Case Page

 

Case Status:    SETTLED
On or around 10/22/2007 (Date of order of final judgment)

Filing Date: May 17, 2004

On October 22, 2007, the Court issued the Order signed by U.S. District Judge Federico A. Moreno granting the motion for settlement and granting the motion for attorney fees. According to the Order, the Court finds that an award of 25% of the $1,684,624.00 Settlement Fund (or $421,156.00) in attorneys’ fees would be fair and reasonable in this case. The Court finds that Class Counsel’s request to be reimbursed for $59,757.89 in expenses is reasonable, and therefore awards Class Counsel $59,757.89 for its costs in addition to the fee award.

As summarized by the Joint Motion for Final Approval of Settlement dated October 12, 2007, Lead Plaintiffs have now filed a Third Amended Class Action Complaint asserting twelve separate causes of action against fifty-one defendants. In response to the Second Amended Complaint, eight motions to dismiss were filed by twenty of the defendants. In response to the Third Amended Complaint, another five motions to dismiss were filed, supplemental by several motions for re-hearing and/or reconsideration. All of these motions were thoroughly briefed by Class Counsel. As a result of over two yeas of highly contentious litigation, all the Motions to Dismiss were resolved. Substantial settlements have been negotiated against several of the named Defendants. … The three Settlements were reached after extensive arms-length negotiations. All of the parties aggressively presented their positions, and the negotiations required continuous efforts over a number of months to bear fruit. On July 17, 2007, Lead Plaintiffs and the Receiver moved for preliminary approval of the Settlement. A hearing on the motion was held on August 6, 2007. On August 13, 2007, the Court entered a Preliminary Approval Order. The primary terms of the Lombardi settlement are as follows: First, one settlement will pay the greater of One Million Five Hundred Thousand Dollars ($1,500,000.00) or all proceeds from the liquidation of certain personal and business assets to be forfeited by one of the individual defendants. The primary terms of the other settlement are as follows: First, an individual defendant’s insurer has tendered the full amount of this individual defendant’s malpractice insurance coverage (which is a wasting policy) in the amount of Ninety Thousand Dollars ($90,000). Second, the individual defendant has agreed to contribute Fifty Thousand Dollars ($50,000) of his personal assets (most of which would be otherwise exempt from execution) towards the settlement. The primary terms of the the third settlement are as follows: First, the individual defendant will pay Forty- Four Thousand Six Hundred and Twenty Four Dollars ($44,624) within thirty (30) days of Preliminary Approval.

The original complaint alleges that Mutual Benefits and certain related parties sold unregistered securities through offering materials that failed to disclose to the class material facts regarding their investments, and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. The Complaint alleges that Mutual Benefits, together with the assistance of others, then improperly commingled and dissipated the investors' funds. The complaint charges defendants with violations of Sections 12(a)(1), 12(a)(2), and 22(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b) and 27 of the Securities Exchange Act of 1934.

Specifically, the complaint alleges that since 1994, defendants have operated or aided and abetted a billion dollar Ponzi scheme and defrauded at least 29,000 investors -- many of whom are retirees -- by issuing a series of material and misleading omissions and false statements, breaching escrow agreements and breaching their fiduciary trust to investors. The complaint alleges that defendants failed to disclose and misrepresented the following material adverse facts which were then known to defendants or recklessly disregarded by them: (1) that new investor funds were diverted to cover shortfalls on the funds escrowed to cover life insurance premiums on policies assigned to earlier investors; (2) that there were gross inaccuracies in the calculated life expectancies of viators; (3) that insurance premium escrow accounts were commingled and deficient; (4) the individual defendant's civil disciplinary backgrounds as well as $26-plus million in "consulting fees" paid to the defendant or to entities that the defendant controlled were not disclosed to investors; and (5) that MBC does not require that its sales agents be licensed, and that several of MBC's sales agents have been the subjects of state cease-and-desist orders in connection with the MBC offering.

On May 5, 2004, the United States Securities & Exchange Commission ("SEC") and federal marshals raided MBC's south Florida offices, seized the company's records and shut down MBC's operations.

The class is defined as "all persons who purchased, between 1994 and the present, interest in discounted life insurance policies known as viatical settlements from Mutual Benefits Corporation ("MBC") and were damaged thereby."

Note: Mutual Benefits Corporation is a viatical and senior life insurance settlement broker. A viatical or life settlement contract involves the sale of a life insurance policy by a terminally ill person or senior citizen (known within the industry as a "viator") at a price discounted from the face value of the policy. Investors pay the premiums, and receive the face value of the life insurance policy when the insured, or viator, dies. In turn, the viator receives a portion of the proceeds of his life insurance policy in a lump sum.

COMPANY INFORMATION:

Sector: Financial
Industry: Insurance (Life)
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol:
Company Market: Privately Traded
Market Status: Privately Held

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. Florida
DOCKET #: 04-CV-21160
JUDGE: Hon. James Lawrence King
DATE FILED: 05/17/2004
CLASS PERIOD START: 01/01/1994
CLASS PERIOD END: 05/17/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Geller Rudman, PLLC.
    197 South Federal Highway, Suite 200, Geller Rudman, PLLC., FL 33432
    561.750.3000 888.262.3131 · info@geller-rudman.com
  2. Hanzman & Criden, P.A.
    220 Alhambra Circle, Hanzman & Criden, P.A., FL 33134
    305.357.9000 305.357.9050 · info@hanzmancriden.com
  3. Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin
    25 West Flagler Street, Suite 800, Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, FL 33130-1780
    305.358.2800 ·
No Document Title Filing Date
COURT: S.D. Florida
DOCKET #: 04-CV-21160
JUDGE: Hon. James Lawrence King
DATE FILED: 09/06/2006
CLASS PERIOD START: 10/01/1994
CLASS PERIOD END: 05/04/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Carlos Velasquez, P.A.
    101 N. Pine Island Road, Suite 201, Carlos Velasquez, P.A., FL 33324
    954.382.0533 ·
  2. Hanzman & Criden, P.A.
    220 Alhambra Circle, Hanzman & Criden, P.A., FL 33134
    305.357.9000 305.357.9050 · info@hanzmancriden.com
  3. Podhurst, Orseck, P.A.
    25 W. Flagler Street, Suite 800, Podhurst, Orseck, P.A., FL 33130
    305.358.2800 305.358.2382 · info@podhurst.com
  4. Scott & Scott LLC (Connecticut)
    P.O. Box 192, 108 Norwich Avenue, Scott & Scott LLC (Connecticut), CT 06415
    860.537.5537 860.537.4432 · scottlaw@scott-scott.com
No Document Title Filing Date
No Document Title Filing Date