Readers who have been following the story of Peter Lombardi, the former president of Mutual Benefits Corp., and who, as such, fronted for the true owners, who were perpetrating a massive Ponzi scheme, the Bureau of Prisons website reports that he was released from Federal Prison last week. Mr. Lombardi's twenty-year sentence was quietly reduced this year, to eighty months, which did not sit well with the many investors who were victims of the Ponzi scheme. He had originally pled guilty, but still received the maximum sentence from the Court.
The sentence reduction was entered by the Court for his Substantial Assistance in other cases brought by the United States Attorney's Office in Fort Lauderdale. His availability to testify against the Mutual Benefits owner, Joel Steinger, may have contributed to Mr. Steinger's decision to change his plea to guilty; he is to be sentenced later this year, and is the last major defendant remaining in the long list of Mutual Benefits employees, and professionals who assisted them, who have, or presently are, serving prison terms for their role in the Ponzi scheme, which irretrievably damaged the image of life settlement investments as a safe, and lucrative, means of obtaining a high return.
Life settlements are investments in existing life insurance policies of elderly (and often ill) individuals. A case brought subsequent to the implosion of Mutual Benefits* held that life settlements are securities under US law, and thus require registration with the Securities & Exchange Commission.
*SEC vs. Mutual Benefits Corp., 408 F.3d 737 (11th Cir. 2005).
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