Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (“FBI”), Miami Field Office, announce that defendant Michael J. McNerney, a founding partner of the Ft. Lauderdale law firm formerly known as Brinkley, McNerney, Morgan, Solomon & Tatum, LLP, pled guilty on May 18, 2011, to a one-count criminal information charging him with conspiracy to commit mail fraud and wire fraud in connection with a scheme to defraud investors in the Mutual Benefits Corporation (“MBC”). As part of his plea agreement, McNerney agreed to be responsible for $837 million in restitution to the investors who were victims of this fraud.
Sentencing has been scheduled for August 26, 2011 before U.S. District Judge Adalberto Jordan. At sentencing, McNerney faces a maximum statutory sentence of five years in prison.
For almost 10 years, from about October 1994 through at least May 2004, McNerney was the lead outside lawyer for MBC, and participated in a scheme through which MBC sold investment interests in viatical and life settlement insurance policies to the general public, raising more than $1.25 billion from approximately 30,000 investors worldwide. A viatical settlement is a transaction in which a terminally ill person sells the death benefit of his or her life insurance policy to a third party in return for a lump-sum cash payment, which is a discounted percentage of the policy’s face value. A life settlement is similar to a viatical settlement, except the seller is not terminally ill, but is a senior citizen. In the sale of viatical or life settlements, an investor would realize a profit if, when the insured dies and the policy matures, the policy benefit is more than the price paid for policy. Any profit realized would be decreased by additional out-of-pocket costs, such as premium payments.
As charged in the information, McNerney, as outside counsel for MBC, made and caused others to make, knowingly misleading representations concerning such matters as the management of MBC and its related entities and the sufficiency of the funds set aside to make premium payments on the investors’ policies. For example, among the misrepresentations made to investors, MBC’s sales agents falsely promised a “fixed return” on investments and falsely represented that MBC had a strong track record of accurately predicting life expectancies. In addition, McNerney and his conspirators concealed from investors and regulators the fact that Joel Steinger, a convicted felon, was the key decision maker at MBC. Through these and other misrepresentations, MBC engaged in an unsustainable Ponzi scheme, in which it used new investors’ monies to pay previous investors.
************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net
No comments:
Post a Comment