Convicted Fort Lauderdale lawyer sentenced to 10 years for role in massive Ponzi scheme
04/01/2014 7:03 AM
04/01/2014 7:24 PM
A longtime Fort Lauderdale lawyer who rolled the dice on a criminal trial — and lost — was sentenced to 10 years in prison Tuesday for his supporting role in a $1 billion-plus insurance-investment scam, among the largest financial frauds in Florida history.
Anthony M. Livoti Jr., convicted at a Miami federal trial in December, could have been sentenced up to 80 years for disbursing trust account funds to pay off insurance premiums to keep Mutual Benefits Corp.’s investment racket going for a decade.
U.S. District Judge Robert Scola opted not to give the 65-year-old Livoti an effective “life sentence,” saying that his role in the Ponzi scheme was not like that of the mastermind, Joel Steinger, the head of Fort Lauderdale-based Mutual Benefits, who pleaded guilty on Friday rather than go to trial this week.
Eleven other company executives and associates, including Steinger’s brother, have already pleaded guilty and been sentenced from one to 20 years.
“It’s clear to me that Joel Steinger was at the top of this pyramid,” said Scola, who could imprison him for up to 20 years at his sentencing in June.
Scola credited Livoti, who had practiced law for more than 40 years in South Florida, with extensive pro bono legal work, charity services in the gay community and mentoring of young lawyers over his career.
Livoti, who apologized profusely to the judge after admitting he “lost his way,” asked for a “second chance” and “hope” as his lawyers sought a sentence of 6 years rather than at least 30 years recommended by prosecutors. After Scola gave him a 10-year prison term, Livoti asked him to reconsider.
“I was hoping for less,” Livoti told the judge, noting how other members of his family died at relatively young ages. “It’s basically my life, your honor.”
Scola did not budge, reminding Livoti of his potential 80-year prison sentence under the federal sentencing guidelines for his offenses. He was the only one of 13 Mutual Benefits’ defendants to try his luck at trial. The others pleaded guilty in the long-running case, which was investigated by the FBI.
In December, a 12-person Miami federal jury found Livoti guilty of conspiring to commit fraud and money laundering, along with two other counts. But the jury found the lawyer not guilty of 20 other related charges.
Still, because Mutual Benefits’ investors lost hundreds of millions of dollars in the fraud conspiracy, Livoti was being held responsible for that entire loss. And that factor, under federal sentencing guidelines, made him an extremely vulnerable defendant for a potential life sentence.
The once-high flying brokerage company sold $1.25 billion worth of life insurance policies held by people dying of AIDS, cancer and other terminal illnesses to some 30,000 investors.
The investors bought the policies at a discount, with the promise of receiving full value upon the death of the beneficiaries. Ultimately, they lost $835 million before the business was shut down amid allegations of fraud in 2004.
At Tuesday’s hearing, Livoti’s domestic gay partner, Michael Porter, a Broward County school teacher, asked the judge for lenience. Porter said his longtime partner worked as a trustee for Mutual Benefits because he thought the company was selling the life insurance policies of people with AIDS so they “die with dignity” at the end of their lives.
“It makes this case more than just a tale of greed,” Porter told the judge.
Livoti’s defense attorneys, Joel Hirschhorn and Jake Greenberg, citing their client’s years of charity work and as general counsel to the Florida State Fraternal Order of Police, said he deserved no more than six years in prison.
They said that Livoti earned between $80,000 and $120,000 yearly over a decade while acting as trustee for Mutual Benefits, and that the company’s top executives stole $15 million each before it was shut down by the Securities and Exchange Commission a decade ago.
Hirschhorn argued that Livoti did not “share in that pie.” He said his client used his “status” as a lawyer in the role of Mutual Benefits’ trustee, not his “skills” in the company’s actual scheme defrauding investors.
Hirschhorn noted that 11 of the 12 convicted Mutual Benefits executives and associates received prison terms ranging from 1 year to 20 years. He also pointed out that a Fort Lauderdale attorney, Michael McNerney, who pleaded guilty after admitting he advised Steinger and other Mutual Benefits’ executives, was sentenced to five years in prison.
Steinger’s brother, Steven Steiner, who pleaded guilty last year rather than face trial with Livoti, received a 15-year sentence under his plea deal. Both he and his brother, Joel, who spells his last name differently, lived in Fort Lauderdale waterfront mansions before their downfall.
Assistant U.S. Attorney Karen Rochlin sharply disagreed with Livoti’s defense attorneys, saying that as Mutual Benefits’ trustee he sustained the scheme by allowing Steinger, Steiner and other executives to steal millions from the company’s investors. “What this defendant [Livoti] did affected every single victim in this case,” Rochlin said.
Rochlin called for a “severe sentence,” before recommending at least 30 years.
Livoti, as trustee, controlled Mutual Benefits’ investment accounts. Livoti was convicted of using newer investors’ money to pay the premiums on older life-insurance policies. Prosecutors called it a classic Ponzi scheme. His lawyers argued that he was manipulated by Steinger and other executives, who lied about the life expectancy of policyholders dying of AIDS and other illnesses.
Before standing trial, Livoti had been better known as the general counsel for the Florida FOP, representing local police officers in union contracts.
Dozens of supporters, including South Florida lawyers and police officers, wrote letters urging Judge Scola to give Livoti a lenient sentence, while a few others recommended a harsh prison term.
Former Broward Circuit Judge Robert Zack called Livoti a “lawyer’s lawyer” with “impeccable” credentials. “His good deeds far outweigh this mistake,” Zack told Scola, “though I do admit it was a grievous mistake.”
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