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Category: Life Settlements

Federal Appeals Court Affirms Restitution Order for STOLI Investors

Federal Appeals Court Affirms Restitution Order for STOLI Investors

A victim of a crime “may not be denied restitution simply because the victim had greedy or dishonest motives, so long as the victim’s intentions were not in pari materia with” the criminal defendant who had been convicted of crimes relating to a stranger-originated life insurance (STOLI) scheme. That’s the way this JD Supra writer put it, describing a decision last month from the Second Circuit Court of Appeals to affirm an order of restitution in U.S. v. Quatrella, 17-1786-cr,…

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Texas Appeals Court Affirms Decision Turning Away Viatical Investor’s Claims

Texas Appeals Court Affirms Decision Turning Away Viatical Investor’s Claims

A Texas court of appeals yesterday affirmed a trial court’s decision rejecting claims, by an investor in viaticals, against life insurance agents who procured more than $70,000,000 worth of life insurance policies – investments that resulted in losses of more than $3 million. In Jessen v. Duvall, No. 14-16-00869-CV, 2018 Tex. App. LEXIS 1369 (Tex. Ct. App. Feb. 22, 2018), the Texas Court of Appeals, Fourteenth District (Houston), held that the investor had standing to bring claims that included fraud and…

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Claims Against Viatical Company Dismissed, Claim against Agent Survives In Lawsuit Over Deal Where – 20 Years After $20,000 Investment – Viators Are Still Alive

Claims Against Viatical Company Dismissed, Claim against Agent Survives In Lawsuit Over Deal Where – 20 Years After $20,000 Investment – Viators Are Still Alive

And, as if on cue given the U.S. News & World Report story (here) about how investors run a serious risk if an insured lives longer than expected, a federal court in New York issues a ruling in a lawsuit involving a 1998 viatical investment. “Nearly twenty years later, the viators are still alive, and plaintiff is without any return on his investment,” said the court in Amberger v. Legacy Capital Corp., 17 Civ. 532(NRB), 2017 U.S. Dist. LEXIS 171816…

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Life Settlements As ‘Morbid’ Investments: ‘An Asset and A Liability’

Life Settlements As ‘Morbid’ Investments: ‘An Asset and A Liability’

A U.S. News and World Report article about life settlements includes a warning from an A.M. Best managing director of insurance-linked securities about how “A life settlement isn’t just an asset; it’s an asset and a liability.” The most significant risk to investors, the article indicates, “is that the insured lives longer than expected and investors end up paying more in premiums than they receive from the death benefit.” The article, “The Morbid Niche of Life Settlement Funds” by Coryanne…

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New York Times: Life Settlements Businesses No Longer Targeting Only the Very Affluent

New York Times: Life Settlements Businesses No Longer Targeting Only the Very Affluent

A New York Times article says that life settlements industry industry, “which previously targeted the very affluent, has begun courting middle class” life insurance policy owners. The article provides a first-hand account of obtaining a quote, as well as commentary about the business, and also points out that – in response to questions about life settlement business practices, such as undisclosed broker commission rates – “43 states have adopted life-settlement regulations, usually requiring that companies be licensed and consumer disclosures.”…

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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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