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SEC defendant indicted in money laundering scheme

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The United States Attorney’s Office for the Southern District of Florida has unsealed an Indictment charging Steven Steiner a/k/a Steven Steinger, a defendant in a now settled SEC action, with obstructing justice by lying to the SEC.

 

The 54 count Indictment charges Steiner, along with Henry Fecker, III, with money laundering and other violations. According to the Indictment, Steiner and Fecker, among other things, concealed assets and lied in financial statements that they submitted to the SEC. Steiner and Fecker submitted the financial statements during settlement negotiations to resolve the SEC’s case against Steiner for his antifraud and other violations in a billion dollar offering fraud conducted by Mutual Benefits Corporation (MBC). Fecker was the sole officer and director of Camden Consulting, Inc., a relief defendant in that case.

The Commission first halted the on-going fraud at MBC in May 2004 when it filed a contested emergency civil enforcement action against MBC and its principals, including Steiner’s brothers, Joel and Leslie Steinger. In its complaint, the SEC alleged that the defendants had raised over $1 billion from more than 29,000 investors through a fraudulent, unregistered offering of securities in the form of fractionalized interests in viatical and life settlements. The SEC obtained a restraining order to halt the alleged fraud at MBC, and thereafter a receiver was appointed by the United States District Court for the Southern District of Florida (the “MBC Receiver”), to identify and trace the assets of MBC.

In June 2005, the SEC filed an amended complaint adding Steiner as a defendant and naming SKS Consulting, Inc. (SKS) a company he controlled, and Camden, as relief defendants. In the amended complaint, the SEC alleged that Steiner 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 made misrepresentations to investors about the safety of investing with MBC and the manner in which it obtained life expectancies for the insurance policies that formed the basis of an investment in MBC. The SEC also alleged that Fecker – Steiner’s life partner – was Camden’s sole officer and director and shared signatory authority with Steiner on the company’s bank accounts. In January 2006, the SEC filed a second amended complaint and further alleged relief defendant Camden acted as a conduit for MBC to make undisclosed payments to Steiner.

On April 10, 2007, the Court entered a settled Final Judgment of Permanent Injunction and Other Relief against Steiner and Relief Defendants SKS and Camden. The Final Judgment enjoins Steiner from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Final Judgment also holds Steiner, SKS, and Camden jointly and severally liable for disgorgement and prejudgment interest in the amount of $5,000,000, but orders them to pay $3,925,000 based on their financial statements and other information submitted to the Commission and waives the remainder of the amount and did not impose a penalty based on the financial information.

According to the Indictment, in the years after 2004 when MBC was shut down, Steiner and Fecker engaged in a series of transactions to hide assets from the SEC and the MBC Receiver by placing funds attributable to Steiner with third parties or in Fecker’s name alone, and later by causing third parties to make payments of monies due to Steiner, instead to Fecker. Fecker used the funds to support a lavish lifestyle for Fecker and Steiner. To obtain a favorable settlement of the SEC’s case against Steiner, SKS, and Camden, the Indictment alleges that in 2006 and early 2007, Steiner and Fecker submitted a series of false and misleading documents to conceal their true financial condition.

The Indictment further alleges that in late 2009, to further conceal assets from the SEC and the MBC receiver, Steiner sold a luxury New York apartment for $1.3 million, but caused false documents to state that the sales price was $1.1 million, and submitted these documents to the SEC and the MBC Receiver. The Indictment alleges that Steiner caused the purchaser to make an additional $200,000 in undisclosed side payments to Fecker, and that these undisclosed and concealed funds were thereafter used to support the lavish lifestyle of Steiner and Fecker. To further thwart the SEC’s efforts to recover assets attributable to MBC, the Indictment alleges that Steiner provided false and misleading testimony under oath to the MBC Receiver concerning his assets and financial condition.

The SEC’s actions regarding Mutual Benefits resulted in injunctions and other relief against eight defendants and eight relief defendants, and orders to pay disgorgement and civil penalties totaling $30 million. In addition, before the August 24 Indictment, the United States Attorney’s Office for the Southern District of Florida had charged 10 defendants in criminal actions for their roles in the fraud.

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