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Law360 (March 19, 2020, 6:16 PM EDT) -- Attorneys for the former CEO of Mutual Benefits Corp. currently serving a 20-year sentence for orchestrating an $837 million insurance investment scam are asking a Florida federal court to release him, saying that given his age and medical ailments, COVID-19 could kill him in prison.
At the time of his sentencing in August 2014, Joel Steinger spoke of his many medical ailments in a bid to have his sentence reduced. In a motion filed Wednesday, his attorneys say his condition has only worsened in the five years he's spent in prison, and that while they have been unable to contact him amid the pandemic, they believe he may be close to dying in prison.
Steinger, now 70, was denied an early release from the Federal Medical Center Butner in North Carolina in January, with the Bureau of Prisons concluding that while he meets the criteria for early release, doing so would minimize the severity of his offenses.
"Whatever the merits of that decision when it was made in January, it is manifestly erroneous at a time when Mr. Steinger's increased exposure to coronavirus in prison — a petri dish of viral contagion — could easily terminate his life given his advanced age and significant preexisting conditions," his attorneys said. "Mr. Steinger was not given a death sentence for his nonviolent crime, nor does he deserve one."
According to his attorneys, Steinger's list of medical conditions include spinal stenosis, chronic neck and back pain, heart disease, sleep apnea, obesity and Hodgkin lymphoma. His ailments have left him bedridden and requiring total care in all aspects of his daily life, they say.
Those conditions put him at high risk of death from COVID-19, particularly in a prison environment, which is at increased risk of exposure, Steinger's attorneys said.
In addition to the "extraordinary and compelling" reasons to release him for the sake of his health, Steinger fits other criteria for early release, his attorneys said, as he is not a danger to the community, nor is he likely to commit an offense again.
"Even in the realm of sheer speculation it is impossible to conceive of the harm such a man poses to the community, except perhaps to its conscience if it allows a man to die in prison in such circumstances," his attorneys said.
And shortening his sentence is unlikely to be seen as a disparity with the severity of his crime, the attorneys argued, noting that one of his co-conspirators was sentenced to five years for his role in the scheme.
"It is sheer nonsense to contend that the release of a 70-year-old man suffering from countless severe medical conditions during the heart of a pandemic outbreak will somehow encourage future white collar criminals," the attorneys argued.
An attorney for Steinger declined to comment, saying the brief speaks for itself. Representatives for the prosecutors could not immediately be reached for comment Thursday.
Steinger pled guilty in March 2014 to one count of conspiracy to commit mail and wire fraud in a 2008 indictment against him for the investment fraud and to the same count in a 2012 indictment against him for health insurance fraud.
The MBC life settlement scheme stretched a decade, from 1994 to 2004, raising more than $1.25 billion from about 30,000 investors worldwide and squandering more than $800 million of it, according to prosecutors.
The company sold investments called viatical and life settlements worldwide. The investors took responsibility for an insured's premiums in exchange for an upfront cash payment representing a discounted portion of the policy's face value or death benefit. The investors, who in return hoped to collect a windfall when the insured died, relied on accurate life-expectancy projections because their profits diminished the longer the insured lived, according to case documents.
In the 2012 case, Steinger and others were accused of forming a shell company called Royal Oak Farms LLC and claiming to incorporate a fictitious company called Blue Hill Trading Inc. for the purpose of fraudulently obtaining group health insurance for themselves.
Steinger is represented by Rebekah J. Poston of Squire Patton Boggs LLP and Nicholas D. Smith of David B. Smith PLLC.
The U.S. was represented by Karen E. Rochlin of the U.S. Attorney's Office for the Southern District of Florida as of May 2015.
The case is United States of America v. Steinger, case number 1:08-cr-21158, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Nathan Hale. Editing by Alanna Weissman.
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