Judge closes inquiry into secret filings in Mutual Benefits Corp. case
By Vanessa Blum | South Florida Sun Sentinel
2:08 PM EDT, March 25, 2009
MIAMI – Over objections from area newspapers, a federal judge today closed a court hearing on secret filings in a case stemming from one of South Florida’s biggest frauds.
U.S. District Judge Adalberto Jordan said he would consider releasing the secret documents and a transcript of the hearing, in whole or in part, after weighing concerns raised by the South Florida Sun Sentinel and the Miami Herald.
The newspapers are trying to break through a wall of secrecy surrounding the latest criminal charges related to Mutual Benefits Corp., a now defunct Fort Lauderdale investment firm.
Federal prosecutors accuse the firm’s founders and lawyers, all Broward County residents, of running a giant Ponzi scheme that bilked investors worldwide out of more than $800 million.
The business dealt in viatical investments, the trading of life insurance policies. Mutual Benefits largely dealt in policies held by elderly or terminally ill people, including many AIDS patients.
Since January, more than two dozen documents in the criminal case have been filed under seal, shielding the records from the public.
Under federal law, that is generally not permitted and can violate the Constitution.
Defendants Joel Steinger, Steven Steiner, Michael McNerney, and Anthony Livoti Jr., have pleaded not guilty to charges of conspiracy, fraud and money laundering.
Neither defense lawyers nor federal prosecutors have publicly explained what the sealed filings pertain to or why they should be kept secret.
Deanna Shullman, an attorney representing the Sun Sentinel, told Jordan that federal law gives members of the public and media representatives the right to view court records, barring extraordinary circumstances.
In a motion, Shullman stated that secrecy in such a high-profile case would create rumors and raise questions about the integrity of the justice system.
"Greater access is the best medicine to restore the public’s faith and confidence in these proceedings," Shullman stated.
Following arguments from Shullman and Herald attorney Scott Ponce, Jordan closed the hearing to the public. He said he would rule in the coming weeks.
"There are a lot of difficult and thorny issues here," Jordan said. "I’m doing my best to navigate my way through."
Jordan received the case in January after two other federal judges stepped aside, citing undisclosed conflicts of interest. In addition, two officials in the U.S. Attorney’s Office have recused themselves from involvement in the prosecution.
The Mutual Benefits case has also drawn interest because the company had deep ties to elected officials in Broward County.
From 2002 to 2004, the firm and its allies donated more than $1.4 million to politicians and political groups, according to Sun Sentinel reports.
Steinger, one of the founders of Mutual Benefits, had a close relationship with the husband of current Broward County Mayor Stacy Ritter. Russ Klenet, Ritter’s husband and one-time lobbyist for Mutual Benefits, has been sued for $2 million by Steiner and his domestic partner over an allegedly unpaid loan.
Vanessa Blum can be reached at vblum@SunSentinel.com or 954-356-4605.