An investigation by the US Federal Bureau of Investigation now
running into its fifth year had another in a series of sequels in
early January when four men were charged in a Florida court for
their alleged role in a life insurance fraud in which more than
28,000 victims lost a total of $837 million.
In a statement the US Department of Justice (DOJ) said two of
the defendants, Steven Steiner and Joel Steinger, were founding
principals of Mutual Benefits Corporation (MBC), a Florida-based
company that sold viatical and life settlement investments through
an international network of sales agents.
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The other two defendants, Florida-based attorneys Anthony Livoti
and Michael McNerney, had close working relationships with MBC
which was shut down by federal regulators in May 2004.
According to the indictment MBC’s sales agents and marketing
materials falsely promised investors safe investments in secure
life insurance policies.
In reality, stressed the DOJ, “MBC was engaged in wide-scale
fraud”.
Specifically, the DOJ alleges that Steinger was the principal in
charge of most major decisions made at MBC.
“Steinger hired doctors who could be pressured to adopt false
life expectancies, allowing him to buy low-value policies and
immediately resell those policies to investors at a higher price by
claiming that the insureds covered by the policies were near
death,” the DOJ explained.
Of the two attorneys the DOJ’s indictment suggest that Livoti
played a particularly key role.
“Livoti was MBC’s premium trustee, who held millions of dollars
of investor money in accounts under his control,” noted the
DOJ.
“Instead of protecting the money entrusted to him, the
indictment alleges Livoti used money collected from more recent
investors to pay premium obligations on older policies as part of a
‘Ponzi’ scheme. Prior to being shut down, MBC raised some $1.25
billion from more than 30,000 investors.
If convicted, the defendants will join MBC’s former president
Peter Lombardi who was sentenced to 20 years imprisonment in 2007
and a medical doctor, Clark Mitchell, who was sentenced to 10 years
imprisonment in 2006.
Mitchell admitted to in assisting MBC present investors with
fraudulently low life expectancies.
According to the DOJ, investors were sent letters and affidavits
which falsely claimed the doctor completed a review of the
insured’s medical condition to determine the life expectancy
assigned to the policies. Mitchell signed more than 5,000 of these
fraudulent letters and affidavits.
