The U.S. government came down hard on a Florida man who committed financial fraud, sentencing the elderly man with medical problems to 20 years in prison for fleecing investors.
Insurance fraudster convicted of masterminding an $800 million scam
Joel Steinger, 64, was convicted of masterminding an $800 million scam, promising return hungry investors sky-high payouts with little risk when his company, Mutual Benefits, purchased life insurance policies of terminally ill people.
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Appearing before U.S. District Judge Robert Scola in a wheelchair with an oxygen tank, Steinger was not given the maximum 50-year sentence the state sought, but will likely spend close to the rest of his life in jail.
“My understanding is that most of the time, on the major decisions, it was you making the decisions,” Scola said. “It’s clear that you were the mastermind of the criminal enterprise.”
“There should be no others like him ever again,” Assistant U.S. Attorney Karen Rochlin said of Steinger, as she argued for the longest possible sentence and compared Steinger to convicted Ponzi schemers Bernard Madoff.
Regulators on to the insurance fraudster
The fraud scheme victimized over 30,000 investors from the U.S and around the world between 1994 and 2004. Regulators were on to the scheme and Mutual Benefits was shut down by the Securities and Exchange Commission in 2004.
Steinger admitted the life expectancy numbers provided to investors were falsified, along with the company’s financial strength. To keep up appearances, Steigner would pay older investors exiting the program with money from newer ones, a classic Ponzi scheme structure, the Associated Press reported.
The company was initially investigated in 2003 by the state Office of Insurance Regulation. It purchased life insurance policies from people with cancer, AIDS, and other chronic illnesses, paying these people up front for their life insurance policies. The fraud occurred when they were later sold to investors. While the policyholder was compensated a discounted amount off the full payout when they died. The full payout was promised to the investor when the person died. When these people died, however, the payout was never as significant as promised.
Insurance fraudster apologizes for hurting investors
From his wheelchair, Steinger delivered a rambling and sometimes incoherent 40-minute monologue repeating his many health issues and apologizing for hurting investors and his own employees, according to the report. “It eats my guts out that this turned into a criminal enterprise, that people got hurt,” he said. “Nobody intended this to end up the way it did, least of all me.” Steinger is the last of 13 defendants convicted in the case, including his brother, who is serving 15 years behind bars.