At Surety and Banner, the sticky matter had been sent over from the underwriting department to claims. The companies asked Equifax--finally--to conduct a true investigation of Michael Apelt's background.

But it wasn't guilt or remorse that compelled the firms to pursue the matter.

Surety and Banner did so because they hoped to prove that Michael had defrauded them. Case law generally allows companies to declare a policy void when a customer submits a fraudulent application.

Banner clearly had a bigger problem than Surety: Lynn Patterson, the underwriter at Surety, could at least claim to have made a good-faith effort at doing things right. His best evidence was that he had decreased the Apelts' requested amount of insurance from $400,000 to $100,000.

But Mary Jo Fox at Banner had signed off on the $300,000 policies with little more than a wink and a grin. She had many more questions to answer.

Equifax assigned Jon Allen to the case. Allen learned quickly that Michael Apelt had no $500,000 estate and hadn't worked for IBM or any other firm as a computer programmer. His last job in Germany had been as a laborer in a trolley-car factory.

Michael Apelt was a fake.
Surety and Banner used the following Equifax information to try to bolster their case of fraud against Michael Apelt:

He was a recent immigrant who had married soon after meeting Cindy and had applied for life insurance shortly after that. He originally had sought $1 million-plus in life insurance on his bride, a ridiculously excessive amount.

Of course, there was nothing new about any of that. But in the hands of the companies' claims investigators, Michael's history took on a far different--and convenient--meaning.

The insurance companies were thrilled by Allen's "findings." Their fraud case against Michael Apelt had gotten off to a rousing start.

The companies were also pleased when the Apelts' prosecutor, Cathy Hughes, said in court during Michael's trial: "The only possible motive in this case is money to do something like that. . . . The insurance is the crux of this case."

The firms offered to help Hughes prove that point.
"They gave me anything I wanted," recalls Hughes, now an assistant Maricopa County public defender. "I knew they had another agenda--it was very, very obvious--but I couldn't concern myself too much. My job was to convict bad guys."

Hughes had little trouble convincing two juries to convict Michael and Rudi Apelt of first-degree-murder charges. Both men landed on death row.

In an April 12, 1990, memo, Bob Jennings, Banner Life's vice president of claims, summarized an interview he had conducted with underwriter Mary Jo Fox. One key question: "If we had known Michael Apelt did not have an estate of $540,000, would that have affected our action?"

Fox said it would have.
Jennings quoted Fox as saying, "Had we known that there was no estate, no earning potential and that the only earning power was $10 an hour at a restaurant, we would not have accepted the application."

That news would be of far more consequence--and horror--to the Monkman family than to Banner.

(Fox later changed her tune dramatically, saying in a deposition that she had not taken Michael's alleged "estate" and work history in Germany into consideration before she approved the policy. "I was comfortable with the age, potential earnings and the amount applied for," she stated.)

On July 2, 1990, Jennings informed the Monkmans that Banner wouldn't pay Cindy's estate a cent. One excuse was Michael's fraudulent intent. Banner also maintained that the policy had never taken effect because the company had not cashed Cindy's check before she was killed.

Surety claims manager Betsy Jerome also denied the Monkmans' claim for $100,000, strictly on the basis of Michael's fraudulent intent.

In March 1991, Jack and Marjorie Monkman sued Banner Life, Surety Life, agent Doug Ramsey, Equifax Services and its investigator Jon Allen. (Equifax and Allen no longer are defendants.)

The Monkmans' Phoenix attorneys, Mark Samson and Donald Peters, summed up their theory of the lawsuit in legal papers: "They want the power to ignore and fail to investigate warning signs while underwriting a policy, then 'discover' those facts after a death and rely on them to avoid a policy."

The attorneys warned the Monkmans that their lawsuit would be an uphill struggle.

The main reason is that Arizona courts apparently haven't even addressed whether there's a duty for an insurance company to take action to protect an insured person from criminal acts.

Judge Roger Strand agreed with that viewpoint in a March 1993 ruling that turned the Monkmans' wrongful-death action into a contract case.

The key players testified this past summer at a two-day trial before Judge Strand. Banner Life underwriter Mary Jo Fox glibly told the judge that the process of insuring the Apelts had been "reasonable and customary."

The judge didn't allow the Monkmans to even raise the issue of the insurers' culpability in Cindy's death. All they could argue was that Banner and Surety had insured her life for $400,000, and that they owed her estate that sum.

During a break, Kathy Monkman-Nimon encountered Fox in the ladies' room. She watched as the underwriter washed her hands.

"I wanted to tell that woman something, but I couldn't bring myself to do it. I wanted to say, 'All you people can wash all you want. You're never gonna wash the blood of my sister off your hands.'"

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