Offit v. U.S. Bank
Estate of Saul Offit, by its Executor, Marc Offit; Estate of Naomi Pressma, by its Executor, Conrad Pressma; Estate of Georgia Towers, by its Executor, Edwin Towers v. U.S. Bank, N.A., as Securities Intermediary; and Wells Fargo Bank, N.A., as Securities Intermediary
- Donovan Frank
- 0:23-cv-00045
- U.S. District Court · District of Minnesota
- 14
Counsel of record per CourtListener. Firm names are approximate.
In Estate of Offit v. U.S. Bank, Judge Frank granted summary judgment for U.S. Bank and Wells Fargo, ruling they cannot be held liable as mere pass-through securities intermediaries under Delaware's insurable-interest law.
Estates of individuals who were insured under alleged stranger-originated life insurance policies, and banks or other financial institutions that serve as securities intermediaries holding and transmitting life insurance policy proceeds on behalf of beneficial owners. This ruling means such intermediaries who pass through 100% of proceeds to the actual beneficial owner cannot be held liable under Delaware's insurable interest statute.
What happened
In Estate of Saul Offit v. U.S. Bank, N.A., three estates sued two banks — U.S. Bank and Wells Fargo — seeking to recover life insurance death benefits they claim were paid out on illegal stranger-originated life insurance policies. These are policies allegedly set up by investors who had no real connection to the insured individuals, which can violate state law requiring that a policyholder have a legitimate financial interest in the insured's life. The estates argue the banks, as named recipients of the insurance payouts, must return those proceeds under a Delaware statute that allows estates to sue whoever receives the benefits of such illegal policies.
U.S. Bank and Wells Fargo defended on the ground that they were merely 'securities intermediaries' — financial institutions that held the policies and received the insurance checks only as a formal, administrative function on behalf of the true owners of the policies (institutional investment funds). The banks argued they never kept any of the money; they simply received the checks and immediately deposited the full amounts into accounts owned by those investment funds. The key legal question was whether this kind of pass-through role makes the banks 'payees' or 'beneficiaries' who can be sued under the Delaware statute.
Judge Donovan W. Frank ruled in favor of U.S. Bank and Wells Fargo, granting their motion for summary judgment and dismissing the Offit and Pressma Estates' claims with prejudice. The court found that the banks functioned as conduits — receiving the insurance proceeds and passing 100 percent of them through to the actual beneficial owners — and therefore did not 'receive' any benefit in the way the Delaware statute requires for liability. A separate dispute involving the Towers Estate was suspended after that estate and Wells Fargo reported reaching their own agreement. The remaining motions for summary judgment were denied as moot.
The detailed version
- Offit v. U.S. Bank · No. 0:23-cv-00045
- Donovan Frank
- Dec. 15, 2025
Background
Three estates — the Estate of Saul Offit (represented by executor Marc Offit), the Estate of Naomi Pressma (represented by executor Conrad Pressma), and the Estate of Georgia Towers (represented by executor Edwin Towers) — brought this action in January 2023 seeking to recover life insurance death benefit proceeds. The estates allege the underlying policies were stranger-originated life insurance (STOLI) policies — policies allegedly created when a group of investors, having no genuine insurable connection to the insured, arranged for policies on the lives of senior citizens and became the ultimate beneficiaries.
The specific policies at issue were: (1) an $8.5 million Hartford policy on Saul Offit; (2) a $1.5 million John Hancock Life Insurance Company policy on Naomi Pressma; and (3) a $5 million American General Life Insurance Company policy on Georgia Towers. The estates allege these policies were manufactured through a program operated by a group of related Delaware entities known as Coventry, and that after the insureds passed away between 2018 and 2021, the death benefits were paid to U.S. Bank (for the Pressma Policy) and Wells Fargo (for the Offit Policy) in their capacities as securities intermediaries. Those banks then deposited the full proceeds into accounts owned by the actual beneficial owners — institutional investment funds identified as Financial Credit Investment III SPV-B (Cayman), L.P. (FCI III), which held the Offit and Pressma policies.
The estates sued under Delaware Code title 18, section 2704(b), which permits estates to bring an action against a 'beneficiary, assignee or other payee' who 'receives from the insurer any benefits' of a life insurance policy issued in violation of the state's insurable interest rules.
