argument

was considered and rejected by the jury.

Second, the overwhelming evidence of the Insurers’ desire not to issue STOLI policies in particular, so

as to warrant the crafting of specific questions designed to weed out and detect STOLI, would defeat any

analogy posited to other types of financing programs.

(Cf. Pet. Ex. B at 1-2 (“John Hancock has not approved

these ‘hybrid’ arrangements. . . . We will continue to

see insurance carriers challenge sales where fraud or

misrepresentation occurred” and “will continue to support a limited number of traditional premium financing programs . . . but which do not present any of the

insurable interest issues of IOLI.”)). Thus, these arguments about Insurers’ acceptance of other forms of insurance do not undermine confidence in the conviction.

Pet.App.13

Binday next argues that the defense erred in not

attacking “the reasonableness of the insurance companies’ expectations that STOLI policies would potentially cause tangible economic harm” by failing to

cross-examine the Insurance company witnesses “regarding the basis for their companies’ concerns” or by

“present[ing] other evidence that the insurance companies’ decisions were not adequately informed.” (Mot.

at 23). To the extent Binday argues that counsels’ cross

examinations of Messrs. Avery and Burns did not

constitute reasonable performance, he ignores the

principle that “[d]ecisions whether to engage in crossexamination, and if so to what extent and to what manner, are . . . strategic in nature.” United States v. Eisen,

974 F.2d 246, 265 (2d Cir. 1992) (quoting United States

v. Nersesian, 824 F.2d 1292, 1321 (2d Cir.), cert. denied,

484 U.S. 957 (1987)). Defense counsel can hardly be

faulted for declining to attempt to establish that the

views of the two insurance company witnesses—one

with four decades and the other with a quarter century’s worth of insurance and actuary experience (Tr.

493, 630-31)—regarding STOLI were “entirely unreasonable or idiosyncratic” (Mot. at 23).

What the defense did accomplish on crossexamination was attempt to undermine the insurance

company witnesses’ assumptions regarding the economic impacts of STOLI. For instance, Mr. Abramowitz

elicited from Michael Burns that he believed the most

significant IOLI risks were “social, legal, and taxrelated,” and not “economic,” and that any such

economic impact would be “difficult to estimate” and

Pet.App.14

“minor” (Tr. 699-702). Mr. Abramowitz also introduced

evidence through Burns that Lincoln was “exploring

opportunities to leverage [its] mortality and risk

management expertise into new, nontraditional businesses” such as life settlements to “provid[e] institutional investors with opportunity for attractive

returns,” (Tr. 722-23 (DX 13)) and that there would

be little difference in the economic consequences to

Lincoln of a STOLI policy versus a life settlement

policy sold immediately upon issuance (Tr. 727-31).

Further, Mr. Abramowitz elicited that, in October of

2008, Burns had concluded that “STOLI activity ha[d]

not had an adverse impact on [Lincoln’s] mortality experience” (Tr. 731-32 (GX 2972 at 3)).

In regard to James Avery, after the Government

had established on direct examination that the pricing

of insurance policies at Prudential was based on “historical experience of ” the performance of “classic,” nonSTOLI policies (Tr. 505), Mr. Abramowitz elicited on

cross-examination that, if STOLI policies had in fact

been issued by Prudential, it would have resulted in

changes to product pricing to reflect the performance

of STOLI within the pool. (Tr. 544). Mr. Abramowitz

further established through Mr. Avery that Prudential

did not vary the cost of its insurance depending upon

the intent of the insured to sell, premium financing, the

purpose behind the purchasing of the insurance, and

whether other applications were pending—each indicia of STOLI policies. (Tr. 547).

All those points were artfully elicited by Mr.

Abramowitz to illustrate the difficulty of establishing

Pet.App.15

“tangible economic harm” resulting to the insurance

companies from the defendant’s scheme. Defendant

certainly suffered no prejudice from Mr. Abramowitz’s

choice in strategy.

