Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Life Insurance

Alleged life insurance fraudster wins trial delay

Your article was successfully shared with the contacts you provided.

MIAMI (AP) – On the eve of jury selection, a federal judge agreed Monday to delay the trial of the alleged mastermind of an $800 million insurance investment fraud scheme because the man suffers from severe pain and health problems caused by a chronic back ailment.

U.S. District Judge Robert Scola granted the postponement after former Mutual Benefits Corp. chief Joel Steinger, 63, tearfully requested time for spinal surgery. Steinger, who uses a wheelchair and is on strong pain medications, appeared in court in a hospital gown. He frequently wrapped a blanket around his chest.

“You can’t do this like this. I don’t have the strength to go on. I can’t take the pain anymore,” Steinger said in a voice breaking with emotion. “You know what I’m thinking about now? Getting back to the hospital so I can get more dope.”

A doctor has recommended surgery for Steinger, according to his attorney Steven Haguel. An evaluation by a University of Miami neurosurgeon for a second opinion is set for next week. Scola’s order did not specify how long the trial might be delayed, but he noted that Steinger refused surgery in the past unless it was with a specific doctor.

If that happens again, Scola said he may order the trial to proceed “with Steinger confined to his hospital bed connected to the courtroom via closed-circuit audiovisual feed.”

Steinger would have needed frequent breaks if trial had gone forward in his current condition, along with a special chair, oxygen bottle and a nurse standing by to handle his needs — all at taxpayer expense. These conditions, Scola wrote, “make his presence throughout the trial a logistical and hygienic nightmare” that surgery may avoid.

With Steinger sidelined for now, jury selection will begin Tuesday only for co-defendant Anthony Livoti Jr., an attorney who handled Mutual Benefits’ escrow accounts. Assistant U.S. Attorney Karen Rochlin had opposed any further delays for either defendant.

The charges against Steinger and several others were first filed in 2008, and Mutual Benefits was shut down in 2004 by the Securities and Exchange Commission.

Mutual Benefits, founded in 1994 and based in Fort Lauderdale, sold investments in life insurance policies held by people with AIDS, cancer and other terminal illnesses. Investors would pay the sick person an upfront, discounted amount and then collect the larger insurance payout when that person died.

Tens of thousands of investors worldwide were attracted by the sales pitch of Steinger and his brother, Steven Steiner — they spell their last names differently — which promised sky-high returns and safety. But prosecutors say most of the brothers’ promises were false, the accuracy of their life-expectancy projections faulty and the company’s financial strength shaky at best.

Steiner, 61, pleaded guilty last week to wire and mail fraud conspiracy. In his plea agreement, Steiner acknowledged that most of the policies Mutual Benefits sold to investors never matured or matured far later than projected because the original policyholders lived longer than expected.

“Investors were not able to regain access to their funds as planned while the insured remained alive, and investors suffered financial hardships as a result,” Steiner said in the plea deal.

The company had claimed that 80 percent of its policies matured on time or early. Prosecutors say that was untrue.

Steiner already has been sentenced to 15 years in prison for money laundering and obstruction of justice convictions stemming from his concealment of $15 million in allegedly fraudulent proceeds from Mutual Benefits. He also pleaded guilty to conspiracy charges last week in a third spinoff case.

Prosecutors claim that Livoti, in Ponzi-scheme fashion, used money from new investors to pay off older ones. Livoti has pleaded not guilty and his attorney, Joel Hirschhorn, said Livoti was simply acting as a lawyer and did not commit any fraud.

All told, authorities say Mutual Benefits sold more than $1.2 billion in life insurance policies to investors, allegedly defrauding them of about $830 million. A court-appointed receiver was able to collect about $120 million after Mutual Benefits collapsed, distributing the money to more than 34,000 investors around the world.

See also:

Life settlement fraud sends advisor to prison

Former wirehouse advisor swindles client out of $1.8M

RI lawyer taken into custody in investment fraud case


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.