Metropolitan News-Enterprise


Tuesday, August 31, 2004


Page 1


Lawyer’s Conviction in Plot to Scuttle Yacht Upheld


From Staff and Wire Service Reports


The Ninth U.S. Circuit Court of Appeals yesterday upheld the conviction of a now-suspended Beverly Hills lawyer who has a history of involvement with sunken yachts and is serving a 90-month prison term for trying to sink his newest craft for insurance money.

Rex DeGeorge was convicted after a month-long jury trial in the downtown courtroom of U.S. District Judge Lourdes G. Baird, who has since taken senior status, of conspiracy, mail and wire fraud and perjury for attempting to sink the 76-foot Principe di Pictor, which was custom built for $1.9 million.

The yacht had been shuffled through a series of corporations to hide DeGeorge’s ownership and make it appear to be worth $3.6 million.

The three-judge panel unanimously upheld all of the convictions, but found DeGeorge’s sentence should be adjusted downward because Baird erred in finding his convictions for perjury in a related civil case meant he obstructed justice in his criminal case.

In the civil case, the yacht’s insurer sought to rescind the policy it had issued while DeGeorge claimed breach of contract and bad faith.

Senior Judge John R. Gibson of the Eighth Circuit, sitting by designation and writing for the panel, rejected DeGeorge’s contention that the charges against him should have been thrown out because more than six years elapsed between the scuttling of the Principe di Pictor and his indictment by a federal grand jury. Though the indictment did not come in January of 1999, in August of 1997 U.S. District Judge Stephen Wilson granted the government’s request for an order suspending the statute of limitations under 18 U.S.C. Sec. 3292.

Sec. 3292 permits such an order where evidence is being requested from a foreign nation that was the site of the alleged crime, but specifies that the order can only be granted by a court “before which a grand jury is impaneled to investigate the offense.”

That provision merely specifies the proper venue and does not, as DeGeorge argued, require a showing by the government that a grand jury is actively investigating the particular offense and has already heard evidence relating to it, Gibson declared. The defendant’s contention was inconsistent with the “realities of grand jury investigations,” the jurist said.

“DeGeorge’s attempt to impose an active investigation requirement ignores the fact that grand juries are continuously impaneled in the Ninth Circuit and only rarely are called to investigate particular offenses,” Gibson explained. “Moreover, the foreign evidence sought by the government often may be critical to obtaining an indictment, yet DeGeorge asks this court to hold that evidence must be presented to the grand jury before the [Sec.] 3292 application can be filed. This would require the government to present evidence and witnesses to the grand jury even if it lacks evidence to support an indictment. In fact, DeGeorge’s interpretation would frustrate the entire purpose of [Sec.] 3292.”

Evidence at DeGeorge’s trial showed that in November 1992, he and two associates set out from Viareggio, Italy for the Principe’s maiden voyage.

After leaving Naples without a captain on Nov. 6, 1992, the three used power tools to cut holes in the bottom of the boat, but were unable to sink it.

Sometime after daybreak, Italian authorities patrolling the coast spotted the craft, and DeGeorge and his companions got into lifeboats.

Prosecutors said the three men used the time before authorities arrived at the yacht to concoct a story about a Russian captain they had supposedly hired who tried to sink the boat before taking off in a black speedboat.

After being briefly incarcerated in Italy, the three were allowed to return to the United States.

They filed a claim with the yacht’s insurer, Cigna, using the story about the Russian captain, but the insurance company refused to pay.

Instead, Cigna successfully sued to rescind the yacht’s $3.5 million policy because of misrepresentations, and because the company had not been told of the role of DeGeorge—who had previously received insurance compensation after claiming two of his boats sank and that another was stolen—in the venture.

DeGeorge’s perjury convictions related to his testimony in the civil case, in which he said that he had not purchased power tools and did not know they were aboard the yacht.

Judge Susan P. Graber and Senior Judge Dorothy W. Nelson concurred in the opinion authored by Gibson.

Irvine attorney William J. Kopeny represented DeGeorge on appeal. Assistant U.S. Attorney Eileen M. Decker represented the government.

The case is United States v. DeGeorge, 02-50365.


Copyright 2004, Metropolitan News Company