Ft. Lauderdale Man Convicted of Money Laundering and Obstruction of Justice in Connection with MBC Fraud
|U.S. Attorney’s Office February 28, 2013|
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announced that, after a four-week trial before U.S. District Judge Kathleen M. Williams, a federal jury sitting in Miami convicted defendant Steven Steiner, a/k/a “Steven Steinger,” 60, on 19 of 54 counts, including conspiracy to commit money laundering offenses, money laundering, conspiracy to commit offenses against the United States, and various obstruction of justice offenses relating to Steiner’s participation in a scheme to launder and conceal more than $15 million in proceeds derived from the Mutual Benefits Corporation (MBC) fraud, and Steiner’s obstruction of United States Securities and Exchange Commission (SEC”), the court-appointed receiver for MBC, and the United States District Court, in their efforts to secure and recover assets traceable to the fraud. Co-defendant Henry Fecker, III was acquitted on all charges. Steiner is scheduled to be sentenced by Judge Williams on May 8, 2013.
According to the evidence presented at trial, from approximately 1994 to May 2004, MBC purchased life insurance policies from people suffering from AIDS, chronically ill people, and elderly people. Having purchased the life insurance policies, MBC sold fractionalized interests in the death benefits, known as “viatical settlements,” to approximately 30,000 investors. In promotional materials, MBC told investors that its viatical settlements offered a fixed rate of return with low risk and that investors’ principal and returns were paid by the insurance companies. Evidence at trial established that MBC misrepresented various material facts relating to its viatical settlements, including, for example, the estimated life expectancies of the insured persons, MBC’s title to certain life insurance policies, the risks associated with certain policies, the payment of premiums, and the source of funds used to pay investors. Witnesses testified 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. The evidence established that as the fraud continued, investor money was required to prevent the MBC Ponzi-scheme from collapsing. Ultimately, investors lost more than $750 million.
Steiner was a founder, principal, and vice president of MBC, and he received more than $15 million in proceeds from the MBC fraud through two shell corporations that he controlled, Camden Consulting Inc., and SKS Consulting, Inc.
In May 2004, the SEC filed a civil enforcement action in the United States District Court for the Southern District of Florida, SEC v. Mutual Benefits Corp., et al., Case No. 04-60573-CIV-MORENO (the “SEC Fraud Action”), against MBC and various “relief defendants,” including Steiner’s shell corporations. On May 4, 2004, United States District Judge Federico A. Moreno entered an order appointing Coral Gables attorney Roberto Martinez as the receiver for MBC, with the mandate to identify, secure, trace, and recover the assets of MBC.
According to evidence presented at trial, the jury found that, following the closure of MBC and the appointment of the MBC receiver, Steiner engaged in money laundering transactions designed to conceal the source, location, ownership, and control of his proceeds from the MBC fraud. At the same time, Steiner acted to obstruct the SEC, the MBC receiver, and the United States District Court.
Evidence at trial also disclosed that in 2006 and early 2007, Steiner submitted false and misleading financial disclosure documents to the SEC to persuade the SEC to agree to a favorable settlement of the SEC claims against him and his shell corporations Camden Consulting and SKS Consulting, in the SEC Fraud Action. Based upon Steiner’s fraudulent financial disclosure, the SEC agreed to a reduced penalty of $3.9 million, and, on April 10, 2007, the District Court entered a final judgment in the SEC Fraud Action ordering Steiner, SKS, and Camden to pay $3.9 million to the court-appointed receiver for MBC. Evidence at trial established that Steiner acted to thwart the MBC receiver’s efforts to trace and recover MBC assets and recover on the final judgment. Among other things, Steiner repeatedly lied under oath during depositions and physically concealed documents, including checks representing proceeds from the MBC fraud.
Steiner is currently awaiting trial in two related cases in the Southern District of Florida. In United States v. Joel Steinger, et al., Case No. 08-21158-CR-Scola, Steiner and co-defendants Joel Steinger and Anthony Livoti are charged with conspiracy to commit mail and wire fraud and money laundering, in relation to the MBC fraud scheme. In United States v. Joel Steinger et al., Case No. 12-20123-CR-Rosenbaum, Steiner, Joel Steinger, and Henry Fecker, III are charged with engaging in a multi-million-dollar scheme to defraud insurance companies.
Mr. Ferrer commended the investigative efforts of the FBI and IRS-CI. This case is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Dwayne E. Williams.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.