Former Mutual Benefits Corporation Head Convicted For His Role In $1 Billion MBC Scheme
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (“FBI”), announce that defendant Joel Steinger, a/k/a “Joel Steiner,” (“Steinger”) pled 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 Mutual Benefits Corporation (“MBC”), which marketed viatical and life settlements.
Steinger is the final defendant to be convicted out of 13 charged as a result of the MBC scheme, which defrauded approximately 30,000 victims. As the de facto head of MBC, Steinger, along with conspirators Steven Steiner, a/k/a Steven Steinger, Michael McNerney, and Anthony M. Livoti, Jr., Esq., along with 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. Steinger is scheduled to be sentenced by U.S. District Judge Robert N. Scola, Jr. on June 6, 2014.
According to the evidence presented in a related trial and summarized during Steinger’s guilty plea, 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 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.
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 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.
Co-defendant Steiner was also 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, Steiner pled guilty to charges in the same case. Steiner was also 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 dollars in proceeds derived from the MBC fraud. 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. McNerney pled 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. Livoti’s sentencing is set for April 1, 2014 before U.S. District Judge Robert N. Scola, Jr.
United States 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.”
“Joel Steinger used Mutual Benefits Corp to bilk hundreds of millions of dollars from trusting investors,” said FBI Special Agent in Charge George L. Piro. “Now, with Joel Steinger's guilty plea, the FBI is pleased that all 13 defendants charged in the MBC scheme have all been convicted.”
Steinger is the thirteenth defendant convicted as a result of the MBC fraud.
Mr. Ferrer commended the investigative efforts of the FBI and the Miami Regional Office of the Securities and Exchange Commission, which previously brought a civil action against MBC and its principals. The MBC case is being prosecuted by Assistant U.S. Attorney Karen Rochlin.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.