Not long ago, Fort Lauderdale business executives Joel Steinger and Steven Steiner lived in waterfront, Mediterranean-style mansions that could have been featured on the once-popular TV show Lifestyles of the Rich and Famous.
But on Tuesday the brothers, both jailed without bail after regulators shut down their insurance brokerage business, Mutual Benefits Corp., looked like what they have become — penniless — as they appeared separately in Miami federal court.
Sporting a prison pallor, Steiner, 61, pleaded guilty before a federal judge to two wire-fraud conspiracy charges in separate criminal prosecutions, entailing duping life-insurance investors in the Mutual Benefits case and health-insurance companies in another case. Sentenced recently to 15 years in prison on a related money-laundering conviction, Steiner now faces up to 20 years that would run concurrently with that term.
Soon after, Steinger, 63, sitting in a wheelchair with a blanket draped over his shoulders, begged the same federal judge to delay his six-month trial set for next Tuesday because he needs surgery for the “excruciating pain” in his spine.
“I need to get to a real hospital to be operated on or I will never make it through trial,” Steinger, who spells his last name differently from his younger brother, told U.S. District Judge Robert Scola. “It’s getting worse by the day.... I’ll never make it.”
“You’ll never make it?” Scola snapped back, reminding Steinger that, like his brother, he’s also been accused of health insurance fraud. “What do you mean by that?”
“Physically, your honor, I’m spent,” he answered. “That’s what I mean.”
Scola, who had postponed the Mutual Benefits fraud trial once before, would not hear of any more delays, ordering Steinger to appear for the jury trial as scheduled next week. The judge also ordered his defense attorney, Steven Haguel, to be ready for trial.
“I am grossly unprepared for this case,” said Haguel, who is Steinger’s third defense attorney since the brothers and several others were indicted in 2008. The Mutual Benefits trial will entail about five million documents, 1,600 exhibits and potentially hundreds of witnesses.
Assistant U.S. Attorney Karen Rochlin, who is prosecuting the case with Roger Cruz, urged the judge to let the case finally go to trial.
“It is my sense the defendant, in his mind, will never be ready for trial,” Rochlin told Scola. “And I will submit to the court that this is not acceptable.”
Steinger and a one-time Mutual Benefits lawyer, Anthony M. Livoti Jr., are the only remaining defendants in the Mutual Benefits case. Ten former company employees, including president Peter Lombardi, have pleaded guilty and been sentenced to lengthy prison terms in the long-standing fraud case.
The once high-flying company sold $1.25 billion worth of life insurance policies, held by people dying of AIDS, to some 30,000 investors, who lost $830 million between 1994 and 2003— among Florida’s biggest financial frauds, federal authorities say. The investors provided a discounted lump-sum payment to the policyholders for the right to collect on the full benefits upon their deaths.
In a factual statement filed with his plea agreement, Steven Steiner acknowledged that he and oher Mutual Benefits employees “falsely promised” investors an allegedly fixed rate of return on the so-called viatical life settlements. But Mutual Benefits could not deliver on those inflated returns ranging from 12 percent to 60 percent because the policyholders continued to live longer than expected and their premiums had to be paid while they were alive.
“Investors were falsely told by [Steiner] ... and by others that as many as 80 percent of all MBC policies matured on time or early,” according to the statement filed in court.
Steiner “and others represented that life expectancies on MBC policies were determined by qualified and independent medical doctors who evaluated the health of the insured and spoke or consulted with the insured’s treating physician,” the statement said.
The statement noted that a doctor named Clark Mitchell, who has already been convicted, “signed letters and affidavits concerning approximately 6,000 insurance policies where life expectancies were actually dictated by codefendant Joel Steinger, the de facto head of MBC, who had no medical training or expertise.”