Finally, Binday faults his defense counsel for failing to call him as a witness at trial. Mr. Abramowitz

says in his affidavit that he and others at his firm, “advised [Binday] of his right to testify on his own defense

on numerous occasions,” and spelled out the “the potential benefits of his testimony as well as the significant potential risks associated therewith,” including

warning him “that his testimony could significantly

jeopardize his credibility with the jury.” (Abramowitz

Aff. ¶¶ 3-4 (Dkt. No. 439)). These risks included being

“confronted with the numerous false statements set

forth in the insurance applications,” as well as “the

statements he made under oath during his testimony

before the New York State Insurance Department.” (Id.

¶ 4 (citing Order (Aug. 29, 2017) (Dkt. No. 431) (noting

that Mr. Binday “lied under oath when the state authorities got involved.”).

To the extent that Binday believes these risks attendant to his decision to testify could have been mitigated by the introduction of a purported prior

consistent statement that was recorded between

Binday and the family member of an insured’s family

member regarding his beliefs on lapse rates and economic harm (Mot. at 22 (citing Pet. Ex. C at 17)), that

argument too fails. The statement—assuming it would

have been admitted—would more likely have been

viewed by the jury as a self-serving falsehood pitched

Pet.App.16

by Binday to a straw insured’s family member to convince them that the scheme was not in fact fraudulent.

This lack of prejudice is underscored by the fact

that both of Binday’s co-defendants relied for their defenses on similar self-serving lies to establish lack of

intent. Both failed to impress the jury.

James Kergil relied on testimony from cooperating

witness Paul Krupit, to the effect that Kergil told

Krupit that the insurance companies had wanted to issue STOLI, and insurers’ financial statements indicating that universal life sales increased dramatically

during the period that STOLI was popular, in arguing

that the proof as to intent was insufficient at trial. See

Binday, 804 F.3d at 580. In rejecting this argument,

the Second Circuit noted that “[d]espite Kergil’s unsupported and self-serving statement to Krupit, the

jury was certainly entitled to infer, based on [antiSTOLI] certifications and other facts of the case, that

Kergil was aware that the insurers did not want to issue STOLI policies, and that he intended that the numerous misrepresentations in the applications would

cause the insurers to do so against their wishes.” Id.

Similarly, Kevin Resnick’s counsel argued in summation that Resnick lacked requisite intent, as evidenced in part by Krupit’s testimony that Resnick had

told Krupit that “[t]he insurance companies wanted

these policies and turned a blind eye to all the red flags

popping up in the policies . . . because they knew the

truth. They knew that it was STOLI.” (Tr. 1491). The

Pet.App.17

jury, in convicting Resnick on all counts, necessarily rejected this argument too.

Far from a strategic error, defense counsel’s advice

to Binday about the negative consequences of his taking the stand, and the risk that he would be confronted

with his systemic and repeated pattern of lies (on applications, to Straw Insureds, and under oath to a regulatory body), was sound and reasonable. That Binday

now regrets taking his lawyers’ sound advice in no way

undermines the Court’s confidence in the jury’s verdict.

Binday’s Sentencing Counsel

Binday argues that Mr. Frisch was constitutionally ineffective by “fail[ing] to properly challenge the

Government’s calculation of actual loss” in two ways.

(Mot. at 26). First, Binday faults Mr. Frisch for failing

to pursue an evidentiary hearing so that he could challenge the Government’s decision to include loss from

“insurance companies for which there was no evidence

at trial that Mr. Binday intended to deprive them of

‘potentially valuable economic information.’ ” (Mot. at

29). Second, Binday asserts that it was unreasonable

for Mr. Frisch not to have retained an actuary to determine a “reasonable alternative to the Government’s actual loss calculation.” (Id.).

It is well-established that a defendant’s counsel

may properly decide to forego a Fatico hearing as a reasonable, tactical “matter of strategy,” United States v.

