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Category: Life Settlements

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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Lawsuit Alleges Fraud by Viatical Company

Lawsuit Alleges Fraud by Viatical Company

A recent published report says that a viatical company has been sued for misrepresenting the life expectancy information. Said the report: A jazz musician who invested $20,000 in two viatical policies 18 years ago with Legacy Capital Corp. has sued, claiming a non-board certified physician dying of AIDS had backdated a life expectancy report. The story, appearing under the headline Musician Sues Legacy Capital Over $20K Viatical Investment, Alleging Fraud, explains that musician Christopher Amberger filed a lawsuit this month…

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Federal Appeals Court Rules Against Insurer In STOLI Case

Federal Appeals Court Rules Against Insurer In STOLI Case

A recent news report explained that a “federal appellate court said Sun Life Assurance Co. of Canada has to pay bad faith damages for refusing to pay a $6 million death benefit, handing a victory to the life settlement market.” The report, Appellate Court Says Sun Life Must Pay Bad Faith Damages In $6M STOLI Case, appeared in the October 14, 2016 edition of The Deal Pipeline. The report further described that the “Wednesday, Oct. 12, decision by the U.S….

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In Life Partners Bankruptcy Proceeding, Wall Street Journal Describes Difficult Decisions, ‘Rotting Fish’ Deal

In Life Partners Bankruptcy Proceeding, Wall Street Journal Describes Difficult Decisions, ‘Rotting Fish’ Deal

The Wall Street Journal publishes detailed articles this week and last week on the Life Partners, Inc., bankruptcy proceeding, with a piece first on the difficult decisions faced by individuals who invested in the company, and later on the bankruptcy judge’s concerns about one of the possible successor deals. Last week’s report describes savvy investors saying that it is tough to understand the pros and cons of various options offered by the bankruptcy court.  The full article, Life Partners Customers Face…

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In Case Where Key Issue Was Whether A Life Settlement Is A Security, Texas Appeals Court Affirms Award

In Case Where Key Issue Was Whether A Life Settlement Is A Security, Texas Appeals Court Affirms Award

Last year, the Texas Supreme Court concluded that life settlements agreements in a case before it were investments and therefore securities. This year, a Texas Court of Appeals case looked at a similar set of facts and concluded there was no reason to distinguish the case from the Texas Supreme Court opinion. In Matlock v. Hill, the Court of Appeals of Texas, Seventh District (Amarillo), affirmed an award of damages based on claims of “fraud arising under both the Texas…

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U.S. Supreme Court Declines to Take Appeal of Criminal Convictions in STOLI Scheme

U.S. Supreme Court Declines to Take Appeal of Criminal Convictions in STOLI Scheme

News outlets report that the U.S. Supreme Court has declined to take the appeal of an insurance broker and two other defendants sentenced to prison for defrauding insurance companies through a $100 million stranger-originated life insurance (STOLI) scheme. The Second Circuit Court of Appeals had upheld the criminal convictions of Michael Binday and two other life insurance agents; the three defendants had sought for the U.S. Supreme Court to take up their appeal. The Supreme Court denied certiorari on Monday, June…

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Court: Connecticut Man Guilty in STOLI Scheme

Court: Connecticut Man Guilty in STOLI Scheme

A federal court this week concluded that a Connecticut man was guilty of mail fraud, money laundering and other charges arising from a stranger-originated life insurance (STOLI) scheme. In U.S. v. Carpenter, Case No. 3:13-CR-226(RNC), 2016 U.S. Dist. LEXIS 78300 (D. Conn. June 6, 2016), U.S. District Court for the District of Connecticut held that the federal government had sustained its burden of proof to show that Daniel Carpenter was guilty of mail and wire fraud, civil conspiracy, money laundering, and…

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Washington State Offficials Find that Life Partners Sold Unlicensed Securities

Washington State Offficials Find that Life Partners Sold Unlicensed Securities

Washington state financial regulators last month determined that Life Partners, Inc., offered and sold unlicensed securities when engaging in its life settlements business. The State of Washington’s Department of Financial Institution’s Securities Division entered an order in a proceeding against Life Partners and others, concluding as follows (according to the summary available on the Department’s web site): In the Final Order, the Securities Division finds that [Brian] Pardo, as CEO of Life Partners, Inc. & Life Partners Holdings, Inc., offered and…

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