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Steinger Guilty in $1 Billion MBC Scheme
Joel Steinger, the former head of Mutual Benefits Corporation, has been convicted of his role in a $1 billion scheme that defrauded approximately 30,000 victims. Steinger pled guilty to conspiracy to commit mail and wire fraud, violating 18 U.S.C. §1349, in a scheme to defraud investors in MBC, which marketed viatical and life settlements.
As the de facto head of MBC, Steinger 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. Steinger is scheduled to be sentenced by U.S. District Judge Robert N. Scola, Jr. on June 6, 2014.
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.
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 guilty plea 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, a founding principal of MBC, 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 McNerney, an attorney licensed by the State of Florida, assisted MBC with the marketing of its fraudulent investment by meeting with investors in his Fort Lauderdale law offices and encouraging them to purchase MBC investments.
The MBC scheme was shut down by federal regulators in May 2004, and the investigation led to charges being filed against 13 defendants, including Steinger and his co-conspirators.
RELATED: Joel Steinger Guilty of $1B MBC Scheme Fraud
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Key Facts
- State: Florida
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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