Mutual Benefits used dirty money to pay its legal defense
North Palm Beach attorney Joseph Murasko remembers when Ken Keechl, the future vice mayor of Broward County, told him that the company he was representing was branching out to South America.
"I looked at Ken and said, 'Be careful,' " Murasko told Keechl. " 'You don't want to piss somebody off who is trying to launder drug money.' "
It's like he had a crystal ball.
The company Ken Keechl was representing was Mutual Benefits Corp., a $1 billion criminal enterprise. The company operated for years with the help of powerful friends like Broward County Mayor Stacy Ritter; her lobbyist husband, Russ Klenet; then-state Sen. Steve Geller; state Rep. Ellyn Bogdanoff; and Keechl, who was yet to be elected county commissioner when he worked for the fraudulent firm.
Stories of investor rip-offs and corruption in Tallahassee have been covered in detail by New Times and other South Florida publications in recent days, most of them focusing on the actions of Ritter, who in 2004 voted on a bill after Mutual Benefits paid $100,000 to renovate her Parkland home.
But what has been largely ignored is the fact that some of the millions of dollars flooding into Mutual Benefits' coffers were supplied by drug dealers trying to wash their money.
The feds followed the money trail from a 13,000-pound cocaine bust in 2001 to the Fort Lauderdale offices of Mutual Benefits. In 2002, the Department of Homeland Security conducted a raid of the offices and confiscated reams of evidence that was ultimately used in the fraud investigation that continues today.
At least one subcontractor working for the firm in Colombia, Jaime Rey Albornoz, was a member of a drug cartel, according to court records. In 2002, Albornoz was indicted in Miami on money-laundering charges. The Chicago Tribune conducted an in-depth investigation in 2004 of the viatical industry, businesses that buy and sell life insurance policies from the elderly and the dying, often AIDS patients. One installment of the Tribune's series focused on Mutual Benefits. In court records, it found that Albornoz put $25 million in drug profits into the company and had plans to deluge it with $100 million more.
No wonder the company was able to afford a half-million-dollar negative ad campaign to help get Bogdanoff elected to the legislature in 2004. With all the drug money coming in, that must have seemed like pocket change.
The Sun-Sentinel published a severely truncated version of the Tribune story in the business section under the absurd and misleading headline, "Loose controls foster problems; but astute investors can find steady earnings." That story, published on July 25, 2004, contained the only mention of the drug connection in the local press.
The drug money puts an even more sinister light on the growing Mutual Benefits scandal and the public officials who lined up to assist it in dodging state regulators.
Keechl's involvement came in courtrooms across the country, where he defended the company against its victims. It began in the '90s and ran through at least 2004, two years before he was elected to the County Commission.
Murasko represented several of those victims and filed at least three lawsuits in Broward County on their behalf. In those cases, he alleged that the company had committed securities law violations and fraud. He said he managed to settle one case, but the rest of his clients are now hoping for pennies on the dollar from the receivership that took over the company after the SEC shut it down.
He says one thing that struck him about Mutual Benefits investors was that they generally weren't wealthy people — mostly just older middle-class folks who made the mistake of investing all or part of their life savings in a crooked company. One client, who he said didn't want to be named, was a retiree who survived the attack on Pearl Harbor and drove a milk truck for a living. Murasko says the man lost his life savings to the Mutual Benefits Ponzi scheme.
"My clients weren't getting what was promised them, and to me it smelled like a boiler-room-type operation from the start," Murasko says.
The evidence had been mounting since the '90s that Mutual Benefits was ripping people off. By 2002, the company was hit with numerous fraud complaints from investors around the country. It was banned from doing business in five states, but not in Florida, where it had so many powerful friends.
All the evidence that the company was dirty didn't stop Keechl from doing its bidding. With partner Michael McNerney, he defended Mutual Benefits in numerous cases nationwide, even after the federal raid in Fort Lauderdale and cease-and-desist orders were issued in other states. McNerney, the company's chief outside counsel, tapped Keechl to lead the defense against the lawsuits.