The Securities Intermediary Framework
A securities intermediary, as defined in Article 8 of the Uniform Commercial Code (UCC) — a body of commercial law adopted in various states — is a financial institution that maintains securities accounts on behalf of customers and holds financial assets for those customers in a nominally registered but purely administrative capacity. The actual owner of the assets is the 'entitlement holder' (here, the beneficial owner investment funds). Courts and UCC commentary describe the securities intermediary's role as 'ministerial,' 'nominal,' and as a 'conduit' in the indirect holding system.
Both U.S. Bank and Wells Fargo operated under Securities Account Agreements (SAAs) with the beneficial owners. Those contracts required the banks to: hold all policy proceeds separately from the banks' own assets; identify assets on their books as belonging exclusively to the beneficial owner; and transfer policy proceeds to the beneficial owner's designated account within three business days of receipt. The banks were contractually prohibited from retaining any of the proceeds for themselves.
The record showed that U.S. Bank deposited $1,502,920.29 in Pressma Policy proceeds into FCI III's account on October 26, 2018, and Wells Fargo deposited $8,519,095.89 in Offit Policy proceeds into FCI III's account on January 5, 2021. Neither bank retained any portion of the proceeds or recorded them as income.
The Court's Ruling
The court granted U.S. Bank and Wells Fargo's motion for summary judgment (Doc. No. 204) insofar as it related to the Offit and Pressma Estates, and dismissed those claims with prejudice.
Securities Intermediary Liability Under Section 2704(b)
The court's central legal conclusion was that a securities intermediary acting purely in a ministerial, pass-through capacity does not 'receive' 'benefits' from an insurer within the meaning of section 2704(b). Because the banks passed 100 percent of the proceeds to the beneficial owners and held no possessory interest, they were not 'payees' or 'beneficiaries' subject to liability under the statute. Any possession of the proceeds by the banks was 'fleeting' and did not make those assets the banks' property under UCC § 8-503(a).
Rejection of Malkin Argument
The estates relied on Wells Fargo Bank, N.A. v. Estate of Malkin (Malkin II), 278 A.3d 53 (Del. 2022), arguing the Delaware Supreme Court had rejected the 'ministerial role' defense. The court disagreed, reading Malkin II as actually supporting its conclusion. The Delaware Supreme Court in Malkin II stated that 'a securities intermediary who merely acts on the instructions of the beneficial owner of a STOLI policy and credits the policy proceeds to the beneficial owner's account is unlikely to face ultimate liability under Section 2704(b)' and would 'generally find protection from sources other than Section 8-115, such as general principles of agency law or its contract with its customer.' The court also cited Daher v. LSH Co., 2024 WL 3571642 (C.D. Cal. July 23, 2024), which read Malkin II as holding that when a securities intermediary passes along 100% of a STOLI policy's death benefit to another party, it cannot be deemed a payee.
The court expressly declined to reach U.S. Bank and Wells Fargo's alternative argument that UCC § 8-115 independently protected them, because the ministerial-role analysis was sufficient to resolve the motions.
Towers Estate Dispute Suspended
On December 8, 2025, the Towers Estate and Wells Fargo notified the court they had reached an agreement to resolve the claims relating to the Towers Policy and requested that pending motions be suspended as to that dispute. The court honored that request and suspended consideration of all motions as they related to the Towers Estate.
Remaining Motions Denied as Moot
Three other pending motions for summary judgment — U.S. Bank's motion on the Pressma Estate's claim (Doc. No. 192), the Offit Estate's motion against Wells Fargo (Doc. No. 199), and the Pressma Estate's motion against U.S. Bank (Doc. No. 209) — were denied as moot in light of the ruling on the securities intermediary liability motion.
Disposition Summary
- Doc. No. 204 (U.S. Bank and Wells Fargo motion for summary judgment on securities intermediary liability): Granted as to the Offit and Pressma Estates. - Doc. No. 192 (U.S. Bank motion for summary judgment on Pressma Estate claim): Denied as moot. - Doc. No. 199 (Offit Estate motion for summary judgment against Wells Fargo): Denied as moot. - Doc. No. 209 (Pressma Estate motion for summary judgment against U.S. Bank): Denied as moot. - Offit and Pressma Estates' claims: Dismissed with prejudice. - Towers Estate dispute: Suspended.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.