NU Online News Service, May 6, 2004, 6:17 p.m. EDT – Federal securities regulators and Florida insurance regulators have shut down the largest U.S. viatical settlement company, Mutual Benefits Corp., Fort Lauderdale, Fla.[@@]
The U.S. Securities and Exchange Commission has seized Mutual Benefits’ files and placed the company in federal receivership, according to the Florida Office of Insurance Regulation.
State insurance regulators have suspended Mutual Benefits’ license to act as a viatical settlement provider.
State regulators also have filed a complaint in the U.S. District Court in Miami that accuses the company of misrepresenting the nature of the policies backing its contracts with investors. The complaint charges Mutual Benefits with racketeering and 15 counts of investor fraud.
Representatives for Mutual Benefits and its principals, Joel Steinger and Leslie Steinger, were not immediately available for comment. Joel Steinger does not appear to have a telephone number in Florida, and Leslie Steinger has a nonpublished number, according to directory information.
Mutual Benefits has raised more than $600 million through the sale of more than 7,300 discounted life insurance policies purchased from terminally ill policyholders at a discount to face value, Florida officials say.
Mutual Benefits was supposed to put enough cash in escrow for each policy to keep the policies in effect, but the company has been transferring cash between accounts to pay the premiums, and the escrow accounts will have a $3.4 million deficit by September, officials say.
Mutual Benefits also issued improper viatical settlement contracts and used unlicensed sales agents, officials say.