Ft. Lauderdale Lawyer Pleads Guilty In Benefits Ponzi Scheme
FT. LAUDERDALE (CBS4) - A founding partner of the Ft. Lauderdale law firm Brinkley, McNerney, Morgan, Solomon & Tatum, LLP has pleaded guilty to mail and wire fraud for his part in a multi-million dollar Ponzi scheme.
As part of his plea, Michael McNerney agreed to pay $837 million in restitution to those he bilked.
From October 1994 through at least May 2004, McNerney was the lead outside lawyer for Mutual Benefits Corp. and sold investment interests in viatical and life settlement insurance policies.
In a viatical settlement, a terminally ill person sells the death benefit of his or her life insurance policy to a third party for a discounted percentage of its value. In return they receive a lump-sum cash payment. A life settlement is similar to a viatical settlement, except the seller is not terminally ill, but is a senior citizen.
In both cases, an investor would only make a profit when the insured person died, when the policy matured, or when the policy benefit was more than the price paid for policy. Any profit would be decreased by additional out-of-pocket costs, such as premium payments.
Prosecuturs say McNerney promised guaranteed returns on life insurance policies and MBC was a Ponzi scheme that raised more than $1.25 billion from approximately 30 thousand investor worldwide using fraudulent claims.
Sentencing has been scheduled for August 26th; McNerney faces a maximum sentence of five years in prison.
