By Terrence McCoy
By Scott Fishman
By Deirdra Funcheon
By Allie Conti
By New Times Staff
By Ryan Pfeffer
By Deirdra Funcheon
By Kyle Swenson
"All over the country there have been charges and allegations against people who have fraudulently sold non-existent life insurance policies from the terminally ill to individual investors for personal gain," the release stated. "Referred to as Ponzi schemes, they have, in some cases, caused investors to suffer staggering losses... Mutual Benefits Corp., the country's largest viatical settlement company, has a mission: they want the world to know that they are one of the 'good guys.' "
At that very time, Mutual Benefits investors were flooding state agencies with complaints. From 1999 through 2003, the state's Department of Insurance received 178 complaints from investors who represented about $20 million in ripped-off money — a tiny portion of the $830 million that the feds believe was actually lost in the Mutual Benefits scandal.
Many of the people listed on the complaints were elderly investors who had put large chunks of their retirement money into Mutual Benefits after being promised big returns. People like 77-year-old Leleen Montgomery who, along with her emphysema-stricken husband, invested $170,000 with Mutual Benefits in 1999, about half of their savings. Mutual Benefits never returned her a dime.
"It was supposed to be guaranteed," she says now. "But it wasn't."
In all, about 30,000 investors sank more than $1.7 billion into Mutual Benefits from 1994 to 2004. Most of them have lost all of their investment in the company. And the problem boiled down to the frank sentiment contained in one of the complaints made to the Florida Division of Consumer Affairs in 2002: "Consumer is upset that insured [person] has not died."
And that was due, of course, to Steinger's manipulation of life expectancies to draw in the investors.
By this time, state and federal investigators knew what was happening. Five other states, in fact, had barred Mutual Benefits from operating within their borders. Steinger's own problems had at least been mentioned in newspapers.
Yet Florida politicians claim they were oblivious to the whole mess.
When asked about his relationship with Joel Steinger, former Senate Minority Leader Steven Geller seemed to take a page right out of Mutual Benefits' news release. "I thought they were the good guys," says Geller, who was term-limited out of the Senate in 2008 and is now running for the Broward County Commission. "I thought they wore the white hats."
Geller became friendly with Steinger in 2000, which was also the year Steinger first contributed at least $1,000 to Geller's campaign. It was the beginning of a years-long steady diet of Steinger-related campaign cash for Geller. The following year, Steinger-related sources gave Geller a nice holiday gift: $5,500 contributed on Christmas Eve. Of that, $500 came from an aptly named company, Bandit Services, one of many shell companies related to Mutual Benefits, this one registered under the name of a Mutual Benefits sales agent named Howard Mandel.
In 2004, Steinger-related companies and Mutual Benefits employees poured at least another $15,000 into his campaign, which equaled nearly 20 percent of the total amount of money Geller raised for that race. Checks came from numerous Mutual Benefits employees. One source who worked for Mutual Benefits at the time says Steinger would collect $500 checks from employees and then reimburse them with cash, a blatant violation of campaign laws. It's not clear if this allegation has been investigated by authorities.
In all, Geller took more than $20,000 in campaign contributions from Mutual Benefits-related donors.
Geller's claim of ignorance regarding Steinger's character is hardly credible. Simply reading the newspaper or putting Steinger's name in an internet search would have shown Geller that he was joining forces with a crook. The state's Medicaid fraud investigation of Steinger was publicized in newspapers in 1998, as was the SEC action against Steinger and his brother Leslie for misleading investors. News reports had also recounted Steinger's 1981 felony fraud conviction. The state made its first arrest in the Mutual Benefits case the same year Geller took that $5,500. On May 23, 2001, the state charged Clark Mitchell, the doctor who allegedly did as Steinger told him, with an organized scheme to defraud and 24 counts of communications fraud. The arrest was reported in the Miami Herald.
"Normally campaigns will vet anyone who gives a lot of money," says political fundraiser and campaign manager Fred Menachem, who worked for a time for Steinger. "If a significant amount of money is coming from one area, the smart thing to do is to vet your prospect before you take the money. You don't want it coming back and biting you on the ass."
State investigative records show that all the criminal charges against Mitchell concerned the doctor's alleged rubber-stamping of Mutual Benefits' phony life expectancy claims that caused false confidence in investors that they'd be paid quick and healthy returns.
The investigators got the doctor, but they wanted Steinger. The problem was that Steinger was hiding his tracks. They knew Steinger controlled Mutual Benefits. Former Mutual Benefits staffer Howard Michael Stern told state investigators that Joel was the "brains" of the operation. Another employee called Steinger the "chairman of the board." Yet another described him as "the godfather" of the company.
On paper, though, Steinger was just a "consultant," albeit one who funneled millions out of the company. And Mitchell, whose attorneys' fees were being paid by Steinger, wasn't talking. He was holding loyal to "the godfather."