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MIAMI---A Miami Beach medical doctor, once associated with Mutual Benefits Corp., has admitted to securities fraud in connect with his role in a viatical and life settlement scheme in which 28,000 investors lost approximately $956 million.
Mitchell, 49, pleaded guilty in federal court to conspiracy to commit health care fraud in connection with his employment at Community Healthcare/Center One Inc., a South Florida AIDS clinic.
As part of his plea agreement, Mitchell will be sentenced to 10 years in prison and be fined over $5 million. Mitchell also agreed to be responsible for approximately $367 million in restitution payable to MBC investors, and more than $500,000 of restitution for the health care fraud. Sentencing is scheduled for March 7.
Mitchell has also agreed to cooperate in the government's investigation of MBC and former firm employees. Federal authorities have accused MBC of defrauding investors out of nearly $1 billion between 1994 and 2004.
According to the facts admitted by Mitchell, MBC's principals directed an international network of sales agents and marketing directors who fraudulently induced investors to purchase interests in viatical and life settlements through a series of material misrepresentations concerning the safety and security of the investments.
A viatical or life settlement is a transaction in which an investor purchases an interest in a terminally ill or elderly person's life insurance policy death benefit in return for a lump-sum cash payment. An investor in a viatical or life settlement realizes a profit if, when the insured dies and the policy matures, the policy benefit is greater than the price paid for the policy. The longer an insured lives, the more premium payments must be made to prevent the policy from lapsing and becoming worthless.
MBC's sales agents and marketing materials falsely led investors to believe that MBC's policies were safe by claiming that an "independent" state-licensed physician would determine a life expectancy after evaluating the insured's health condition. Instead, fraudulently low life expectancies figures on thousands of policies were by dictated by MBC's principals to doctors, including Mitchell. Investors were then sent letters and affidavits which falsely claimed that the doctor completed a review of the insured's medical condition to determine the life expectancy assigned to the policies. During his association with MBC, Mitchell signed more than 5,000 of these fraudulent letters and affidavits.
Federal prosecutors said MBC also misled investors by promising to escrow enough money to pay for anticipated insurance premiums. However, given the fraudulently low life expectancies dictated to Mitchell by MBC's principals, MBC compensated for insufficient premium reserves by creating an unsustainable "Ponzi" scheme that used premium funds from recently sold policies to pay premium obligations on older policies that failed to mature.
In connection with his guilty plea to conspiracy to commit health care fraud, Mitchell also admitted that from 1996 through May 2001, while he served as medical director of an AIDS clinic called CenterOne, he and others fraudulently inflated Medicare bills by more than $500,000 by falsely claiming that AIDS patients received more extensive treatments than had actually been provided at the clinic.
Victims/investors may obtain information concerning this case, or submit victim impact statements concerning this case at http://www.usdoj.gov/usao/fls/VictimWitness.html 12-29-06
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© 2006 North
Country Gazette
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