Friday, January 9, 2009

4 Floridians Charged With Running Ponzi Scheme With "Viatical" Investments

The US Attorney for the Southern District of Florida announced Monday that 4 individuals had been charged with running a $1 billion investment Ponzi-scheme. The four defendants, Joel Steinger, Steven Steiner, Michael McNerney and Anthony Livoti, Jr., were principals of Mutual Benefits Corp., which sold viatical and life settlement investments to over 30,000 investors worldwide, totalling $1.25 billion in proceeds between 1994 and 2004, according to prosecutors. These investments purchase the rights to the proceeds of terminally ill or elderly individuals, including AIDS patients. The 25 count indictment charges the defendants with conspiracy, mail fraud, wire fraud and money laundering. According to prosecutors, Steinger and Steiner, the two co-founders of Mutual Benefits Corp. and McNerney and Livoti, two attorneys associated with the company, falsely promised investors "safe" and "secure" investments, improperly acquired insurance policies, mismanaged escrow accounts and pressured doctors to "rubber-stamp" false life expectancy figures, among other things. They promised investors fixed returns ranging from 12% to 72%. The SEC ceased operations of Mutual Benefits through an emergency action in May 2004. In addition to the individuals and Mutual Benefits Corp. listed above, the SEC action froze the operations and assets of the following related entities: Viatical Benefactors, LLC, Viatical Services, Inc., Kensington Management, Inc., Rainy Consulting Corp., Twin Groves Investments, Inc., P.J.L. Consulting, Inc, SKS Consulting, Inc. and Camden Consulting, Inc.

We note that Joel Steinger has a prior criminal conviction for wire and mail fraud. Both Steigner and Steiner have extensive regulatory disciplinary histories and there were cease and desist orders against them in at least 5 states.

Read the story here, here and here.

Read the SEC's litigation release here.

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