Mutual Benefits officials charged
Jan 7, 2009
Top officials of viatical- and life-settlement company Mutual Benefits were charged in a 25-count indictment.
BY PATRICK DANNER
Miami Herald--January 6, 2008
Marking the culmination of a more than four-year investigation, federal prosecutors have charged the top officials of one-time Fort Lauderdale viatical- and life-settlement firm Mutual Benefits with defrauding some 28,000 investors of more than $830 million.
On Monday, a 25-count indictment was unsealed against Joel Steinger, identified as Mutual Benefits’ principal executive, his brother and company founder Steven Steiner, and Fort Lauderdale lawyers Michael J. McNerney and Anthony Livoti Jr. They face a maximum 20 years in prison on each charge if found guilty.
Attorneys for the four said their clients will fight the charges, which include conspiracy to commit money laundering and wire fraud. Nine other officials connected with Mutual Benefits pleaded guilty and were sentenced to prison terms.
The indictment, filed Dec. 23, comes nearly five years after state and federal regulators shut down Mutual Benefits. The company was placed in receivership.
Mutual Benefits bought life insurance policies of AIDS patients and the elderly and sold the policies to investors, who stood to collect benefits when the insured died. Mutual Benefits promised investors the investments were ”safe,” the U.S. attorney’s office claims.
But prosecutors allege Joel Steinger hired doctors to adopt bogus life expectancies for the insured. By claiming the insureds were near death, prosecutors say, Mutual Benefits could sell low-value policies at a higher price. The longer the insured lives, the more premium payments must be made to prevent the policy from lapsing and becoming worthless.
Prosecutors also claim Mutual Benefits was a massive Ponzi scheme, using money from more recent investors to pay premium obligations on older policies.
Joel Steinger, 59, and Steven Steiner, 56, are set to be arraigned Wednesday, but Joel Steinger is recovering from spinal-cord surgery last week, said his lawyer, Edward Shohat.
Joel Steinger has been called by his doctor a ”functional paraplegic,” Shohat said. He is seeking to postpone the arraignment.
”He will enter a plea of not guilty and will proceed to prepare for and go to trial,” Shohat said. West Palm Beach lawyer Richard Lubin, who represents Steven Steiner, denied the indictment’s allegations.
”He vehemently denies any guilt in this matter and is anxious to finally have his day in court,” Lubin said.
Another brother, Leslie Steinger, also had been identified as a Mutual Benefits principal, died of pancreatic cancer in September.
Joel and Leslie Steinger, and Mutual Benefits President Peter Lombardi, in 2005 agreed to pay $25 million to settle civil charges by the Securities and Exchange Commission that they defrauded investors. Their lawyers contended the insurance investments the company sold were not subject to SEC regulation, but a federal judge disagreed. Lombardi was sentenced to 20 years in prison in 2007.
Lawyers McNerney, 60, and Livoti, 59, were arraigned Monday. They posted bond and turned over their passports.
Prosecutors allege McNerney met with investors and encouraged them to buy the investments.
”We are totally convinced that Michael McNerney is innocent, and we will vigorously defend him until he is completely exonerated,” said Scott Srebnick, one of McNerney’s lawyers.
Livoti, who served as a trustee overseeing investors’ money in accounts, is accused of participating in the Ponzi scheme.
”Tony Livoti is innocent,” said his lawyer, Joel Hirschhorn, adding others at Mutual Benefit “abused his trust and naivete.”
Meanwhile, the receiver appointed to oversee Mutual Benefits expects to make payments to investors this spring. Investors are likely to either get 10 cents or 19 cents on the dollar, depending on what happened with their investment.