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Category: Life Settlements

Federal Court Sentences Texas Man For Money Laundering with Funds from Life Settlement Scheme

Federal Court Sentences Texas Man For Money Laundering with Funds from Life Settlement Scheme

A federal court in Missouri this month sentenced a Texas man to more than three years in prison for engaging in money laundering with funds coming from a fraudulent life settlements scheme, according to news reports. U.S. District Court Judge Howard F. Sachs sentence Lewis Dean McBride to three years and four months, according to a report in the Stephenville (Texas) Empire-Tribune.  The newspaper reported that McBride sold “unregistered securities in the form of viatical settlements” even “following a 2003…

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Federal Court Denies Habeas Corpus Petition and Dismisses Lawsuit Challenging Validity of Inmate’s Fraud Conviction In Connection With Viatical Investments

Federal Court Denies Habeas Corpus Petition and Dismisses Lawsuit Challenging Validity of Inmate’s Fraud Conviction In Connection With Viatical Investments

A federal court in Kentucky this month denied the habeas corpus petition brought by an inmate whose conviction arose from a fraudulent scheme involving viatical investments. In Hogan v. Butler, Civil No. 6:15-046-GFVT (E.D. Ky. Aug. 3, 2015), the court said “[e]ven liberally construing Hogan’s claims, the Court cannot grant him the relief he seeks, I.e., the vacation of his convictions for money laundering and for conspiracy to commit money laundering and release from custody, because the basis underlying his…

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Report: Business Professor Says That Without More Transparency and Other Changes, Life Settlements Market Will Either Cease of Diminish

Report: Business Professor Says That Without More Transparency and Other Changes, Life Settlements Market Will Either Cease of Diminish

“A Harvard business professor says he expects that the life settlement market will either cease to exist or diminish markedly in 10 years unless it provides more transparency into fees and investor returns, fewer layers of fees and intermediaries and better alignment of interests between life settlement providers and investors.” So begins an article appearing last month on The Deal Pipeline website (home page here).

Some of Insurer’s Counterclaims Survive Motion to Dismiss in Alleged STOLI Dispute

Some of Insurer’s Counterclaims Survive Motion to Dismiss in Alleged STOLI Dispute

Three of an insurer’s five counterclaims against a life settlements company survived a motion to dismiss, as decided by a federal court earlier this month. In Dukes Bridge LLC v. Security Life Of Denver Ins. Co., 10-CV-5491 (E.D.N.Y. June 15, 2015), the federal district court for the Eastern District of New York denied Dukes Bridge’s motion to dismiss counterclaims by Security Life for fraud, civil conspiracy, and violation of the New Jersey Insurance Fraud Prevention Act, while the court dismissed claims…

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News Stories Describe Life Settlements Developments Concerning ‘Plummeting’ Market, Texas Supreme Court Rehearing Request

News Stories Describe Life Settlements Developments Concerning ‘Plummeting’ Market, Texas Supreme Court Rehearing Request

Some recent developments in the business of life settlements have received attention from media.  In the past month, the following stories have appeared in the news: Life settlements deals “plummeted” in 2014, according to one recent news report – see Life settlement transactions plummet – Volume fell to 847 transactions, $1.65 billion in face value last year, appearing in the June 3, 2015 edition of The Deal, available here. Life Partners Holdings, Inc.’s trust companies have requested “rehearing by the…

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Divided Rhode Island Supreme Court Answers Federal Court’s Questions In Latest Chapter of Story of ‘Rapacious’ Secondary Market Scheme

Divided Rhode Island Supreme Court Answers Federal Court’s Questions In Latest Chapter of Story of ‘Rapacious’ Secondary Market Scheme

A divided Rhode Island Supreme Court last week chimed in on two certified questions involving issues of annuities, insurable interest, and incontestability clauses. In Western Reserve Life Assurance Co. of Ohio v. ADM Assocs., LLC, the Rhode Island Supreme Court, began its opinion by summing up the “rapacious investment scheme” that generated the litigation and led the First Circuit Court of Appeals to ask the certified questions: A rapacious investment scheme exploiting the complexities of certain variable annuity policies provides…

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SEC Charges California Firm With Lying About Life Settlements

SEC Charges California Firm With Lying About Life Settlements

The Securities and Exchange Commission recently charged a California retirement planning firm with falsely telling investors that interests in life settlements the company sold were “guaranteed” and “federally insured.” The SEC filed its complaint recently against Pacific West Capital Group Inc. in the U.S. District Court for the Northern District of Texas. The SEC also charged a weekly radio show host and another principal of the Pacific West Capital Group. For more, see “SEC Charges Radio Host With Lying About…

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Report: Life Partners Decision Breathes New Life into Securities Lawsuits

Report: Life Partners Decision Breathes New Life into Securities Lawsuits

The Texas Supreme Court decision in Life Partners, Inc. v. Arnold No. 14-0122, 2015 Tex. LEXIS 440 (Tex. May 8, 2015) – described here, here and here – has also received some media attention. In the decision, the highest court of the state of Texas concluded that life settlements sold by Life Partners Inc. were securities under the Texas Securities Act – a holding that is “breathing new life into lawsuits brought by the Texas State Securities Board and a putative class of…

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Texas Supreme Court Describes Life Settlements Transactions in Detail

Texas Supreme Court Describes Life Settlements Transactions in Detail

In Life Partners, Inc. v. Arnold, No. 14-0122, 2015 Tex. LEXIS 440 (Tex. May 8, 2015) (described here and here), the Teas Supreme Court held that life settlements agreements are investment contracts, and thus securities, under the Texas Securities Act. The Texas Supreme Court’s opinion includes a detailed description of the background of the cases, as well as of the life settlements business: First, the court described the procedural history: “In Life Partners, Inc. v. Arnold, Michael and Janet Arnold and others1…

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How the Texas Supreme Court, In Life Settlements v. Arnold, Concluded that Life Settlements Agreements Were Investments and Thus Securities

How the Texas Supreme Court, In Life Settlements v. Arnold, Concluded that Life Settlements Agreements Were Investments and Thus Securities

As described here, the Texas Supreme Court last week, in Life Partners v. Arnold, No. 14-0122 (Tex. 2015),  held that “a ‘life settlement agreement’ or ‘viatical settlement agreement’ is an ‘investment contract’ and thus a ‘security’ under the Texas Securities Act.” Here is recap as to how the court reached its conclusion: The Court applied the Howey/Forman test, developed by the United States Supreme Court in addressing the meaning of “investment contract” in the federal Securities Act of 1933, drawing guiding principles developed from not…

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