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MIAMI — The sole shareholder of one of the largest death benefits companies pleaded guilty Monday, as part of a plea agreement, to a securities fraud scheme that cheated investors out of $956 million. Peter Lombardi, a founding partner of the now defunct Mutual Benefits Corp., agreed to cooperate with authorities and is responsible for $956 million in restitution to the more than 28,000 investors, the Miami U.S. Attorney’s Office said in a statement. Prosecutors also agreed to seek no more than 20 years in prison and a fine of up to $5 million, the statement said. Lombardi, of Fort Lauderdale, committed fraud in the sale of viatical settlements, in which investors buy life insurance policies at a discount from the terminally ill or elderly people in need of cash. The investors collect the benefit when the insured person dies. Investors could pick policies that were projected by a doctor to pay off in one, two or three years. According the SEC complaint, the Fort Lauderdale company guaranteed fixed returns of 12 percent, 28 percent and 42 percent respectively. As of Sept. 30, the insured people had lived longer than projected, which decreased the value of the investment for about 90 percent of the active policies. The SEC also said 74 percent of the policies didn’t have enough premium money in escrow to keep the policies from lapsing, so the company used money from new investors and to make payments on the old accounts. “Peter Lombardi and other MBC executives preyed on investors’ compassion for others while they sought only personal gain,” FBI Special Agent In Charge Jonathan Solomon said in a statement. “Securities fraud cases have an impact on so many people, and in this case, the effects were felt worldwide.” Lombardi’s attorney, Jon May, said his client is doing all that he can to make amends. “Mr. Lombardi deeply regrets the harm that came to the investors of Mutual Benefits Corporation,” May said. “He is cooperating with the U.S. Attorney’s Office in its ongoing investigation.”

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