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Mutual Benefits Corp. Settles with the SEC

The following is from the SEC's Litigation Release dated December 1, 2005. For other information go to the bottom of this page.

The United States Securities and Exchange Commission (SEC) agreed to accept a $25 million settlement in its pending federal civil action against former principals of Mutual Benefits Corporation, Defendants Joel Steinger, Leslie Steinger and Peter Lombardi.

The SEC’s action alleges that the Defendants, using corporate relief defendants they controlled, defrauded the approximately 31,000 investors in the South Florida-based viatical company. Before the settlement becomes final it must be approved by U.S. District Court Judge Federico Moreno, who is presiding over this action.

According to the SEC’s Complaint, filed in May 2004, the Defendants oversaw Mutual Benefits’ fraudulent sale of over $1 billion in viatical settlements from 1994 through 2004. The Defendants deceived investors by failing to disclose (1) that investors’ purported returns were dependent upon life expectancy estimates that were manipulated by Joel Steinger and not determined independently by doctors, (2) Mutual Benefits’ used funds from new investors to pay premiums on older policies, and (3) that the Steingers’ were controlling Mutual Benefits and had a disciplinary history, including a prior actions by the SEC and the Commodities Future Trading Commission. The SEC’s action continues as to Defendant Steven Steiner and two relief defendants.

In settling, each of the three defendants has agreed to consent to the entry of an injunction against future violations of the antifraud and registration provisions of the federal securities laws they were alleged to have violated [Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder], without admitting or denying the allegations.

In addition, Joel and Leslie Steinger, have agreed to each pay $9 million in disgorgement and prejudgment interest and a $500,000 civil penalty. Peter Lombardi, Mutual Benefits’ former president, has agreed to pay $5,880,000 in disgorgement and prejudgment interest and a $120,000 civil penalty.

The disgorgement amounts will be owed jointly and severally with the relief defendants controlled by either the Steingers and Lombardi: Kensington Management, Rainy Consulting Corporation, Twin Groves Investments, Inc. and P.J.L. Consulting Corporation.

Other information about the SEC v MBC

The Untold Story of Mutual Benefits Corporation