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Category: Life Settlements

Life Partners Bankruptcy Provides Litigator with Strange Day in Court

Life Partners Bankruptcy Provides Litigator with Strange Day in Court

Law360 publishes a regular series of articles about lawyers’ unusual or interesting experiences.  Last month, the publication ran a piece entitled “My Strangest Day In Court: The Life Partners Bankruptcy”, by Texas attorney Joseph Wielebinski.  Among his observations were the following: In 1992, Life Partners Inc. (LPI) began developing a multilevel marketing network to sell a life insurance derivative known as a ‘viatical.’  . . . . These life insurance products essentially pit investors against life insurance companies.  The investors…

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‘Coma’ Meets ‘The Big Short’: Financial Advice Columnist Opines That Life Settlements Business Seem to Attract ‘Fraud and Financial Blowups’

‘Coma’ Meets ‘The Big Short’: Financial Advice Columnist Opines That Life Settlements Business Seem to Attract ‘Fraud and Financial Blowups’

The life settlements industry “seems to attract both fraud and financial blowups” and should be avoided by investors. So says a financial advice columnist, Michael Taylor, who points to the fraud and “financial blowups” as the rationale to avoid the investment, rather than the “ick factor” of investing in death. In his July 7 column, he also says that he “decided long ago that when I write my first novel – a financial thriller obviously – the main plotline will involve a hedge…

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SEC, Life Settlements Company Settle Claims Over Ponzi-Style Scheme

SEC, Life Settlements Company Settle Claims Over Ponzi-Style Scheme

The Securities and Exchange Commission this month announced that it had reached a settlement with Verto Capital Management and one of its officers over charges that the company “used new investor money to repay earlier investors in Ponzi-like fashion and tapped investor funds for the CEO’s personal use”, according to a press release from the SEC. Said the SEC: “Verto Capital Management and William Schantz III raised approximately $12.5 million selling promissory notes to purportedly fund Verto Capital’s purchase and sale…

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New York Court Affirms Fine Imposed on Agent/Broker Concerning Misleading Advertisements, Other Conduct in Viatical Sales

New York Court Affirms Fine Imposed on Agent/Broker Concerning Misleading Advertisements, Other Conduct in Viatical Sales

The Appellate Division of the New York Supreme Court affirmed a determination that a licensed agent/broker for a viatical company, Mutual Benefits Company, was to be fined for engaging in misleading life settlement sales practices. In re Nichols, 523289, 2017 N.Y. App. Div. LEXIS 1869 (A.D. Mar. 16, 2017), is the opinion where the appellate court affirmed the hearing officer’s decision to fine agent/broker Richard Nichols.  The court focused a portion of its opinion on the basics of viatical transactions: [A] viatical settlement…

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Life Settlement Companies Among Those ‘Scrambling’ to Comply with New York’s New Complex Cybersecurity Reglations, Says Report

Life Settlement Companies Among Those ‘Scrambling’ to Comply with New York’s New Complex Cybersecurity Reglations, Says Report

“Life settlement companies are scrambling to meet complicated cybersecurity rules imposed by a New York regulator,” reports The Deal in an article entitled “Market Players Scramble to Meet New York Cybersecurity Rules”. The article describes the New York State Department of Financial Services’ cybersecurity rules that went into effect March 1 and are aimed a protecting private personal information of individuals from cyber threats, and how the rule gives companies holding such information – including banks and other financial service…

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Investment in Viatical Deal Leads to Lawsuit Lifespans Last Longer Than Expected

Investment in Viatical Deal Leads to Lawsuit Lifespans Last Longer Than Expected

A dispute over an investment in viaticals will be litigated in New York, rather than California, a federal court decided last week. And in deciding to transfer the matter to the federal court for the Southern District of New York, the court in Amberger v. Legacy Capital Corp., Case No. 16-cv-05622-JSC, 2017 U.S. Dist. LEXIS 8392 (N.D. Calif. Jan. 20, 2017), also shed some light on what happens when an investment in viaticals goes bad – due to the fact that…

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Lawyer Pleads Guilty to Wire Fraud Count in Life Settlements Scam, Say Reports

Lawyer Pleads Guilty to Wire Fraud Count in Life Settlements Scam, Say Reports

A Connecticut lawyer has pleaded guilty to wire fraud charges arising from a life settlements scam, according to news reports based on information from the U.S. attorney’s office. The criminal investigation was focused on a scam whereby the lawyer and others offered senior citizens the promise of free life insurance for two years, after which the policies would be sold. One report, Connecticut Lawyer Admits To Role In Life Insurance Scam (available here), says lawyer David Quatrella pleaded guilty this week to a single count of…

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Court Grants Rescission in Stranger-Originated Life Insurance Lawsuit

Court Grants Rescission in Stranger-Originated Life Insurance Lawsuit

A plaintiff’s lawsuit seeking to enforce a stranger-originated life insurance policy resulted instead in a court ruling in favor of the insurer seeking to rescind the policy. In addition, the court in Ashkenazi v. AXA Equit. Life Ins. Co., 115034/07, 2016 NY Slip Op 31882(U), Supreme Court, New York County, N.Y. (N.Y. Sup. Ct. Oct. 5, 2016), denied the plaintiff’s motion to dismiss the insurer’s counterclaim for fraud. The lawsuit was filed by plaintiff Alexander Ashkenazi as Trustee of the…

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Judge Approves Life Partners Reorganization Plan

Judge Approves Life Partners Reorganization Plan

A federal judge last week gave his approval to a reorganization plan for Life Partners Holdings Inc., a life settlement company that filed for bankruptcy last year following reports that the company has engaged in allegedly fraudulent practices – practices that were described by the Wall Street Journal earlier this year as “one of the largest frauds in Texas.” Under the reorganization plan, another life settlement company, Vida Capital, would take over and several thousand investors would have the option to cancel or keep their…

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In STOLI Scheme, Court Correctly Calculated $2.6 Million Restitution Amount, Says U.S. Appeals Court

In STOLI Scheme, Court Correctly Calculated $2.6 Million Restitution Amount, Says U.S. Appeals Court

A man convicted of mail fraud in connection with a stranger-owned life insurance scheme must pay $2.6 million in restitution, a federal appeals court affirmed earlier this month. The U.S. Court of Appeals for the Fifth Circuit on October 5 said that the district court judge properly applied the law to the calculation of losses by insurance companies and lenders that were victims of the man’s STOLI scheme. A summary of the opinion, U.S. v. Bazemore, No. 15-10805 (5th Cir. Oct….

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