$50 Million in Life Insurance Issued to Fake Billionaire

How long does it take a “billionaire” to fall from grace? For Gilbert Eastin, the self-proclaimed 144th richest man in the world, it took about three years.

The West Bloomfield man claimed to be worth more than $2.5 billion, which would have placed 144th on the Forbes list of richest Americans, nestled in a lovely spot right between Wal-Mart and heirs to the Hilton fortune. Since 2008, Gilbert Eastin’s fortune has apparently taken a nose dive. Or more accurately, his life insurer found out he added some extra zeros to that estimate of financial wealth. Several extra zeros.

According to The Detroit News, Eastin, whose pension and other benefits total about $60,000 a year, is being sued in the U.S. District Court in Detroit for more than $2 million. He is accused of inflating his net worth to obtain millions of dollars in life insurance and committing fraud and persuading John Hancock Life Insurance Co. to issue $50 million worth of 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.

Over 30 states have passed laws recently against such transactions. Legislation is currently pending in Michigan.

Eastin has admitted that he’s no billionaire; he’s not even a 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.”

His alleged fraud all started back in December of 2007, consisting of a fake lawyer, exotic European locales, improbable fortunes, barrels full of precious metals, and the intricate world that is life insurance.

According to federal court records, Eastin set up a trust fund in late 2007 for his daughter, a Macomb Township resident named Gail Welicki. Then in mid-December, they applied for a life insurance policy with the John Hancock Life Insurance Company.

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

Eastin was vouched for by Boruch Feder, a Brooklyn-based life insurance broker. He stated that he had signed a joint-venture agreement with the Ukrainian government worth 6 billion Euros, which is roughly 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 the application was filed, John Hancock insured Eastin’s life for $20 million. Later on, in early January of 2008, John Hancock issued two other $15 million policies.

Eastin’s life was now insured for $50 million.

Fenton resident Bobbie Everett, a friend of Eastin’s, was named the beneficiary of the $20 million policy.

As noted in federal court records, by mid-January of 2008 Everett had sold her interest in the trust to a company, American Heritage Enterprises LLC, for $450,000.

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.

Court records also noted that John Hancock claimed that American Heritage paid Eastin to obtain those life insurance policies. Lawyers stated that Eastin’s cut was $300,000.

It all started going south in April 2008, three months after all the policies were issued. Nancy, Eastin’s third wife, filed for divorce after 22 years of marriage. While trying to obtain a higher alimony payment during the divorce, she decided to hire a financial P.I. so she could find out what her estranged husband did with the money.

The sleuth helped fill in the gaps about how Eastin and about six others helped convince John Hancock that 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.

According to the state bar association directory though, Buglak is not a licensed attorney in Michigan.

One of the documents used to support the claim that Eastin was worth billions was a deed for barrels filled with a mineral called SPMG complex ore. The ore was apparently harvested from a mine and stored in southwest Oregon, and was reportedly 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.

Taylor has never even heard of a metal ore called SPMG.

There is an acronym that is used to refer to platinum group metals (PMG), which are mainly used in catalytic converters.

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

During a May 18^th court appearance, Eastin entered U.S. District Judge George Caram Steeh’s courtroom, where he told the judge that that 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, though he didn’t say who, apparently contacted him and sent him a blank life insurance policy application.

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

The judge questioned how the deal went through without Eastin having to provide proof that he was a billionaire, like tax returns or bank account records.

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

“Obviously not enough,” Steeh said.