Peter Lombardi, the former president of Mutual Benefits, was sentenced to 20 years
in federal prison today for his role in defrauding some 28,000 investors out of
nearly $1 billion.
Lombardi pleaded guilty in October to one count of securities fraud. His prison
sentence doesn’t begin until April 9.
Mutual Benefits purchased the life insurance policies of the sick and elderly and
then sold the policies to investors. Authorities alleged the company defrauded
investors by using bogus life expectancies in determining when the insured would die
and using new investors’ money to pay off earlier ones.
In 2005, Lombardi agreed to pay about $6 million to settle civil charges brought by
the Securities and Exchange Commission. He neither admitted nor denied the SEC’s
allegations.
The SEC said the insurance investments Mutual Benefits sold were securities subject
to regulation. A federal judge later agreed.
Source: Miami HeraldÂ
