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MBC Managers Sentenced To Five Years For Role In $826 Million Securities Fraud
R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (“FBI”), announced that defendants Carol Traina and Bari Wiggins were sentenced today to five (5) years’ imprisonment, followed by three (3) years probation by United States District Judge Paul C. Huck in Miami. The defendants were also ordered to pay approximately $826 million in restitution to MBC investors. Traina and Wiggins were employee-managers at Mutual Benefits Corp. (“MBC”), a viatical and life settlement company that was closed by federal regulators in May 2004. On February 27, 2007, Traina and Wiggins each pled guilty to an Information charging one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. §371 in connection with MBC’s billion dollar securities offering.
According to the Information, Traina, as MBC’s Office Manager, assisted MBC’s principals with the management of an international network of sales agents and marketing directors. Under her supervision, MBC’s sales agents misrepresented the safety and security of the investments that MBC offered and sold. Traina also admitted to a role in the creation and distribution of false and misleading life expectancy letters that misrepresented the health condition of insureds underlying MBC’s life insurance policies.
Under the supervision of MBC’s principals, Wiggins managed MBC’s Policy Services Department. In this position, Wiggins oversaw the acquisition of insurance policies. Wiggins admitted that she acquired MBC’s insurance policies, knowing that sales agents were misleading investors about the safety and security of MBC’s investments. Wiggins further admitted that she helped MBC fraudulently obtain certain group insurance policies, which also placed investors at risk of losing their money. Read more at fbi.gov.
Definition:
(1) A strategy involving the simultaneous purchase and sale of options of the same class and expiration date, but different strike prices. In a bear spread, the option that is purchased has a lower delta than the option that is bought. For example, in a call bear spread, the purchased option has a higher exercise price than the option that is sold. Also called Bear Vertical Spread. (2) The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a decline in prices but at the same time limiting the potential loss if this expectation does not materialize.
Accrued interest
Definition:
Interest deemed to be earned on a security but not yet paid to the investor.
Systemic Risk
Definition:
The risk that a default by one market participant will have repercussions on other participants due to the interlocking nature of financial markets. For example, Customer A’s default in X market may affect Intermediary B’s ability to fulfill its obligations in Markets X, Y, and Z.
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