Florida viatical firm president gets 20 years after 28,000 investors lose over $800 million
Peter Lombardi, the former president and sole shareholder of Mutual Benefits Corp. (MBC), a South Florida viatical firm, was sentenced on January 19, 2007 to 240 months in prison, followed by three years of supervised release. He had pleaded guilty on October 23, 2006 to securities fraud in a viatical and life settlement scheme in which, the U.S. Attorney's Office said, 28,000 investors lost over $800 million.
- Year
- 2007
- Where
- United States
- Outcome
- Sentenced
- Reported loss
- $800.0 million
- Victims
- 28,000
- Schemes
- Life settlement fraud
- Last reviewed
- 2026-10-28
The facts, as recorded
- Judge Paul C. Huck imposed the sentence of 240 months' imprisonment, followed by three years of supervised release.
- Lombardi pleaded guilty on October 23, 2006 to securities fraud in connection with his role in the scheme.
- According to facts he admitted, MBC principals directed an international network of sales agents and marketing directors who fraudulently induced investors to buy interests in viatical and life settlements through misrepresentations about the safety and security of the investments.
- The U.S. Attorney's Office described a viatical or life settlement as a transaction in which an investor buys an interest in a terminally ill or elderly person's life insurance policy death benefit for a lump-sum cash payment, and profits if the benefit is greater than the price paid when the insured dies. The longer the insured lives, the more premium payments must be made to prevent the policy from lapsing and becoming worthless.
- MBC also misled investors by promising to escrow enough money to pay for anticipated premiums. Given the fraudulently low life expectancies assigned by MBC's principals, it made up for insufficient premium reserves by creating an unsustainable Ponzi scheme that used premium funds from recently sold policies to pay premiums on older policies that failed to mature.
- The investigation involved the FBI and the SEC's Southeast Regional Office.
Why this case matters
It is the largest loss of the cases on this page, and the U.S. Attorney’s release sets out the mechanism that the other cases share. An investor in a life settlement is paid only when the insured dies, and until then someone must keep paying the premiums. The longer the insured lives, the more premiums are owed. MBC assigned life expectancies that were fraudulently low, according to the release, so the reserves for premiums were too small, and it used money from new sales to pay premiums on older policies.
The caveat
Lombardi pleaded guilty and was sentenced, so the conduct above is what he admitted according to the U.S. Attorney’s Office release. The release is dated January 19, 2007 and is the only source for this case on this page. It does not say how many of the 28,000 investors were elderly, how the money was spent or what happened to the other principals, and this page does not either.
Sources
- Former viatical firm executive sentenced to twenty years for role in securities fraud scheme. U.S. Attorney's Office, Southern District of Florida. Accessed 2026-10-28. Supports: Every fact above: the 240-month sentence and supervised release, Judge Huck, the October 23, 2006 plea, the 28,000 investors and $800 million, the sales network, the explanation of a viatical or life settlement, the escrow promise, the low life expectancies and the Ponzi characterization.