A Fort Lauderdale attorney was sentenced to five years in federal prison for his role in a giant Ponzi scheme that defrauded thousands of investors out of nearly $1 billion. United States District Judge Adalberto Jordan sentenced Michael J. McNerney, 63, to the maximum sentence possible for wire fraud. McNerney was the former lead attorney for Mutual Benefits Corp., a viatical settlement broker shut down by the SEC in 2004 and accused of operating a giant Ponzi scheme.
Mutual Benefits solicited investors to purchase viatical settlements and life insurance policies, pitching guaranteed returns on policies purchased by elderly and terminally ill individuals. From 1994 to 2004, more than $1.25 billion was raised from 30,000 investors. Prosecutors indicted McNerney in December 2008 on twenty-five counts in association with his role as outside counsel for Mutual Benefits. The indictment was later dropped when McNerney pled guilty to a single count of conspiracy to commit mail and wire fraud and agreed to aid authorities in their investigation against other Mutual Benefits executives. In his role as outside counsel, McNerney acknowledged concealing from regulators the involvement of one executive's criminal past that included a fraud conviction. McNerney also failed to stop the company from making false representations concerning the company's prowess at estimating life expectancies.
McNerney is the tenth individual to be convicted for a role in the scheme. Along with the sentence, he was also ordered to pay $826 million in restitution to victims at a rate of 10% of future income. Three top executives have pled not guilty and are currently scheduled to stand trial in 2013.