As he was picking up bagels before a deposition in a divorce case, Russ Klenet got a strange tap on his shoulder.
Klenet is the husband of Broward County Mayor Stacy Ritter and a lobbyist for a host of cities, including Sunrise, Lauderhill, and Pompano Beach. He turned around in the Einstein Bros. Bagels shop on the 17th Street Causeway in Fort Lauderdale and saw what he later described as a "ghost."It was Joel Steinger, his old boss, the con man and convicted felon who'd once renovated the Parkland home Klenet shares with Ritter. The man who once paid Klenet $20,000 a month to lobby for the fraudulent company Mutual Benefits Corp.
"It was like karma," Klenet recounted a few hours later at a deposition on August 24, 2007. "I was coming to this thing today, had not physically laid eyes on or talked to him in that long, and there he was."
Karma? The attorney questioning Klenet seemed incredulous. After all, Klenet was being deposed in Steinger's divorce case, and the fact that they had chatted that very morning looked suspicious. But the lobbyist stuck to his claim that the divorce wasn't mentioned during his 15-minute chat with Steinger at Einstein's. "Didn't think it was appropriate," Klenet told Miami attorney Donald J. Hayden, who was representing Steinger's ex-wife, Diana.
The encounter — and Klenet's dubious explanation about it — encapsulates the puzzling and mysterious relationship between the mayor's husband and the longtime fraud artist. Klenet and Ritter both downplay their connection to Steinger. The mayor says that Steinger gave her the "creeps" and that her husband lobbied for Mutual Benefits merely for a quick paycheck.
But court records portray a deep personal and business bond between the two men that involved a shared company in New York and millions of dollars.
The truth about Klenet's dealings with Steinger could dictate the outcome of an ongoing criminal investigation of Mutual Benefits. Several sources have confirmed that the Federal Bureau of Investigation is investigating Klenet and Ritter, who voted on bills that benefited Steinger's company while she served in the state Legislature and her husband was on the Mutual Benefits payroll.
It's clear that Klenet played a key role for Steinger in Tallahassee and was paid handsomely for his work — $20,000 a month plus the home renovation. He helped to put together a dream team of lobbyists for Mutual Benefits that included heavyweights like former Deputy Attorney General Peter Antonacci, onetime Florida Republican Party chief Will McKinley, and Alan Mendelsohn, a key GOP fundraiser and adviser to Gov. Charlie Crist.
Together, they managed to manipulate the Legislature into passing bills that protected Mutual Benefits from state regulators even as the company was being banned in other states, subjected to an audit in Florida, and public agencies were receiving complaints that it was a Ponzi scheme. The company was in the viatical business — brokering the purchase of life insurance policies, mostly from dying AIDS patients — and raised more than a billion dollars. The company defrauded investors, according to the feds, and Steinger and several of his cronies siphoned millions off into outside accounts.
The key to the company's undue influence in the Legislature was the millions that Steinger, who was convicted of fraud in 1981 for a boiler-room scam, threw into campaign contributions. Klenet admitted in sworn testimony that he directed that money to politicians throughout the state.
But Klenet's involvement with Steinger didn't end when the Securities and Exchange Commission shut down Mutual Benefits in 2004. Steinger, who was forbidden from conducting business, then tapped Klenet to be the frontman for his next viatical company, Life Settlements International (LSI), which was run out of New York City.
A source close to Steinger says that Klenet wasn't his first choice to lead the new company. The source says he initially wanted to install then-Senate Minority Leader Steve Geller as the owner. Geller was a close friend of Steinger's who introduced him to Klenet.
"Steinger was going to put Steven Geller in as head of that company, but he changed his mind and put Klenet on there instead," says the source, who has firsthand knowledge of the business and requested anonymity. "He felt Geller better served him in Florida."
Geller, who is now running for a seat on the Broward County Commission, admits that he advocated for Steinger and Mutual Benefits in Tallahassee, but only because he thought Steinger was a "good guy." He admitted to me that he was approached about having an unspecified role in the new company but said it never got to the "serious discussion stage."
"Did I know Joel? Absolutely," he said. "But Joel knew a lot of people. He knew the cabinet members; he knew a lot of legislators."
In the 2007 deposition, Klenet explained that he took on the role with the new company in part because he had no criminal record and could avoid scrutiny that former Mutual officials could not. The plan was for the company to broker insurance policies for international investors so LSI could skirt the same SEC rules that had caused the downfall of Mutual.