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.
