Lawyer Faces Suit Over His Involvement in Mutual Benefits Corp. Fraud
The Securities and Exchange Commission has filed a complaint against a lawyer for his involvement in Mutual Benefits Corp.’s fraudulent offerings to investors which raised more than $1 billion from approximately.
From 1995 through at least May 2004, McNerney served as primary securities regulatory counsel for MBC. The complaint alleges that in this role, he helped conceal the fraud, met with 29,000 investors, and supervised the filing of false reports with state regulators.
The SEC seeks permanent injunctive relief against McNerney, who has consented to the entry of Final Judgment providing for full injunctive relief.
On August 26, 2011, Judge Adalberto Jordan of the United States District for the Southern District of Florida, sentenced McNerney to 5 years in prison, followed by three years of supervised release, and ordered him to pay restitution, along with his co-conspirators, in the amount of $826,839,642.
On May 3, 2004, the SEC first halted the on-going fraud at MBC when it filed a contested emergency civil enforcement action against MBC and its principals.
In its complaint, the SEC alleged that the defendants raised over $1 billion from thousands of 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 the United States District Court for the Southern District of Florida appointed a receiver to identify and trace the assets of MBC.
The SEC’s actions regarding MBC have resulted in nine injunctions and other relief against nine defendants and eight relief defendants, and orders to pay disgorgement and civil penalties totaling $30 million. In addition, the United States Attorney’s Office for the Southern District of Florida has charged 12 defendants in criminal actions for their roles in the fraud.
The United States Attorney’s Office for the Southern District of Florida, the Federal Bureau of Investigation, Miami Field Office, and the Internal Revenue Service, Criminal Investigation Division assisted in the investigation.