⚖ Oral Arguments, with Context

The Second Circuit considers who should receive the money from two five-million-dollar life insurance policies on Russel Mechling. He joined an arrangement called Oceanus that financed the policies and obtained an option to take them over. His wife received several hundred thousand dollars in connection with the arrangement. The investor later acquired the policies’ beneficial interest, and U.S. Bank acted as a securities intermediary, holding assets for its customer rather than for itself. After Mechling died, his estate sued the bank and the investor, FCI Cayman, to recover the death benefits. It alleges stranger-originated life insurance, or STOLI: insurance arranged from the outset for investors to benefit from a stranger’s death, rather than later resale of a policy genuinely obtained for insurance needs. The estate invokes Wisconsin’s insurable-interest law. An insurable interest is a recognized family or financial stake in the insured person’s continued life. Section six thirty-one point oh seven does not automatically invalidate a policy lacking that interest. Instead, it permits a court to redirect proceeds to someone equitably entitled to them. Whether that includes this estate is disputed. The district court entered summary judgment for the defendants, resolving the claim without a trial. It relied on unclean hands: a doctrine that can deny equitable relief because of a claimant’s own wrongdoing connected to the transaction. The estate challenges both the assessment of Mechling’s conduct and the use of that doctrine against the statute’s anti-wagering purpose. You will hear references to Gold, a separate case raising similar insurance issues. This recording is the argument about Mechling’s policies, not a decision on the appeal.

Estate of Russel Mechling v. U.S. Bank National Association (No. 25-2059) — U.S. Court of Appeals for the Second Circuit, argued October 21, 2026.