A Fort Lauderdale, Fla., lawyer was convicted of playing a supporting role in an alleged Ponzi scheme that prosecutors say propped up one of Florida's biggest investment scams -- more than $1 billion...
Dec. 04--A longtime Fort Lauderdale lawyer was convicted Wednesday of playing a supporting role in an alleged Ponzi scheme that prosecutors say propped up one of Florida's biggest investment scams -- more than $1 billion.
Anthony M. Livoti Jr., 64, stood trial for 11 weeks and faced deliberations for an unusually long eight days before learning his fate from a federal jury in Miami.
The 12-person 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 19 other fraud charges.
U.S. District Judge Robert Scola ordered Livoti, who had a $ 2 million bond, to surrender immediately to marshals. He will be held at the Miami Federal Detention Center until his sentencing on Feb. 21. He faces a potential life sentence because of the massive scale of the investment scam orchestrated by executives at Fort Lauderdale-based Mutual Benefits Corp.
"Am I disappointed? Crushed," said Livoti's defense attorney, Joel Hirschhorn, outside the courtroom. "He's crushed. He really is crushed."
Livoti was the only defendant in the long-running prosecution of the Mutual Benefits case to go to trial, with 10 others, including employees, a lawyer and a doctor, pleading guilty in recent years.
The once-high flying Fort Lauderdale-based 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 by federal regulators in 2004.
Livoti, charged with conspiring to commit wire fraud and money laundering along with related offenses, played the role of trustee who controlled Mutual Benefits' investment accounts. He was accused of using newer investors' money to pay the premiums on older life-insurance policies to sustain the racket for years, Assistant U.S. Attorney Karen Rochlin asserted.
But Livoti's defense attorney, Hirschhorn, countered that the prosecution miscast his client's part, saying he was actually kept in the dark about the investment scam by Mutual Benefits executives who exploited him to line their own pockets. He said Livoti's principal role was to ensure that the premiums on policies were paid up so that they would not lapse and investors could be made whole when beneficiaries died.
Hirschhorn told the 12-person jury that his client was innocent during closing arguments in November. Before standing trial, Livoti has been better known as the general counsel for the Florida State Fraternal Order of Police, representing local police officers in union contracts. Facing disbarment, he will now have to transfer his pending police cases to other lawyers.
The only remaining defendant in the Mutual Benefits' case is former top executive, Joel Steinger, described by prosecutors as the mastermind who allegedly stole tens of millions of dollars from investors. Steinger, who once lived in a Fort Lauderdale waterfront mansion, has been held without bond and must use a wheelchair to get around because of severe back pain.
Steinger has tested the patience of U.S. District Judge Robert Scola, claiming he cannot physically endure trial because he needs back surgery. The judge allowed him to forego the trial alongside Livoti, but he still did not undergo his surgery. Scola recently ordered Steinger, 63, to start trial on April 1, even if it means providing him costly medical accommodations in Miami federal court.
In September, Steinger was supposed to face trial with his brother, Steven Steiner, 61, and Livoti.
Steiner, who spells his last name differently, pleaded guilty before 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.
According to prosecutors, Mutual Benefits repeatedly lied to investors, who paid out discounted lump sums to beneficiaries dying of terminal illnesses for the right to collect on their benefits at full face value.
In a factual statement filed with his plea agreement, Steven Steiner acknowledged that he and other Mutual Benefits employees "falsely promised" investors a 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."
Others who have been convicted in the Mutual case are: Peter Lombardi, the former president, who is serving 20 years in prison, and disbarred Fort Lauderdale attorney, Michael McNerney, who is serving five years. Both testified at Livoti's trial.
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