In an unusual move, the Securities and Exchange Commission filed civil securities fraud charges against a disbarred Fort Lauderdale attorney whos already serving a five-year sentence for his role in the $1.25 billion Mutual Benefits viatical scam.
Former attorney Michael J. McNerney was sentenced last August on his guilty plea to fraud conspiracy.
The SEC complaint also relates to the Mutual Benefits scam that fleeced 29,000 investors.
McNerney has agreed to a permanent injunction against him, though an SEC news release does not spell out the details. The commission does say injunctions against others in the scam have resulted in $30 million in civil penalties.
Mutual Benefits infamously bought life insurance policies of the elderly and dying at a discounted price, counting on cashing them in for full value when the policy owners died. Mutual Benefits focused partly on those infected with the HIV virus, but AIDS ceased to be a death sentence for many policy holders new treatments were developed and the company couldnt capitalize on its investments.
Federal regulators said Mutual Benefits became nothing more than a Ponzi scheme by the time it collapsed in May 2004.
McNerney was a founding partner of the Fort Lauderdale law firm formerly known as Brinkley McNerney Morgan Soloman & Tatum.
He served as the primary securities regulatory counsel for Mutual Benefits from 1995 to 2004.
The SEC complaint alleges McNerney helped conceal the fraud, met with investors and supervised the filing of false reports with state regulators.
SEC civil complaints often are the first sign that federal agencies have targeted a fraud, and criminal charges often follow months or years later. The order is reversed in the McNerney case.
