Defendants Plead Guilty to $826 Million in Securities Fraud

The FBI put an end to another scam today when defendants in an $826 million securities fraud conspiracy pleaded guilty in federal court in Miami.

The defendants, Raquel Kohler, Ameer Khan, and Stephen Ziegler, pleaded guilty to one count of conspiracy. Kohler also pled guilty to one count of perjury.

Here is how the scam worked. It involved a viatical and life settlement company, Mutual Benefits Corp. ("MBC") that was closed by the government in 2004. This is a type of company that seeks investors to purchases an interest in a terminally ill or elderly person's life insurance policy death benefit in return for a lump-sum cash payment. The policy holder gets the lump sum and the investor gets the policy. If the patient dies and there is more money in the policy than the investor paid for it, then the investor makes money. If the patient lives and more payments have to be made into the policy, the investor loses. It is perfectly legal unless you do what the defendants did with their company, Mutual Benefits Corp.

Their sales agents and marketing materials fraudulently offered investors "safe" investments in "secure" life insurance policies. This type of investment is far from safe. It is very high risk. They did not stop at this, which would have been enough to be arrested. The policies they offered were policies that could not be bought and sold. They also pressured doctors into making false life expectancy figures, making it appear that patients were terminal when they were not and mismanaging escrowed premium funds in an unsustainable "Ponzi" scheme.