UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15729 \ May 1, 1998
SECURITIES AND EXCHANGE COMMISSION V. JOEL STEINGER AND LESLIE STEINGER, Case No. 98-6442-CIV-MIDDLEBROOKS (S.D. Fla.)
The Securities and Exchange Commission ("SEC") announced today that two South Florida men who founded and controlled Mutual Benefits Corporation ("MBC"), one of the country's largest viatical settlement companies, settled charges brought against them by the SEC for allegedly misleading investors in connection with selling approximately $100 million worth of viatical settlements during the 18-month period from October 1994 to April 1996. With the filing of the SEC's Complaint in U.S. District Court for the Southern District of Florida, Joel Steinger and his brother Leslie Steinger consented, without admitting or denying liability, to the entry of a judgment permanently enjoining them from violating the registration and antifraud provisions of the federal securities laws. Under the judgment, the Steingers will also be required to pay a total of $850,000 in disgorgement and interest, and to pay $50,000 each in civil money penalties.
Named in the SEC's Complaint are
Joel Steinger, age 47, of Pompano Beach, Florida. Joel Steinger was involved in many facets of MBC's business operations, including its offer and sale of viatical settlements to the investing public. Joel Steinger acted as a "consultant" to MBC and received payments from it.
Leslie Steinger, Joel's younger brother, age 42, of Pompano Beach, Florida. Leslie Steinger was until recently the president, director and sole shareholder of MBC. With Joel, Leslie Steinger controlled MBC.
In its Complaint, the SEC alleged that the Steingers had caused MBC to sell approximately $100 million worth of unregistered viatical settlements to more than 1,190 investors nationwide. According to the SEC, the Steingers misled investors during this offering by causing investors to be told that they held irrevocable interests in certain policies when they did not and that their funds were held in a "Special Trust Account" when that account was nothing more than an MBC checking account. The Steingers also misled investors by failing to disclose that investor funds would typically be held by MBC for several weeks or more prior to being placed on a policy, thereby negatively affecting the investment's annual rate of return.
The Complaint charged the Steingers with selling unregistered securities in violation of Section 5 of the Securities Act of 1933 ("Securities Act"), and with misprepresentations in violation of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.