Metropolitan News-Enterprise


Thursday, May 11, 2006


Page 1


Ninth Circuit Upholds Lawyer’s Prison Sentence for Plotting to Scuttle Yacht, Collect Insurance


By KENNETH OFGANG, Staff Writer/Appellate Courts


The Ninth U.S. Circuit Court of Appeals yesterday upheld the 90-month prison term imposed on a now-suspended Beverly Hills lawyer for attempting to sink a yacht to collect insurance money.

Rex DeGeorge was convicted of conspiracy, mail and wire fraud and perjury in 2002 after a month-long jury trial before U.S. District Judge Lourdes G. Baird, who has since retired. Jurors agreed that DeGeorge, who has a history of involvement with sunken yachts, attempted 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, prosecutors said.

In a published opinion filed in August 2004, a three-judge panel unanimously affirmed the conviction, but remanded for resentencing.

The judges found that Baird erred in computing the Sentencing Guidelines range, improperly applying an “obstruction of justice” enhancement based on DeGeorge having committed perjury in a related civil case. In that case, the yacht’s insurer succeeded in rescinding the policy it had issued and defeated DeGeorge’s claims of breach of contract and bad faith.

On remand, Baird rejected the prosecution’s efforts to reinstate the enhancement. But because the Supreme Court ruled in the interim that the guidelines are advisory only and that the court may impose any sentence that is reasonable in light of the applicable statute, the judge imposed the same sentence as previously.

In an unpublished memorandum yesterday, the Ninth Circuit panel—Judges Michael Daly Hawkins, Richard A. Paez, and Susan Graber—said it could find no fault with Baird’s reasons for imposing the 90-month sentence, which included findings that DeGeorge was “consistently unrepentant” and “deceitful and evasive.”

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. He has been on interim suspension from the State Bar since his conviction four years ago.

The case is United States v. DeGeorge, 05-50210.


Copyright 2006, Metropolitan News Company