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Category: Life Settlements

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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Federal Appeals Court Affirms Lower Court Ruling in STOLI Dispute That Allowed Insurer to Rescind Policy, Keep Premiums

Federal Appeals Court Affirms Lower Court Ruling in STOLI Dispute That Allowed Insurer to Rescind Policy, Keep Premiums

  A federal appeals court last week affirmed a district court’s decision that an insurer could both rescind a policy that was part of a stranger-originated life insurance scheme, and could keep the policy premiums. In PHL Variable Ins. Co. v. The Sheldon Hathaway Family Ins. Trust, Nos. 15-4028, 15-4029, 2016 U.S. App. LEXIS 7315 (10th Circuit April 22, 2016), the federal Court of Appeals for the Tenth Circuit affirmed the decision by the U.S. District Court for the District of…

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Federal Court Rejects Claims of Investors Who Declined to Join Settlement Resulting from Viatical Company’s Receivership

Federal Court Rejects Claims of Investors Who Declined to Join Settlement Resulting from Viatical Company’s Receivership

A federal court in Ohio rejected the claims of six investors who declined to join the settlement of claims involving the receivership of a viatical company. Six investors had decided not to join the investors’ settlement. The court described the case as follows: Starting in 1997 and continuing for about six years, 4,000 or so people invested in LifeTime Capital, Inc.  At the time of the investments, LifeTime appeared to be in the legitimate business of selling financial interests in…

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Texas Securities Board Disciplines Forth Worth Investment Adviser Over Life Settlement Investments

Texas Securities Board Disciplines Forth Worth Investment Adviser Over Life Settlement Investments

The Texas State Securities Board entered an order revoking the securities registration for a Fort Worth investment adviser who the Board found to have engaged in fraudulent practices. The Board said that James Poe sold life settlement investments to investors who “were informed in writing that their investments would be used to pay ‘all associated costs’” but there was no written disclosure detailing these costs that included a 10% commission to Poe and an entity he owned. The Board also…

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