Mastermind of $800 Million Fraud Gets 20 Years in Prison

Businessmen in jail
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MIAMI -- The man who masterminded an $800 million insurance scam that fleeced tens of thousands of investors in one of Florida's all-time largest fraud schemes was sentenced Friday to 20 years in prison.

U.S. District Judge Robert Scola gave Joel Steinger, 64, credit for pleading guilty to avoid a lengthy and costly trial and said Steinger's multiple medical problems -- he appeared in court in a wheelchair, with an oxygen tank -- argued against the maximum 50-year sentence sought by prosecutors.

But Scola said Steinger still deserved a lengthy prison term because, as chief executive of now-defunct Mutual Benefits Corp., he orchestrated a fraud scheme that victimized more than 30,000 investors in all 50 states and numerous foreign countries between 1994 and 2004.

"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."

The Books Were Cooked in This Ponzi Scheme

The company, first investigated in 2003 by the state Office of Insurance Regulation, bought life insurance policies from people with AIDS, cancer and other chronic illnesses and sold them to investors. The policyholder would get paid an upfront, discounted amount and the investor was promised a larger insurance payout when the person died.

The company promised safety and sky-high returns. But Steinger and others involved in the scam admitted that life expectancy numbers were cooked, the company's financial strength was falsified and eventually older investors were being paid with money from newer ones in classic Ponzi scheme fashion. Mutual Benefits was shut down by the Securities and Exchange Commission in 2004.

Assistant U.S. Attorney Karen Rochlin argued for the longest possible sentence, comparing Steinger to convicted Ponzi schemers Bernard Madoff and Scott Rothstein, the former South Florida attorney who is serving a 50-year sentence for running a $1.2 billion scam involving investments in fake legal settlements. "There should be no others like him ever again," Rochlin said of Steinger.

'It Eats My Guts Out,' Steinger Says

From his wheelchair, Steinger delivered a rambling 40-minute monologue repeating his many health issues and apologizing for hurting investors and his own employees. "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, Steven Steiner, who is serving 15 years behind bars. The brothers spell their last names differently.

Part of Friday's hearing concerned Steinger's 2007 assistance to the FBI in an offshoot case involving Dr. Alan Mendelsohn, a Fort Lauderdale eye doctor who was seeking campaign contributions to wield influence among state leaders in Tallahassee. Steinger wore a recording device in conversations in which Mendelsohn falsely claimed he had enough clout to make criminal investigations into Steinger's business disappear. Mendelsohn eventually pleaded guilty in a federal corruption case and was sentenced to four years in prison.

Steinger got little credit in his own sentencing for his cooperation because, as Rochlin put it, he only turned to the FBI about Mendelsohn when investigators were closing in on his own fraud scheme and he didn't help them uncover the truth behind Mutual Benefits. "It was too little, too late," she said.

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Wonder how long it will take THIS cretin to file for "disability" like Jesse Jackson Junior did? Considering JJ collects NINE THOUSAND DOLLARS A MONTH WHILE IN JAIL FOR FRAUD, I figure this guy would most likely get a whole lot more because he "earned" a whole lot more in his ponzi scheme.

September 01 2014 at 11:27 PM Report abuse rate up rate down Reply

I live in FL....its a breeding ground for greed and insanity. I dont know what is in the water here

September 01 2014 at 10:35 PM Report abuse +1 rate up rate down Reply

He will go to some Federal "Campus" Prison like Butner where Madoff is, get three squares, gym, library, be a celebrity amongst his inmates and be free of societal shame, medical benefit, nice lawns to walk around and never have to see his victims while they are being tossed on the street, in foreclosure, unable to pay medical bills and lossing a lifetime of savings for many generations to come. And yes, danswissmr, some 16 year old black kid will get the same sentence in a much rougher facility for robbing a 7-11 of 50 bucks. And as a narcisstic sociopath will feel no remorse, ever.

September 01 2014 at 10:33 PM Report abuse rate up rate down Reply

he caused to many people to get sick over the problems and heartache he caused. This resulied in many shortened lives. He didn't care how many sick or old people he stole from so why should it have any consideration in his sentencing

September 01 2014 at 9:55 PM Report abuse rate up rate down Reply

Wow, that'll teach him! Meanwhile some poor 19-year-old from the inner city somewhere probably got 45 years for sticking up a convenience store for $200.

September 01 2014 at 8:44 PM Report abuse rate up rate down Reply

Send U.S. District Judge Robert Scola to Wall Street to throw some of those mercenaries in the hoosegow. When they buy presidents and the "justice" department imposes fines, the fines are paid by the customers who just got gypped before. It's a crooked system, and it's time for some hard prison time for the offenders.

September 01 2014 at 5:38 PM Report abuse rate up rate down Reply

In retrospect, I have been much too hard on Sheriff Joe Arpiao and the Maricospa County Jail. IMO this would be the perfect prison environment for these fraudsters

September 01 2014 at 3:42 PM Report abuse +1 rate up rate down Reply

FL again?????What the fluck is wrong with FL...fraud of some kind all the time...

September 01 2014 at 3:13 PM Report abuse +1 rate up rate down Reply
1 reply to pllove49's comment

It must be the Wall Street training facility.

September 01 2014 at 5:38 PM Report abuse rate up rate down Reply

Hefty? 20 means he will be out in 8. The ruination of thousands of peoples lives and the theft of their savings deserves a much harsher sentence, afterall if this guy had stuck up a c store for $50 he would surely spend more time in jail. I suppose however, we should all prostrate ourselves in gratitude that a wealthy white collar fraudster got sentenced to any time at all

September 01 2014 at 2:59 PM Report abuse +2 rate up rate down Reply

To bad there is no death penalty for this crime

September 01 2014 at 2:13 PM Report abuse rate up rate down Reply