U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19274 / June 20, 2005
Securities and Exchange Commission v. Mutual Benefits Corp., et al., Case No. 04-60573-CIV-MORENO (S.D. Fla.) (May 4, 2004)
SEC FILES CHARGES AGAINST NEW DEFENDANT IN PENDING ACTION AGAINST MUTUAL BENEFITS AND ITS PRINCIPALS ALLEGING FRAUDULENT OFFERING OF VIATICAL SETTLEMENT INVESTMENTS
The Securities and Exchange Commission ("SEC") announced that on June 17, 2005, it filed an Amended Complaint in its pending civil injunctive action against Mutual Benefits Corp. ("MBC") and its principals, adding Steven Steiner ("Steiner") as an additional defendant. The Amended Complaint charges Steiner, former vice president of MBC, with violations of the antifraud and registration provisions of the federal securities laws in connection with MBC's fraudulent offering of viatical settlement investments, which raised over $1 billion from approximately 29,000 investors worldwide.
The SEC's Amended Complaint alleges that Steiner, who is the brother of Defendants Joel and Leslie Steinger, was the "public face" of MBC, who participated in all or most initial sales training sessions for new in-house and outside sales agents, met with prospective and existing MBC investors, and directed MBC's philanthropic activities in the community. The Amended Complaint further alleges that during meetings with prospective sales agents and investors, Steiner touted the safety and humanitarian nature of viatical settlement investments, assured investors that life expectancies are determined by doctors prior to their being placed on policies, and made glowing remarks about MBC as the leader in the viatical industry. Steiner also wrote articles in newspapers and business journals (provided in investor packets) touting viatical settlement investments, new regulations designed to protect investors, and specifically referring to MBC as a superior operation and clean company with "thousands" of satisfied customers. Steiner failed to disclose, among other things, that over 90% of the viatical settlements were beyond their projected life expectancies, that his brothers (defendants Joel and Leslie Steinger) were the de facto principals of MBC, his brothers' prior disciplinary history, or that cease-and-desist orders had been issued against MBC.
The SEC's complaint charges Steiner with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder. In addition to seeking a permanent injunction against Steiner, the Amended Complaint seeks an order requiring Steiner to disgorge all ill-gotten gains he received and imposition of civil penalties. Also named in the Amended Complaint is SKS Consulting, Inc., an entity controlled by Steiner through which he received over $3.8 million in "consulting fees."
For further information about the pending civil injunctive action, see Litigation Release No. 18698.