Now, all 13 who had been charged in what prosecutors have characterized as a $1 billion scheme to defraud 30,000 investors in Mutual Benefits Corporation (“MBC”) stand convicted.
The thirteenth defendant, Joel Steinger, a/k/a “Joel Steiner,” pleaded guilty before U.S. District Judge Robert N. Scola, Jr., to conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349, as a result of his scheme to defraud investors in MBC, which marketed viatical and life settlements.
Prosecutors said that, as the de facto head of MBC, Mr. Steinger, along with Steven Steiner, a/k/a Steven Steinger, Michael McNerney, and Anthony M. Livoti, Jr., Esq., and others, raised more than $1.25 billion from investors before being shut down by federal regulators in May 2004. By the time charges were filed in December 2009, investor losses were estimated to amount to more than $800 million.
Mr. Steinger is scheduled to be sentenced by Judge Scola on June 6, 2014.
Prosecutors described the fraud, based on evidence presented in a related trial and summarized during Mr. Steinger’s guilty plea, as follows:
From approximately 1994 to May 2004, MBC purchased life insurance policies from persons suffering from AIDS, the chronically ill, and elderly persons. Having purchased the life insurance policies, MBC sold fractionalized interests in insurance policy death benefits, known as “viatical settlements,” to approximately 30,000 investors. MBC solicited the investments through an international network of sales agents. In promotional materials, MBC told investors that its viatical settlements offered a fixed rate of return with low risk, and that investors’ principal and returns were paid by the insurance companies. Under Mr. Steinger’s direction, MBC misrepresented various important facts relating to its viatical settlements, including, for example, the estimated life expectancies of the insured persons, the supposedly independent role of doctors determining those life expectancies, MBC’s fraudulent methods used to acquire life insurance policies, the risks associated with certain policies, the payment of premiums, and the source of funds used to pay investors.
Mr. Steinger, already a convicted felon at the time of the MBC fraud, hid behind a figurehead company president to conceal a criminal and disciplinary history that otherwise would have prevented the company from obtaining a license to conduct business in Florida and elsewhere.
Evidence supporting his guilty plea also established that new investor money was used to pay premiums on life insurance policies purchased by earlier investors and to pay investors who requested their money back. In essence, the evidence demonstrated that Mr. Steinger and his co-conspirators were operating a Ponzi-like scheme, using new investor money to pay for earlier investor obligations, and that money from new investors was continuously required to prevent the MBC Ponzi-scheme from collapsing, which, ultimately, it did.
Prosecutors added that co-defendant Steiner also was a founding principal of MBC, was actively involved in MBC’s marketing and promotional activities, and encouraged investors to buy MBC’s investments. On September 3, 2013, Mr. Steiner pleaded guilty to charges in the same case. Mr. Steiner also was found guilty by a federal jury in a related case, United States v. Steven Steiner, No. 11-20578-CR-Williams, in connection with money laundering and obstruction of justice related to the use and concealment of more than $15 million in proceeds derived from the MBC fraud. Mr. Steiner was sentenced to a total of 15 years in prison.
Co-defendant McNerney, an attorney licensed by the State of Florida, assisted MBC with the marketing of its fraudulent investment by meeting with investors in his Fort Lauderdale law offices and encouraging them to purchase MBC investments. Mr. McNerney pleaded guilty in this case and was sentenced to five years in prison for his criminal conduct.
Co-defendant Livoti, Jr., was convicted for his role in the MBC fraud on December 4, 2013 after a jury trial. Mr. Livoti’s sentencing is set for April 1, 2014 before Judge Scola.
U.S. Attorney Wifredo A. Ferrer stated, “I am pleased to announce the guilty plea of Joel Steinger, who led one of the largest investment schemes in South Florida’s history. For a decade, Steinger and his co-defendants victimized approximately 30,000 people and stole nearly one billion dollars. I commend the prosecutors and agents who have worked so hard on this important matter.”