The life settlements company Life Partners Holdings is facing lawsuits from the Securities and Exchange Commission and the Texas attorney general’s office—as well as several class action lawsuits and individual lawsuits filed by individuals. These lawsuits have alleged that Life Partners deliberately mislead investors about the value of the investment products sold by the company, which are known as life settlement agreements.
Life settlements are life insurance policies that are sold by the insured individuals for a cash settlement that is less than the face value of the policy. When the insured individual dies, the benefit from the insurance policy is paid to the company or individual who purchased it, rather than to the family of the insured. The value of a life settlement policy is determined in large part by the life expectancy of the insured individual—the shorter the individual’s life expectancy, the more valuable the life settlement investment becomes.
Lawsuits filed against Life Partners and its executives allege that they deliberately misled investors about the life expectancy of the individuals covered by life insurance settlements sold through the company. According to these allegations, Life Partners hired a doctor in Nevada to provide shorter-than-actual life expectancies for these policies, making them appear more valuable than they actually were. The lawsuits also allege that Life Partners already possessed prior to hiring the Nevada doctor life expectancy assessments from reputable companies in the business of providing such assessments, but that the company withheld this information from investors.
In January 2012, the SEC filed a lawsuit against Life Partners and its executives, charging them with securities fraud in connection with the company’s business of marketing these life settlement investments. The SEC alleged that the company engaged in a disclosure and accounting fraud that misled the company’s shareholders about the sustainability of revenues and profits. The suit alleged that by underestimating the life expectancy of the insureds on the policies, the company and its executives artificially inflated revenues and profits, but that this was not disclosed to stockholders. The suit also alleged that Mr. Pardo and Mr. Peden, two of the company’s executives profited from this fraud by trading company stock on inside information as to how the company was able to achieve such large profits.
The Texas state attorney general’s office also filed a Life Partners lawsuit in September 2012. This suit alleges that the company used fraudulent practices in connection with the offer for sale of the life settlement investments. The lawsuit asserts that Life Partners used artificially and contrived short life expectancies to create the perception that the life settlements had higher values. Attorney General Greg Abbott compared the tactic employed by Life Partners to those of a used car salesman who rolls back the odometer on a vehicle.
The law firm of Heygood, Orr & Pearson has also filed lawsuits against Life Partners on behalf of investors in Texas, California, and those nationwide. Investors who purchased a life settlement agreement from the company may be eligible to join one of the Life Partners lawsuits filed by the firm.
For a free legal consultation and to find out if you are eligible to file a case, contact the lawyers at Heygood, Orr & Pearson by calling toll-free at 1-877-446-9001. You can also reach us by filling out the free case evaluation form located on this page, and one of our representatives will be in touch with you as soon as possible to discuss your case.