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Insurer Off the Hook for Alleged Schemer’s Defense

(CN) - A Marin County judge blocked an insurance company from paying for the criminal defense of Gary Armitage and James Koenig, who allegedly fleeced 2,000 investors of as much as $200 million in one of the biggest financial frauds in California history.

Judge Michael Dufficy issued the order after attorneys sparred over whether the men or their alleged victims should have access to a $5 million insurance policy.

Attorneys for National Union Insurance Co. said it was the insurance company's right to decide how to pay out on the policy.

But attorneys representing investors said the insurance company was breaking California law by paying criminal defense costs.

Armitage, co-owner of Santa Rosa-based AGA Financial before its 2007 collapse, and Koenig, owner of the related Redding-based Asset Real Estate and Investment, have both civil and criminal cases pending against the men, as they sit in Shasta County jail.

The Redding Record-Searchlight reported that the plaintiffs and the court had assumed the insurance money would be used to compensate the alleged victims in the civil case. But attorneys representing the investors said California law bars insurance companies from paying for criminal defense costs.

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