Lee, 818 F.2d 1052, 1056 (2d Cir. 1987); see also United

Pet.App.18

States v. Costa, 423 Fed.Appx. 5, 8-9 (2d Cir. 2011)

(summary order) (decision not to request a Fatico

hearing fell “within the range of reasonable professional assistance”); United States v. Santiago, 330

F. App’x 234, 238-39 (2d Cir. 2009); Brito v. United

States, No. 13 Cr. 589 (PKC), 2017 WL 3142074, at *3

(S.D.N.Y. July 24, 2017) (collecting cases); Papetti v.

United States, No. Civ. 09-3626 (DRH), 2010 WL

3516245, at *6 (E.D.N.Y. Aug. 31, 2010) (“[T]he decision

to forego a Fatico hearing is a matter of strategy and

[a court will] presume that such a strategy is sound

absent a strong showing to the contrary.”) (internal

quotation marks and citations omitted).

In this case, Binday’s sentencing counsel prepared

a thorough and well-reasoned sentencing memorandum, vigorously arguing for a non-incarceratory or

short period of imprisonment. (See Dkt. No. 327). In

support, he argued that there was no causal link between the “idiosyncratic fraud at issue” and the economic harm as reflected in the Government’s loss

calculations. (See id. at 2-25). And, with regard to the

actual loss calculation, Mr. Frisch argued specifically

that the Government, by “excluding policies still in

force on which the owners are still paying premiums,

and may continue to do so for years,” arrived at an “artificially high” loss amount by “exclud[ing] the most

profitable period of life insurance” during which an Insured “exceeds his or her life expectancy.” (Id. at 13).

Mr. Frisch also argued, among other things, that the

Government erred in calculating loss on a policy-bypolicy basis instead of looking at the pool as a whole

Pet.App.19

(id. at 21-22), and argued that the Government’s calculation of actual and intended loss did not adequately

account for the investment returns from premiums

paid (id. at 22-23). Binday cannot simply point to Mr.

Frisch’s failure to ask for an evidentiary hearing as

evidence of his deficient performance, in light of the

many ways in which Mr. Frisch argued against the

Government’s method in calculating loss by way of his

papers, and at the sentencing itself.

But assuming arguendo that Mr. Frisch’s failure

to request a Fatico hearing could be construed as unreasonable, Binday cannot sustain his claim in light of

the absolute absence of what evidence, if any, a Fatico

hearing might have established, so as to constitute

prejudice to him. See United States v. Costa, 423

F. App’x 5, 8-9 (2d Cir. 2011). The crux of Binday’s argument appears to be that, had sentencing counsel requested a Fatico hearing, he might have been able to

elicit evidence that seven insurance companies (other

than Prudential and Lincoln) may have not have been

deprived of economically valuable information or exposed to economic risk as a result of the defendants’

scheme. Binday, however, does not suggest what a “reasonable” actual loss calculation would have been. Cf.

Binday, 804 F.3d at 597 (“Notably, the defendants have

not offered an alternative calculation for actual loss,

nor is one readily apparent.”). Indeed, Binday’s failure

to establish prejudice beyond mere hypothesis is evidenced by the conditional way in which his argument

is couched: “If an insurance company did not believe

the issuance of STOLI policies could result in tangible

Pet.App.20

economic harm or if it did not otherwise use the financial information in pricing its policies, any loss incurred could not be part of [Binday’s] scheme.” (Mot. at

28).

But the Government established at trial, through

the testimony of Messrs. Avery and Burns and through

documents, that the insurance industry as a whole did

not want STOLI. (See, e.g., Tr. 496-97 (Avery, noting

from his capacity at Prudential as well as his role on

the American Council of Life Insurance Committee,

that “the industry, as they began to understand it, . . .

never wanted to issue a STOLI policy”); Tr. 536 (Avery

noting that National Council of Life Insurance Legislators and the National Association of Insurance Commissioners had passed model regulation to make

STOLI illegal)). And although the Government did

limit its testimony to two industry witnesses (Prudential and Lincoln) at trial, it introduced corporate policy

statements, not only from those two companies (GX

2922, 2943), but also from AIG (GX 2904), Hancock (GX

2915), and Union Central (GX 2951). It also introduced

the STOLI-targeted questions used by each of nine Insurers, to which the defendants supplied false answers.

