South Florida mastermind of $1 billion-plus swindle sentenced to 20 years in prison
By Jay Weaver, The Miami Herald | |
McClatchy-Tribune Information Services |
"It eats my guts out that this thing turned into a criminal enterprise -- that people were hurt," said Steinger, who fumbled repeatedly as he tried to persuade a judge on Friday not to give him a 50-year prison sentence.
"I'm sorry. I repeat it every night," he told U.S. District Judge
Steinger, the former head of
Despite his misgivings, Scola showed some leniency after taking into consideration Steinger's declining health, his assistance in an unrelated corruption probe and his punishment relative to other defendants in the long-running case.
"I could easily sentence you to 50 years and never lose a moment of sleep," Scola told Steinger. "It's clear you were the mastermind of this criminal enterprise."
The judge imposed no fines on Steinger, because the former multi-millioniare is now penniless. A restitution hearing is set for
Steinger, the last defendant to be convicted and sentenced in a 2008 indictment, has been suffering from a degenerative spinal condition and partial paralysis, resulting in pre-trial detention for more than two years at
"I got a heart problem, I got a spinal problem. My days are numbered anyway," Steinger told the judge, as he weighed the prosecution's recommendation of a 50-year maximum prison term. "If I had the money, I'd give it all back."
Steinger, once a major donor to the
Mendelsohn, convicted of tax offenses and released from prison this summer, had asked Steinger for a
Prosecutors, however, did not want to give Steinger any credit for assisting in the Mendelsohn case or for anything else, largely because they viewed him as a deceptive defendant who manipulated the justice system.
Prosecutor
"He has caused untold harm to so many people," Rochlin told the judge, arguing Steinger's sentence should send a loud message of deterrence. "There should be no others like it again."
Unlike the other 11 convicted defendants in the Mutual Benefits case, Steinger dodged prosecution for years -- partly because of delay tactics and partly because of his deteriorating health. Despite the passage of time, his leading role in the life insurance investment scheme was not lost on the judge.
Steinger formerly ran
The investors bought the policies at a discount, with the promise of receiving full value upon the death of the beneficiaries. But Steinger and other company employees lied about their life expectancy as investors paid the premiums of the former policyholders without ever receiving their benefits, according to court records.
Ultimately, the investors lost
Steinger is among a dozen company executives and associates, including Steinger's brother, who have pleaded guilty and been sentenced from one to 20 years. The Mutual Benefits investigation, which started with state regulators who handed it off to federal prosecutors, is one of the largest investment scams in
The only defendant in the long-running Mutual Benefits case to go to trial was
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.
In March, Steinger admitted as much in his plea agreement.
"In fact, it was the defendant, who had no medical training or expertise, who determined life expectancy projections for thousands of policies marketed to investors," according to a statement filed with Steinger's plea deal.
"On many occasions, the defendant or others acting at his direction altered life expectancy projections with white-out or by cutting and pasting portions of letters," Steinger's statement said. "These altered letters were Xeroxed to hide evidence of the alternations and then mailed to unsuspecting investors."
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