Former MBC executives face $1bn insurance fraud case

7 January 2009

Two former executives with the defunct Mutual Benefits Corp (MBC) have been charged along with a pair of attorneys in connection with a $1 billion life insurance fraud, it has been reported.

According to the Associated Press, the defendants face a 25-count federal grand jury indictment for their alleged roles in a scheme that affected more than 28,000 MBC investors.

US authorities closed the firm down in 2004 after it was found to have sold investments based on life insurance policies held by the elderly, people suffering from Aids and the terminally ill. The investments lost value the longer these policyholders lived.

They accused MBC of neglecting to disclose risk associated with the assets, providing faked life expectancy figures and mismanaging premium funds.

Since the Securities and Exchange Commission began its litigation against MBC in 2004, a number of its executives have already been convicted.

Ex-marketing director Rocky Van Swaim pleaded guilty to tax evasion, as did sales manager David Traina.

Former MBC president and sole company shareholder Peter Lombardi was sentenced to 240 months in 2007 after pleading guilty to securities fraud.

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