Friday January 5, 2024
Jeremy Schulman and others are accused of creating false documents regarding his authority to recover assets on behalf of the Somali government. CREDIT: World Justice News
Minneapolis (HOL) - A US court has upheld a district court's summary judgment that Maryland attorney Jeremy Schulman is not entitled to defence costs under his law firm's insurance policy. The ruling follows Schulman's indictment for allegedly misappropriating $13 million of Somali government funds.
The Fourth Circuit Court of Appeals concurred with Axis Surplus Insurance Co., Endurance American Specialty Insurance Co., and Prosight Syndicate 1110 at Lloyds that the policy does not cover Schulman's expenses related to the fraud and money laundering charges. Schulman, a Bethesda-based attorney, had claimed coverage under the policy's clause for "demands," arguing that the indictment and prosecutors' intent to seize his property fell under this category. However, the court interpreted the term "demand" differently, considering the forfeiture allegation as merely a notification of a potential future claim.
The panel also dismissed Schulman's contention that a 2017 letter from the insurers constituted a binding contract assuring coverage for his criminal defence expenses. According to the court, the letter explicitly limited coverage to a subpoena, not the broader indictment.
Federal prosecutors allege that Jeremy Schulman, a Bethesda-based attorney, masterminded an elaborate fraudulent scheme aimed at unfreezing and subsequently misappropriating nearly $13 million in assets belonging to the Somali government. These funds, initially frozen during Somalia's political upheaval, became the focal point of Schulman's intricate plot, which extended over several years and involved multiple players and countries.
According to the indictment, the scheme began more than a decade ago when Schulman started working with the Somali government to recover these frozen assets. Prosecutors contend that he exploited his position and connections within the Somali government, presenting himself as an official representative of the war-torn country's interests. This facade allowed Schulman to orchestrate a series of forgeries and misrepresentations to financial institutions worldwide.
The prosecution's narrative details how Schulman, with the collaboration of certain Somali government officials and associates, fabricated documents and misled banks about his legal authority to manage and retrieve the Somali government's funds. These actions were part of a broader strategy to gain control over the $12.5 million that was eventually unfrozen.
Schulman's personal financial gain from this scheme was substantial. The indictment highlights that by the end of 2013, Schulman had received over $880,000 directly, a significant increase from his compensation in the previous year. This windfall was part of a larger sum of over $3.3 million he directed to his law firm, alongside hundreds of thousands of dollars funnelled for his personal use.
This intricate web of deception and fraud led to Schulman's indictment in December 2020 on 11 criminal counts. These charges include conspiracy to commit mail fraud and money laundering, wire and bank fraud, and money laundering. Each count reflects the various aspects of the alleged criminal conspiracy, spanning from the manipulation of legal documents to the illicit transfer and laundering of funds.
Since his indictment, Schulman has reportedly incurred about $2 million in criminal defence costs.
U.S. Circuit Judges James Andrew Wynn, Pamela A. Harris, and DeAndrea Gist Benjamin formed the appellate panel. Schulman's legal representation did not comment, while counsel for Axis and Endurance chose not to issue a statement. Prosight's response is pending.