Victims Of Dead Lawyer’s Ponzi Scheme Can Collect On Life Insurance Policy, Court Says

Long Island lawyer William Parente died April 20, 2009. It appears that he murdered his wife, Betty Ann, and their two children, Stephanie Ann and Catherine Ann, and then took his own life. Apparently, Parente also was involved in a Ponzi scheme. 

Before his death, Parente created the William M. Parente Irrevocable Insurance Trust. The trust is the owner and beneficiary of a $5 million life insurance policy on his life; the beneficiaries of the trust are Parente's wife and children. A question arose as to whether Parente’s heirs were entitled to the proceeds of the policy, or whether investors who lost their investments in the alleged Ponzi scheme – more than two dozen people whose collective claims against Parente for investment losses exceeded $25 million – were entitled to the proceeds.
 
A court has just sided with the investors. The court explained that it was undisputed that Betty, Stephanie and Catherine predeceased William and that Betty died first, followed by Catherine, then Stephanie and finally William. The court added that it also was undisputed that the trust was silent as to the disposition of the trust remainder in the event that Betty, Stephanie and Catherine predeceased William. Thus, the court reasoned, under state law, the proceeds of the insurance trust reverted to William or his estate, and were subject to claims of his creditors.