Feds: Crist Ally Falsely Claimed He Thwarted Probe Of Insurance Company

The Miami Herald runs down the back-story to the indictment of Alan Mendelsohn, the Florida doctor and lobbyist — and close ally of Governor Charlie Crist — who’s been charged with running fraudulent lobbying and political fundraising schemes.

Mendelsohn’s alleged crimes center around his ties to Mutual Benefits Corp., a Fort Lauderdale life insurance company which was being investigated by the state for defrauding investors. Mutual Benefits operates by selling the life insurance policies of people dying of AIDS and other diseases — a line of business that, a recent New York Times report suggested, may replace sub-prime mortgages as the basis for the next investment bubble.The charges against Mendelsohn are complex, but in a nutshell, prosecutors allege that Mendelsohn raised money — both for himself and candidates — by falsely claiming that he had influenced state officials to end an investigation into Mutual Benefits.

The Herald explains:

The investigation was launched by the Justice Department in 2007 after Mutual Benefits’ former chief, Joel Steinger, told the FBI that he and Mendelsohn had conspired to hinder the state crackdown on the firm, sources familiar with the probe have told The Miami Herald. Steinger alleged that Crist and others in Crist’s inner circle tried to help him and his top executives in their effort.

Crist was attorney general during the period in question. Crist, his former chief of staff George LeMieux (who Crist recently appointed to the U.S. Senate) were previously cleared of wrong-doing.

Steinger has told prosecutors that Mendelsohn portrayed himself as a “rainmaker” who could use his political influence to help Mutual Benefits. Mendelsohn raised about $2 million from the company and others for various political candidates, including Crist.

But at some point Steinger began giving prosecutors incriminating information on Mendelsohn, in an effort to get a better deal for himself, it appears. So in 2007, Mendelsohn himself began talking to the FBI, claiming that he had won over Crist, LeMieux, and another aide to go easy on Mutual Benefits.

In a secretly recorded call to LeMieux, Mendelsohn talked about how he had raised a large amount of money to help Mutual Benefits. LeMieux grew suspicious, thinking that Mendelsohn might be trying to implicate him. The governor’s office called the FBI, and soon, Mendelsohn himself was the target of the probe…