Former Mutual Benefits Corporation Head Sentenced To 20 Years In Prison 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 Joel Steinger, a/k/a “Joel Steiner,” (Steinger) was sentenced to 20 years in prison, three years of supervised release, and ordered to forfeit $15 million by U.S. District Judge Robert N. Scola, Jr. A restitution hearing is scheduled for November 24, 2014. .
Steinger previously pled guilty 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., 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.
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 conviction 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 Livoti, Jr. was convicted for his role in the MBC fraud on December 4, 2013, after a jury trial. Livoti was sentenced to 10 years in prison.
Today’s sentencing also resolved Steinger’s more recent Case No. 12-CR-20123-Scola, charging conspiracy to commit mail and wire fraud against health insurers, where Steinger, his brother Steven Steiner, and his brother’s life partner, Henry Fecker, made false claims of employment in order to secure group health coverage. Steinger received a total sentence of 20 years, followed by three years of supervised release to run concurrently with the sentence imposed in the MBC case. Mr. Ferrer commended the investigative efforts of the Internal Revenue Service, Criminal Investigation. This case was prosecuted by Assistant U.S. Attorneys Jerrob Duffy, Dwayne Williams and Alison W. Lehr.
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. Attorneys Karen Rochlin and Alison W. Lehr.
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.