My Florida C F O

Dear Fellow Floridians:

People commit acts of fraud for many reasons, but we’ve come to learn that any and all of these reasons boil down to one thing: greed. Greed drives men and women to lie, to cheat, and to steal from other honest and hard-working Floridians.

The Greed Report: The Tricky World of 'Life Settlements'A few months ago we helped bring fraud to life by participating in a national television program that focused on our law enforcement efforts to drive down personal injury protection (PIP) fraud in our state. This week, our office’s efforts will once again be showcased on a national stage. This Friday, another Division of Insurance Fraud investigation will appear as the focus of an episode of CNBC’s hit show "American Greed."

Since 1998, the Division of Insurance Fraud has been on the forefront of investigation that has been instrumental in successfully combating fraud in the viatical industry. The most commonly known aspect of the viatical industry is something known as a viatical settlement. A viatical settlement is an arrangement in which someone, most commonly with a terminal illness, sells his or her life insurance policy to a third party for a cash value less than the total policy benefit. The third party or investor gets the full amount of the policy when the original owner passes away—the shorter the life expectancy, the higher the rate of return and the higher the purchase price of the policy.

It’s clear why this type of investment can be risky: while life expectancies can be estimated, it is impossible to know when someone will die. Viatical settlements became increasingly popular during the mid-1990s and early 2000s, during the height of the HIV/AIDS epidemic. As treatment options became more widely available, patients were willing to buy and cash in their life insurance policies in order to gain access to much-needed funds for treatment.

CNBC The case that will be featured is about a man named Joel Steinger and his company, Mutual Benefits Corporation, which during the course of several years, bilked viatical settlement investors out of more than $800 million.

Between 1994 and mid-2004, Steinger and Mutual Benefits purchased life insurance policies from people suffering from HIV/AIDS or other chronic illnesses and then sold the policies to investors. By offering a projected rate of return with an apparent low risk, the policies were popular among investors. Problems grew when Mutual Benefits misrepresented facts associated with the transactions. For example, by lying about the life expectancies of the policyholders, Steinger and his business partners could make the policies appear more valuable than they were.

Ultimately, Steinger became the operator of one of the largest Ponzi schemes in U.S. history. New investor money was used to pay premiums on existing life insurance policies rather than purchase new policies as they represented to investors. But by buying policies and selling them to new investors without ever reimbursing a vast majority of investors, Steinger lost only the initial, partial cash value paid during purchases of the existing policies. All of the other funds padded none other than Steinger and his business partners’ pockets. A lavish South Florida lifestyle—ripe with mansions, fancy cars and material possessions as far as the eye could see—is what Steinger and his associates enjoyed.

That is, until their scheme unraveled. Steinger, already a convicted felon, hid behind a figurehead company owner in order to obtain a license to conduct business in Florida. When investors began to cry foul, our state auditors seized records and Steinger’s kingdom fell to its knees. From policy salesmen to the crooked doctors who signed off on false life expectancies to the marketers who convinced the ill to sign on and the business partners who reaped the benefits, this fraud ring fell hard.
Division of Insurance Fraud Badge
In a case that brought together insurance auditors, state regulators and law enforcement expertise, Steinger and his cohorts landed where they belonged—behind bars. The case was later brought to the federal level and ultimately influenced public policy built to protect policyholders and investors.

It’s a tricky ride, and I hope you’ll tune in to see this story. The show airs this Friday, October 23rd at 10PM ET on CNBC. To read more about viatical settlements and the upcoming show, check out CNBC’s featured story here.


Jeff Atwater
Chief Financial Officer
State of Florida

Inside Florida's Bottom Line: Current Edition

Florida's Bottom Line: International TradeAs the ever-innovating world economy continues to diversify and expand, Florida must continue to make strategic investments in order to remain a key player in major global trade lanes. These investments are already at work deepening our ports to accommodate larger ships and strengthening rail lines to increase the speed at which goods flow through our state. Additionally, with the completion of the Panama Canal Expansion Project, Florida is poised to capitalize on one of the largest international trade advancements in modern time.

This edition of Florida’s Bottom Line highlights Florida’s growing presence as a hub for international trade, and its readiness to grow alongside global markets. Inside, you will find commentary from international trade experts in Florida, an update on Florida’s economy, and the facts behind why Florida remains one of the most business-friendly states in the U.S.

Florida's Bottom Line website keeps you up-to-date on Florida's economy and finances in between quarterly editions of CFO Atwater’s economic magazine

Florida Economic Briefs

Florida’s unemployment rate drops to a 7-year low
The unemployment rate in Florida dropped to 5.2 percent in September, down 0.2 percentage points from August (5.4 percent) and down 0.6 percentage points from a year ago (5.8 percent). The U.S. unemployment rate was 5.1 percent in September.
Source: Bureau of Labor Statistics

Venture capital investment in Florida increases by over 300 percent
In the third quarter of 2015, Florida attracted over $150 million in venture capital investments, up 310 percent from the third quarter of last year ($36.7 million). Venture capital is money provided to entrepreneurial companies to facilitate growth and is indicative of a growing economy.
Source: National Venture Capital Association

Stop Adult Financial Exploitation

Operation S.A.F.E.Florida Chief Financial Officer Jeff Atwater invites you to participate in Operation S.A.F.E., Be Scam Smart, a free workshop for seniors, their families, and caregivers.

The Florida Department of Financial Services launched Operation S.A.F.E. (Stop Adult Financial Exploitation) as part of CFO Atwater’s On Guard for Seniors initiative. Be Scam Smart workshops help inform, empower, and protect Florida’s seniors from financial scams and fraud. If you want to make sure your savings are protected, register for this workshop and get a better understanding of how scam artists and scams work.

Be Scam Smart by learning more about:

  • The Psychology of a Scam
  • How to Spot Fraudulent Behavior
  • Common Scams that Target Seniors
  • How to Fight Identity Theft
  • Resources to Keep You Safe

Find out more about us in the About Us section or Register for an upcoming event, including the following workshop:

  • Friday, November 6th - Milton
    12:30 p.m. – 1:30 p.m. CST
    Santa Rosa Medical Center
    6002 Berryhill Road, Milton, Florida 32570
    Register | Directions | Flyer