White Collar
Week 1: Written Assignment – Article 1
On August 29, 2014, Joel Steinger, former chief of Fort Lauderdale-based Mutual Benefits Corporation (MBC), was sentenced to 20 years in a federal prison. According to the Associated Press (2014), Steinger was the mastermind of an insurance scam in which investors lost about $830 million between 1994 and 2004, affecting 30,000 victims around the world. Mutual Benefits Corp was one of the largest fraud schemes in Florida history to date. Between 1994 and 2004, Mutual Benefits Corporation (MBC) “purchased life insurance policies from persons suffering from AIDS, the chronically ill, and elderly persons,” (U.S. Attorney’s Office, 2014). MBC then sold fractionalized interests in insurance policy death benefits, known as “viatical settlements”. It used an international network of sales agents to promote their service to approximately 30,000 investors. MBC promotional materials advertised a fixed rate of return with low risk. The insurance companies would be paying the principal and returns to the investors. However, MBC misrepresented several facts regarding its viatical settlements, such as, “the estimated life expectancies of the insured persons, the supposedly independent role of doctors determining those life expectancies, MBC’s fraudulent methods used to acquire life insurance policies, the risks associated with certain policies, the payment of premiums, and the source of funds used to pay investors,” (U.S. Attorney’s Office, 2014). MBC started using new investor money to pay premiums on life insurance policies bought by early investors. It also paid off any investors who wished to have their money returned to them. “MBC was basically operating a Ponzi-like operation,” (U.S. Attorney’s Office, 2014). It was using new investor money to pay off early investors. It required constant new investors to keep the operation going, but it eventually crashed. Federal regulators shut down their operation in 2004,
On August 29, 2014, Joel Steinger, former chief of Fort Lauderdale-based Mutual Benefits Corporation (MBC), was sentenced to 20 years in a federal prison. According to the Associated Press (2014), Steinger was the mastermind of an insurance scam in which investors lost about $830 million between 1994 and 2004, affecting 30,000 victims around the world. Mutual Benefits Corp was one of the largest fraud schemes in Florida history to date. Between 1994 and 2004, Mutual Benefits Corporation (MBC) “purchased life insurance policies from persons suffering from AIDS, the chronically ill, and elderly persons,” (U.S. Attorney’s Office, 2014). MBC then sold fractionalized interests in insurance policy death benefits, known as “viatical settlements”. It used an international network of sales agents to promote their service to approximately 30,000 investors. MBC promotional materials advertised a fixed rate of return with low risk. The insurance companies would be paying the principal and returns to the investors. However, MBC misrepresented several facts regarding its viatical settlements, such as, “the estimated life expectancies of the insured persons, the supposedly independent role of doctors determining those life expectancies, MBC’s fraudulent methods used to acquire life insurance policies, the risks associated with certain policies, the payment of premiums, and the source of funds used to pay investors,” (U.S. Attorney’s Office, 2014). MBC started using new investor money to pay premiums on life insurance policies bought by early investors. It also paid off any investors who wished to have their money returned to them. “MBC was basically operating a Ponzi-like operation,” (U.S. Attorney’s Office, 2014). It was using new investor money to pay off early investors. It required constant new investors to keep the operation going, but it eventually crashed. Federal regulators shut down their operation in 2004,
References: Associated Press (August 29, 2014). “Chief of $800 million insurance fraud scheme sentenced to 20 years in federal prison.” FoxNews.com. Online. Retrieved on August 30, 2014, from website http://www.foxnews.com/us/2014/08/29/chief-800-million-insurance-fraud-scheme- sentenced-to-20-years-in-federal/ U.S. Attorney’s Office (August 29, 2014). “Former Mutual Benefits Corporation Head Convicted for His Role in $1 Billion MBC Scheme.” Southern District of Florida. Online. Retrieved on August 30, 2014, from website http://www.fbi.gov/miami/press-releases/2014/former-mutual-benefits-corporation-head- convicted-for-his-role-in-1-billion-mbc-scheme Weaver, Jay (July 25, 2011). “Joel Steinger, accused in $1.25B fraud, awaits trial in mansion.” The Miami Herald/Palm Beach Post. Online Retrieved on August 30, 2014, from website. http://www.palmbeachpost.com/news/business/joel-steinger-accused-in-125b-fraud- awaits-trial-i/nLwNb/