(See,e.g., GX 413 at 13 (Security Mutual questions); GX

531 at 5-6, 12-13 (Sun Life questions); GX 541 at 13

(AIG questions); GX 605 at 1-2 (Lincoln questions); GX

650 at 13 (Union Central questions); GX 1324 at 2-4,

GX 1325 at 67 (AXA questions); GX 2000 at 2, 9, 16

(Hancock questions); GX 2350 at 25 (Prudential questions)). This evidence was more than sufficient for the

Government to meet its burden to prove that the

Pet.App.21

scheme included all nine Insurers by a preponderance

for purposes of sentencing. It also establishes that

Binday’s assertion of prejudice on this score is nothing

more than hypothetical speculation.

Indeed, it is equally plausible that, had sentencing

counsel insisted on a Fatico hearing, testimony and

further evidence from the seven other Insurance companies might have yielded evidence supporting an

even greater loss amount. For instance, certain of the

Insurers had taken the position prior to sentencing

that they were entitled to estimated losses based on inforce policies (see Gov’t Sentencing Submission at 58

n.28). The Government—“unaware of precedent for

awarding projected losses in [such] circumstances”—

did not pursue this measure of loss at sentencing. Id.

Had counsel insisted on a Fatico hearing, these additional losses may very well have been back on the table, exposing defendant to even greater loss amounts.

As such, defense counsel cannot be faulted for declining to rolling the dice in this regard, especially when,

as the Second Circuit noted on appeal, there are no

“readily apparent” alternative measures of actual loss.

See generally Greiner v. Wells, 417 F.3d 305, 319 (2d

Cir.2005) (“We will not normally fault counsel for foregoing a potentially fruitful course of conduct if that

choice also entails a significant potential downside.”

(internal quotation marks omitted)).

Similarly, Binday cannot find Strickland fault or

prejudice in his sentencing counsel’s failure to hire an

actuary. He has simply failed to establish that such testimony would have resulted in a different actual loss

Pet.App.22

calculation so as to have impacted his sentencing or

undermine confidence in his sentence.

Finally, even if Binday could do more than speculate as to whether either a Fatico hearing or an actuary

would have resulted in a different Sentencing Guidelines range, Binday cannot establish any prejudice

with regard to his sentence, because the Court in this

case sentenced the defendants “the old-fashioned way”

without regard to the loss amounts calculated for the

Guidelines. (Sentencing Tr. 41-42 (the Court noting

“[f]orget about the amount of fraud loss, whatever it

was or will turn out to be; in the end, this was a scheme

perpetrated over a span of years, brazen . . . and characterized by truly horrible behaviors on the defendants’ part”); see also id. at 11 (noting that this case is

“a perfect example of why [the Guidelines] should be

abolished” in light of “[t]he amount of time, the amount

of money, the amount of effort that has been expended

arguing about the guidelines and how they should be

calculated instead of arguing about Mr. Binday”); id. at

40 (describing case as, after “long time discussing the

calculation,” one that proves the “idiocy” of the Guidelines). As this Court made clear in fashioning Binday’s

sentence, “[t]he fact that the nominal victims here are

major insurance companies does not and ought not

lessen the disgust with which we view the defendants’

behavior.” (Id. at 43). Indeed, the Second Circuit, in reviewing defendant’s sentence, took “comfort in the district court’s emphatic statement that it would have

imposed the same sentence regardless of the loss

Pet.App.23

amount, which renders any error in the loss calculation harmless.” 804 F.3d at 598.

The motion is denied and the petition is dismissed.

The Court declines to issue a certificate of appealability because there has been no “substantial showing

of the denial of a constitutional right.” 28 U.S.C. Section 2253(c)(2); see United States v. Perez, 129 F.3d 255,

260 (2d Cir. 1997). Further, the Court finds, pursuant

to 28 U.S.C. Section 1915(a) (3) that any appeal from

an order denying Binday’s motion would not be taken

in good faith. See Feliz v. United States, 2002 WL

1964347, at *7 (S.D.N.Y. 2002).

