The doctor accused of signing off on bogus life expectancies for investment firm Mutual Benefits Corp. pleaded guilty in Miami federal court Wednesday to securities and health care fraud.
As part of a plea deal, Dr. Clark Mitchell agreed to cooperate in the government’s investigation of Mutual Benefits and former firm employees. Federal officials accuse Mutual Benefits of defrauding investors out of almost $1 billion between 1994 and 2004.
Prosecutors and Mitchell’s attorneys agreed to recommend a 10-year prison term at the physician’s sentencing on March 7. Mitchell, 49, of Miami Beach, also agreed to pay restitution to Mutual Benefits investors.
“He’s remorseful and has decided to accept responsibility and cooperate with the government to make amends,” said Neal Sonnett, Mitchell’s attorney.
As part of the plea agreement, Mitchell also admitted he defrauded Medicare out of more than $500,000 as medical director of the now defunct Community Healthcare CenterOne, in the 2800 block of Oakland Park Boulevard. He is serving a 33-month sentence on unrelated Medicare fraud charges.
Prosecutors said Mutual Benefits purchased life insurance policies from elderly and terminally ill people, including many AIDS patients, and sold shares of the anticipated death benefits to investors around the world, promising returns as high as 72 percent. The investments, known as viatical or life settlement contracts, would become profitable if the insured died within a certain period of time.
Mitchell admitted he misled investors by signing more than 5,000 letters and affidavits containing predicted life expectancies for individuals insured under policies obtained by Mutual Benefits. In reality, Mitchell never reviewed the medical files of the insured people and rubber-stamped life expectancies dictated by another firm principal, said prosecutor Ryan O’Quinn.
Those projections determined the rate of return promised to investors. For instance, buying a policy of a person estimated to live three years brought a promised 42 percent return.The company raised money from more than 18,000 investors, who lost roughly $367 million between 1995 and 2001, the years Mitchell worked for Mutual Benefits, O’Quinn said. Only 5 percent of the investments sold by Mutual Benefits matured on time and 80 percent of those insured are still alive, he said.
Mutual Benefits was put under the control of a court-appointed receiver in 2004 after the U.S. Securities and Exchange Commission filed a civil fraud suit against the firm.
In October, former president Peter Lombardi pleaded guilty to securities fraud and is to be sentenced Jan. 19.
Vanessa Blum can be reached at or 954-356-4605.
