Joel Steinger, the former owner of Mutual Benefits Corporation, once the largest life settlement/traded life policy firm in the world, this week entered a plea of guilty to a fraud count in his 2008 criminal case, bringing to an end a decade of indictments against executives and staff at the closed company, which was closed down by regulators, and found to be a billion dollar Ponzi scheme.
The other 25 counts pending against defendant Steinger are to be dismissed, under the plea agreement, in which he admitted that he doctored the life expectancies issued to investors, misled his victims, and orchestrated the massive Ponzi scheme, in which losses are estimated to be $800m, to cover insurance premiums, and to refund money to unhappy investors, while taking $15m out of the company. The Eleventh Circuit Court of Appeals held, in a case involving Mutual Benefits, that life settlements constituted securities, and were required to be registered with the Securities & Exchange Commission.
The Mutual Benefits scandal gave the life settlements industry a black eye, from which many observers believe it has still not recovered. Sentencing is set for June 6; the Plea Agreement recites that he faces consecutive 20 year sentences, and a minimum 10 year sentence, for committing an additional crime while out on bond. Steinger, who is disabled due to a chronic back injury, has been in custody, under medical care, for the past eighteen months.
The company's trustee, Fort Lauderdale attorney Anthony Livoti, is scheduled to be sentenced next week. He was convicted by a jury in 2013 on multiple counts, including money laundering, and could receive life in prison. The firm's outside counsel, Michael McNerney, is currently serving a five-year sentence.