A decade ago, Steve Steiner would have been running from venue to venue as a member of the Board of Directors of CenterOne, then the longest running HIV agency in Broward County.
He would be gathering items for auction at the star studded annual ‘Art for AIDS’ auction, attended by the elite of South Florida’s LGBT community.
The social point of the season for close to a decade, the event often raised $50,000, auctioning off high end Mediterranean cruises, rare canine breeds, and even dinner with A-List Hollywood hosts who were friends of Steiner, like the 2002 co-hostess Liza Minnelli. That was Steve Steiner then.
The world Steve Steiner, 61, knows now is vastly different. He’s been a prisoner in a federal Miami jail since 2011, and last week was convicted of money laundering and obstruction of justice in connection with an AIDS related viatical fraud that dates back a decade.
After a four-week trial in Miami, Steiner, also known as “Steven Steinger,” was convicted on 19 of 54 counts, including conspiracy to commit money laundering offenses, money laundering, conspiracy to commit offenses against the United States, and various obstruction of justice offenses relating to Steiner’s participation in a scheme to launder and conceal more than $15 million in proceeds derived from the Mutual Benefits Corporation (MBC) fraud.
In what local court observers call next to remarkable, his co-defendant Henry Fecker III, Steiner’s partner of decades, was acquitted on all charges.
Steiner is set to be sentenced on May 8. The voluminous counts and gravity of the charges suggest he could be facing more than 20 years in federal prison.
The Ponzi Scheme
According to the evidence presented at trial, from approximately 1994 to 2004, MBC purchased life insurance policies from people suffering from AIDS, chronically ill people, and elderly people.
Having purchased the life insurance policies, MBC then sold fractionalized interests in the death benefits, known as “viatical settlements,” to approximately 30,000 investors.
In promotional materials, MBC told investors that its settlements offered a fixed rate of return with low risk. MBC promised the investors’ their principals that the insurance companies were paying returns.
Prosecutors argued that MBC misled investors about the estimated life expectancies of the insured persons, MBC’s title to certain life insurance policies, the risks associated with certain policies, the payment of premiums, and the source of funds used to pay investors.
Witnesses testified that new investor money was used to pay premiums on life insurance policies purchased by earlier investors and to pay investors who requested their money back.
According to the press release published by the Justice Department after the verdict last week, “the evidence established that as the fraud continued, investor money was required to prevent the MBC Ponzi-scheme from collapsing.”
Ultimately, investors lost more than $750 million and MBC was accused of operating one of the most extensive Ponzi schemes in the nation.
Steve Steiner was a founder and vice president of MBC, receiving more than $15 million in proceeds from the MBC fraud through two shell corporations that he controlled, Camden Consulting Inc., and SKS Consulting, Inc.
In May 2004, the SEC filed a civil enforcement action against MBC and various “relief defendants,” including Steiner’s shell corporations, accused of hiding funds.
On May 4, 2004, United States District Judge Federico A. Moreno entered an order appointing Coral Gables attorney Roberto Martinez as the receiver for MBC, with the mandate to identify, secure, trace, and recover the assets of MBC.
What the Jury Heard
According to evidence presented at trial, the jury found that, following the closure of MBC, Steiner engaged in money laundering transactions designed to conceal the source of his proceeds from the fraud. At the same time, the U.S. attorney argued, Steiner acted to obstruct the SEC, the MBC receiver, and the United States District Court.
Evidence at trial also disclosed that Steiner submitted false and misleading financial disclosure documents to the SEC to persuade the SEC to agree to a favorable settlement of the SEC claims against him and his shell corporations Camden Consulting and SKS Consulting, in the SEC Fraud Action.
Based upon Steiner’s fraudulent financial disclosure, the SEC agreed to a reduced penalty of $3.9 million, and, on April 10, 2007, the District Court entered a final judgment in the SEC Fraud Action ordering Steiner, SKS, and Camden to pay $3.9 million to the court-appointed receiver for MBC.
Evidence at trial, however, persuaded jurors, at least on 19 counts, that Steiner acted to thwart an appointed receiver’s efforts to trace and recover MBC assets and recover on the final judgment. Prosecutors proved that Steiner repeatedly lied under oath during depositions, and concealed documents.
LGBT Attorney, Steiner Face More Charges Still
Even after this conviction, Steiner’s trials are not over. The case he lost is only one of three in which he has been charged.
In United States v. Joel Steinger et al., Steiner and Henry Fecker III, the couple, who had beautiful condos at Points of America and vacation homes in New England, are still charged with engaging in a multi-million-dollar scheme to defraud insurance companies.
In the last case, the most serious one, and the source for all the other prosecutions, Steiner is accused, with his brother and local gay attorney Anthony Livoti, of conspiracy to commit mail and wire fraud as well as money laundering in relation to the MBC fraud scheme. Livoti continues to practice law and vigorously asserts his innocence.
Those that have already pled guilty including local attorney Michael J. McNerney, 63, who was sentenced to five years, and a lead company executive, Peter Lombardi, who was sentenced to 20 years in 2007. Each could now be called against Steiner in the pending prosecution.
Steve Steiner’s Philanthropic Past
As the Vice President of Mutual Benefits, Steiner was once named Man of the Year for the Cystic Fibrosis Foundation. At one annual fundraising dinner, he personally gave a $100,000 check to the Miami Center to Cure Paralysis. “We have a duty,” he said, “to help those who can’t always help themselves.”
As a philanthropist, Steiner was also instrumental in personally bankrolling and underwriting hundreds of thousands of dollars in donations to The Boys and Girls Clubs of Broward County, the National Association of People With AIDS, the AIDS Memorial Quilt, The March of Dimes, The Muscular Dystrophy Association, Food for Life, and The Children’s Diagnostic and Treatment Center.
In full disclosure, Mutual Benefits once sponsored the ‘Norm Kent Show on WFTL’ telling an interviewer that he wanted “gay voices given credentialed advocates on local airwaves.”
In 2004, Steiner explained his philanthropic passion to Express Gay News reporter Ian Drew: “I have just known too many people who have died from diseases not to use my energy and fortune to assist others in need.”
Steiner’s odyssey began in the early days of the AIDS epidemic. He started by volunteering at Center One, in the early 1980’s, becoming a teacher for those who would care for the ill at the clinic. It was Steiner who eventually launched the buddy program to teach volunteers how to become an off-site family for the indigent.
Stated the late John Weatherhead, who once served as the Executive Director of CenterOne, “Steve Steiner has played an active role in educating people about treating the HIV community with compassion and care, rather than distance and disgrace.”
The late Gary Steinsmith, at one time the premier advocate for HIV patients in the early stages of the epidemic, referred to Steve Steiner in 2004 “as a mitzvah; a blessing from God.”
In March of 2013, during a federal court trial in Miami, God was not on the jury.