Murasko says the company was helped greatly by the Florida Legislature, which kept viatical companies from being regulated as securities. Legislators Geller and Ritter pushed the legislation, and Ritter's husband, Klenet, lobbied on behalf of the company. The support by lawmakers emboldened the company and its lawyers. "They were raking in the money," Murasko recalls. "They felt cocky. McNerney was overseeing the lobbying arm, and they were going full-throttle."
Keechl has refused to discuss his representation of Mutual Benefits, which doesn't seem surprising, since much of that work was indefensible.
Gloria Wolk, a consumer advocate, was one of the earliest experts to warn the public about Mutual Benefits. "As soon as I saw their promotional materials, I knew Mutual Benefits was a fraud," Wolk says. "People who thought they'd been defrauded would contact me, and I organized them."
After she warned people about Mutual Benefits on her website and in a book, she got a letter from Keechl and law partner Steven Gigliotti in March 2002 claiming that she was unlawfully using the name "Mutual Benefits" in "meta tags" — keywords used to help drive traffic to web postings — that accompanied her internet articles. They claimed that the use of the tags constituted copyright infringement and unlawful competition, since it diverted web traffic from the Mutual Benefits site.
The allegations on their face are ridiculous; the use of meta tags using company names is perfectly legal and is done all the time. As for the accusation of unlawful competition, Wolk didn't sell viaticals or work in the industry.
Wolk says she took down the Mutual Benefits meta tags and wrote Keechl a letter back asking him what else she could do to avoid a lawsuit.
He never wrote back. Instead, Keechl sued her in federal court in Fort Lauderdale.
"I didn't say anything that was false about the company, so they tried to get me on a trademark thing," says Wolk. "If you couldn't use a company's name when you're criticizing it, you couldn't expose anything about any company. On top of that, they'd never even registered the trademark in the first place. It was obviously a frivolous lawsuit."
Yet Keechl went so far as to fly out to California where she lived in Laguna Beach to depose Wolk. The suit, filed in May 2002, dragged on for more than a year before a settlement was reached in the fall of 2003. The result actually favored Wolk. She says that to silence her criticism and keep her from filing a countersuit, the company paid her as a consultant to help it with charitable pursuits.
She says she thought it was a chance for something good to finally come from Mutual Benefits. The SEC shut down the company in 2004 before any philanthropic projects came to fruition.
"You want to know about Keechl? I'll tell you that I think he's dirty," says Wolk. "He's just another one of these miserable lawyers. Many of them are as bad as any con artist you can find, just padding their wallets."
Even by South Florida lawyer standards, Keechl's work for Mutual Benefits is an embarrassment — and it might be worse than that. His partner, McNerney, was indicted in December on conspiracy and money laundering charges in connection with his work for Mutual Benefits. McNerney is just one of numerous people who have been indicted or convicted in the Mutual Benefits case.
The law firm, in 2005, also faced a class action lawsuit from Mutual Benefits investors alleging negligence and breach of fiduciary duties. The firm paid $10 million to settle the suit, which didn't name Keechl personally.
Keechl left the law firm to run for County Commission in 2006. His opponent, incumbent Jim Scott, raised the issue of Mutual Benefits late in the race, prompting a single article in the Sun-Sentinel about the connection.
In the article, Keechl claimed he didn't know the company was breaking the law. "They were entitled to be represented, and they were," he said at the time. "That's what lawyers do."
Most lawyers stay away from defending ongoing criminal enterprises, though. And if Keechl didn't know it, then his judgment is suspect. If he did, then his ethics are in serious question.
The feds continue to investigate, and more indictments may be on the way. Murasko, who spent a lot of time in courtrooms with Keechl, says he doesn't have any inside information but believes that Keechl didn't take part in any criminality.
"I think Keechl was just a frontman," says the lawyer. "McNerney seemed like he was behind everything. That's what my gut tells me. I would be surprised if Keechl was in there with his hands out."
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