Daniel Carpenter Guilty of $30 Million Fraud Out of Prison and Fights Collection of Judgment
Keeping the Proceeds of Fraud Refused by Tenth Circuit
Post 4966
Universitas Education, LLC sued to recover funds it lost in an elaborate insurance fraud scheme perpetrated by convicted felon Daniel Carpenter. The underlying litigation occurred in the Southern District of New York, leading to a civil judgment against multiple defendants. Among the corporate entities allegedly used to perpetrate the fraud was Avon Capital, LLC and several of its affiliates located in Oklahoma, Nevada, and Wyoming. Universitas sought to garnish a $6.7 million insurance portfolio held by SDM Holdings, which Avon owns, located in Oklahoma.
In Universitas Education, LLC v. Avon Capital, LLC, Nos. 23-6125, 23-6167, 23-6126, 23-6168, 24-6066, 24-6033, United States Court of Appeals, Tenth Circuit (December 31, 2024), after registering the judgment in Oklahoma, Universitas sought summary judgment on its entitlement to the funds.
The district court entered summary judgment for Universitas and authorized a receivership over Avon and SDM. Avon and SDM appealed, claiming a myriad of procedural defects and disputes on the merits. After an adverse appellate decision the court again entered judgment in favor of Universitas after Universitas re-registered the New York judgment. The district court re-entered summary judgment in its favor, and reauthorized the receivership over Avon and SDM. Avon and SDM challenged that ruling, claiming the district court lost jurisdiction over the claims and that Universitas did not properly revive them as required by Oklahoma law.
BACKGROUND
Fraud Resulted in Criminal Conviction of Daniel Carpenter
Carpenter had devised and carried out an insurance fraud scheme that, among other wrongdoing, defrauded Universitas of $30 million in life insurance proceeds. The fraud was uncovered, and Mr. Carpenter was convicted for his crimes.
In its efforts to recover losses, Universitas sued in the Southern District of New York, naming as defendants a group of Mr. Carpenter’s corporate entities. One of those entities was Avon Capital, LLC, a Connecticut company.
Universitas eventually secured a judgment in that suit for $30.6 million in 2014, of which $6.7 million was against Avon Capital, LLC. Each of these Avon entities was ninety-nine percent owned by Carpenter Financial and one percent owned by Caroline Financial-both of which were controlled by Daniel Carpenter.
The district court referred cross-motions for summary judgment, along with follow-on evidentiary motions, to the magistrate judge, who issued a 73-page Report and Recommendation finding that the entities were “one and the same for purposes of their liability to Universitas.” The magistrate judge also determined that, because Avon-WY fraudulently acquired the SDM insurance portfolio using stolen funds (provided by Avon-NV), the insurance portfolio was subject to garnishment.
The district court agreed and granted summary judgment to Universitas over the objections of Avon and SDM. The district court traced the fraudulently transferred funds to Avon-WY’s acquisition of SDM Holdings life insurance portfolio and pierced Avon-WY’s corporate veil to allow Universitas to execute the judgment against the insurance portfolio.
In an order issued February 11, 2021, the district court enjoined Avon-WY from transferring or disbursing any of its interests in SDM and placed it into a receivership under Oklahoma law.
ANALYSIS
Avon and SDM raised a combined cascade of nineteen issues on appeal.
JURISDICTION AFTER THE MANDATE
Receivership
Avon and SDM argued that the district court erred by reappointing a receiver over Avon Capital-WY and its interests in SDM Holding. The appointment of the receiver rests on interpretation of an authorizing statute, the district court’s interpretation was reviewed and found to be proper.
CONCLUSION
In 2008, Mr. Carpenter stole $30 million worth of life insurance proceeds that were meant for Universitas. Universitas received its arbitration judgment against Mr. Carpenter and his entities, including Avon, in 2012. That judgment is valid for twenty years. Mr. Carpenter has been tried and convicted for his fraudulent business activities twice. See generally, United States v. Carpenter, 405 F.Supp.2d 85 (D. Mass. Dec. 15, 2005); United States v. Carpenter, 190 F.Supp.3d 260, 274 (D. Conn. June 6, 2016).
He has been sentenced and even fully served out those sentences in the years since Universitas first received its judgment.
While Mr. Carpenter’s debt to society may have been repaid, his entities’ debts to Universitas certainly have not and the judgment may be collected from the receivers.
ZALMA OPINION
Insurance fraud perpetrators, like Mr. Carpenter, prefer to spend time in jail rather than pay the victims of his crime by multiple motions, trials, appeals and obfuscation. This case put to rest Mr. Carpenter’s attempts to avoid payment to the victim of his fraud, Universitas and the lawyers will be forced to deal with the need to pay Universitas $30 million plus interest..
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Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