This constitutes the decision and order of the

court.

May23, 2018

/s/ Colleen McMahon

Chief District Court Judge

Pet.App.24

UNITED STATES COURT OF APPEALS

FOR THE

SECOND CIRCUIT

------------------------------------------------------------------------------------------------------------------------------

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 6th day of May, two thousand nineteen.

Michael Binday,

Petitioner – Appellant,

ORDER

Docket No. 18-2142

v.

United States of America,

Respondent – Appellee.

Appellant, Michael Binday, filed a motion for panel

reconsideration, or, in the alternative, for reconsideration en banc. The panel that determined the appeal has

considered the request for reconsideration, and the active members of the Court have considered the request

for reconsideration en banc.

Pet.App.25

IT IS HEREBY ORDERED that the motion is denied.

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk

[SEAL]

/s/ Catherine O’Hagan Wolfe

Pet.App.26

STATUTES

18 U.S.C. § 1341

Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses,

representations, or promises, or to sell, dispose of, loan,

exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or

anything represented to be or intimated or held out to

be such counterfeit or spurious article, for the purpose

of executing such scheme or artifice or attempting so

to do, places in any post office or authorized depository

for mail matter, any matter or thing whatever to be

sent or delivered by the Postal Service, or deposits or

causes to be deposited any matter or thing whatever to

be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any

such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction

thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such

matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit

authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are

defined in section 102 of the Robert T. Stafford Disaster

Relief and Emergency Assistance Act (42 U.S.C. 5122)),

or affects a financial institution, such person shall be

Pet.App.27

fined not more than $1,000,000 or imprisoned not more

than 30 years, or both.

18 U.S.C. § 1343

Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses,

representations, or promises, transmits or causes to be

transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any

writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined

under this title or imprisoned not more than 20 years,

or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted,

transferred, disbursed, or paid in connection with, a

presidentially declared major disaster or emergency

(as those terms are defined in section 102 of the Robert

T. Stafford Disaster Relief and Emergency Assistance

Act (42 U.S.C. 5122)), or affects a financial institution,

such person shall be fined not more than $1,000,000 or

imprisoned not more than 30 years, or both.

18 U.S.C. § 371

If two or more persons conspire either to commit any

offense against the United States, or to defraud the

United States, or any agency thereof in any manner or

for any purpose, and one or more of such persons do

any act to effect the object of the conspiracy, each shall

Pet.App.28

be fined under this title or imprisoned not more than

five years, or both.

Pet.App.29

D9HJBIN1

Trial

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

--------------------------------------------- x

UNITED STATES

OF AMERICA,

12 Cr. 152 CM

v.

MICHAEL BINDAY,

a/ka/ Sealed Defendant 1,

JAMES KEVIN KERGIL,

a/k/a Sealed Defendant 2,

and MARK RESNICK,

a/k/a Sealed Defendant 3,

Defendants.

--------------------------------------------- x

September 17, 2013

10:00 a.m.

Before:

HON. COLLEEN McMAHON,

District Judge

and a jury

*

*

*

[1579] Now, as I told you a few minutes ago, a

scheme to defraud is a course or a plan of action to deprive someone of money or property. What does that

mean, deprive someone of money or property? Well, obviously a person is deprived of money or property when

someone else takes his money or property away from

Pet.App.30

him. But a person can also be deprived of money or

property when he is deprived of the ability to make an

informed economic decision about what to do with his

money or property. We referred to that as being deprived of the right to control money or property.

Because the government need only show that a

scheme to defraud existed, not that it succeeded, it is

not necessary for the government to prove that any insurance company actually lost money or property as a

result of the scheme. Such a loss must, however, have

been contemplated by the defendant.

In considering whether loss was contemplated,

keep in mind that the loss of the right to control money

or property constitutes deprivation of money or property only when the scheme, if it were to succeed, would

result in economic harm to the victim. Economic harm

is not limited to a loss on the [1580] company’s bottom

line.

*

*

*