Russ Klenet Was Owned By Joel Steinger

We have the latest on lobbyist Russ Klenet, his wife Broward County Mayor Stacy Ritter, his former boss Joel Steinger, and the Mutual Benefits fraud saga. 

And it basically shows that Klenet, when he purchased Life Settlements International, was acting as a straw man for Steinger, the con man and convicted felon who had been forbidden from doing business by the SEC. After Klenet stepped in as the owner of LSI, Steinger oversaw the his work and guided him from afar. My favorite part of the story is this e-mail Klenet wrote to Steinger about the company: "I stay awake at night thinking about these things. Trust me I am not complaining. I can only imagine what juggling you have to go through just to stay alive. I will do everything to make this work."

Klenet claimed he spent so much time with Steinger and communicated with him so much about the business because he was good friends with him, adding oddly, "we didn't date." He talks about Steinger coming to he and Ritter's New Year's Eve Party and swimming with his kids in Steinger's pool and learning everything he could from the long-time con man, whom he and his former assistant, Aaron Scavron, sometimes called "uncle."

This contadicts Mayor Ritter's public comments about Steinger. She claims Steinger gave her the "creeps" (apparently when he wasn't paying $117,000 to renovate her home). And last week she said in a condo meeting that her husband was in it with Steinger just for a "paycheck."

Somebody's lying -- but that's getting to be par for the course for the conflict-ridden Broward's First Couple. The story also outlines Klenet friend and former client Mark Ginsburg's role in the company and shows how, in the end, Klenet appears to have ripped off the Steinger clan.

Below is an excerpt from the story. 

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A source close to Steinger says that Klenet wasn't his first choice to lead the new company. The source says he initially wanted to install then-Senate Minority Leader Steve Geller as the owner. Geller was a close friend of Steinger's who introduced him to Klenet.

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"Steinger was going to put Steven Geller in as head of that company, but he changed his mind and put Klenet on there instead," says the source, who has firsthand knowledge of the business and requested anonymity. "He felt Geller better served him in Florida."

Geller, who is now running for a seat on the Broward County Commission, admits that he advocated for Steinger and Mutual Benefits in Tallahassee, but only because he thought Steinger was a "good guy." He admitted to me that he was approached about having an unspecified role in the new company but said it never got to the "serious discussion stage."

"Did I know Joel? Absolutely," he said. "But Joel knew a lot of people. He knew the cabinet members; he knew a lot of legislators."

In the 2007 deposition, Klenet explained that he took on the role with the new company in part because he had no criminal record and could avoid scrutiny that former Mutual officials could not. The plan was for the company to broker insurance policies for international investors so LSI could skirt the same SEC rules that had caused the downfall of Mutual.

"We thought there might have been at that point quite frankly an opening in the world," Klenet said during the 2007 deposition. "You know, Mutual was the largest life settlement company in the world, and they were no longer doing business, so somebody needed to do business."

Klenet tried to downplay Steinger's role in his new company. But court records indicate that Steinger pulled the strings behind the scenes, even after the SEC forbade him from engaging in the viatical business.

The felon's fingerprints were all over the deal, beginning with the money used to purchase LSI at a total cost of $1.65 million. The brunt of the money Klenet used to buy the company, for instance, was traceable to Steinger and Mutual Benefits. Steinger's brother, Steven Steiner, and Steiner's life partner, Henry Fecker, loaned Klenet the original $950,000 payment for the company, all of it coming from ill-begotten Mutual Benefits profits, according to court records.

Klenet still owed $750,000 for the company, an amount that was to be paid in three installments. Steiner and Fecker picked up the first $250,000 installment. They also loaned Klenet another half million for expenses, including an office and apartment in New York where Klenet worked and slept, according to court records and sources.

Those who know Steinger say his little brother, Steiner, did nothing businesswise without his approval. Federal prosecutors indicted both brothers in December on fraud and money-laundering charges.

During the deposition in Steinger's divorce case, attorney Hayden established that Steinger oversaw LSI's efforts and that Klenet used numerous former Mutual employees to staff the new business, including sales agents and executives.

For instance, Klenet hired former Mutual staffer Anita Love to form the company's "anti-money laundering program" to ensure that the company took only clean investments. In the deposition, Klenet slipped and said the company formed a "money laundering program."

"Excuse me a second," interrupted Klenet's attorney, Michael Moskowitz. "You don't mean the company needed a money laundering program."

"Did he say money laundering?" asked Diana Steinger's attorney, Don Hayden.

"Yeah," answered Moskowitz. "I don't want to go from a civil deposition to other matters."

Mutual Benefits had, after all, laundered millions in illicit Colombian drug profits.

Click here to read full story.

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