Lawyer who plotted to sink yacht for insurance resigns

A Beverly Hills lawyer who spent four years in prison for masterminding a plot to sink his own luxury yacht in order to collect $3.6 million in insurance money has resigned from the State Bar. REX K. DeGEORGE [#35901], 60, submitted his resignation Sept. 11. It must be accepted by the Supreme Court before taking effect.

State Bar prosecutor Joseph Carlucci said DeGeorge faced certain disbarment and chose to resign rather than engage in lengthy proceedings to preserve his license. “It was clear to me that he understood the nature of his conviction was going to result in disbarment and he didn’t want to spend time and resources fighting what was sort of a fait accompli,” Carlucci said.

DeGeorge will be technically able to apply for reinstatement in May 2007; under bar rules, attorneys who resign may apply for reinstatement five years after they were placed on interim suspension. DeGeorge was put on interim suspension May 4, 2002, after his conviction on 16 counts of conspiracy, mail fraud, wire fraud and perjury, all felonies involving moral turpitude.

A one-time insurance adjuster, DeGeorge bought a 76-foot yacht, the “Principe di Pictor,” in 1992 for $1.9 million and then set up phantom companies and made phony transactions to boost the yacht’s value to $3.6 million.

He transferred ownership to a Swiss-based firm, which in turn sold the yacht for $3.6 million to Polaris Pictures Corp., a firm for which DeGeorge served as president, CEO, chairman of the board, sole director and sole shareholder. No money changed hands, federal prosecutors said.

On its maiden voyage off the coast of Naples, prosecutors charged, DeGeorge and two associates tried to sink the boat by drilling holes in its hull with power tools. The boat didn’t sink, however, and the three concocted an elaborate story about being ambushed by drug smugglers.

DeGeorge pursued an insurance claim, but an investigator for the Cigna Property and Casualty Insurance Co. learned that he had previously made three claims, and been paid nearly $500,000, for three other yachts lost at sea. Investigators also found 29 insurance disability claims, a burglary claim and at least six claims for items lost while DeGeorge was traveling abroad.

Cigna sued to rescind the yacht’s $3.5 million policy and DeGeorge was ordered to make restitution totaling $2.8 million. The court also referred the case to the U.S. Attorney, which won the convictions.

In 2004, the Ninth Circuit Court of Appeals affirmed DeGeorge’s conviction, although it sent the case back to the lower court for reconsideration of the sentence. The same judge imposed the same sentence, which later was affirmed by an appellate court.