Heygood, Orr & Pearson are advocates committed to bringing justice to clients against corporations that would attempt to take advantage of them. Recently, HO&P has filed several lawsuits against Waco-based Life Partners, Inc., a wholly owned subsidiary of Life Partners Holdings, Inc. (LPHI), in connection with the life settlement investments sold by the company. Life settlements are investment products which originate from life insurance policies.
Policyholders who wish to receive a cash payment for their insurance policy can sell the policy to investors, entitling the investor to receive the death benefit (i.e., face amount of the policy) that would have been paid to the policy’s beneficiary upon the owner’s death. When a policy is sold to an investor, this is called a “life settlement.”
After the policy is sold, the obligation to make premium payments to keep the policy in force passes onto the investor. Life Partners bids on policies for sale and markets them to investors who each typically purchase a fractional interest in one or more policies. Key to how much an investor should pay for an interest in a policy is the life expectancy of the person who is the insured under the policy. The shorter the life expectancy, the more valuable the policy because the death benefit will be received sooner and fewer premium payments have to be made to keep the policy in force.
In addition to paying to acquire interests in policies, Life Partners customers must also deposit funds in escrow to make premium payments during the life expectancy of the insured. Life Partners is accused of misrepresenting the value of life settlements by providing investors with incorrect life expectancies that were shorter than the actual life expectancies of the insureds under the policies.
The U.S. Securities and Exchange Commission has filed a lawsuit against Life Partners and its executives, alleging that the company committed securities fraud in misstating the value of the investments that it sold to consumers. Investors have also filed several Life Partners lawsuits alleging they were misled by the company about the value of the life settlement investments that they purchased.
Life Expectancy Lawsuits Against Life Partners, Inc.
Several lawsuits have been filed against Life Partners on behalf of investors who purchased life settlements through Life Partners. The lawsuits allege that Life Partners used inaccurate life expectancy assessments to extract exorbitant profits from its customers/investors. The lawsuits allege that Life Partners hired a physician out of Nevada (Dr. Cassidy) with no experience in estimating life expectancies to issue life expectancy estimates far shorter than the insureds’ true life expectancy. Life Partners, according to the suit, was able to use this inaccurate life expectancy estimate to convince its customers to pay far more for interests in life settlements than they were worth, thus pocketing the spread.
Heygood, Orr & Pearson has filed numerous cases on behalf of individual investors who, according to the lawsuits, were overcharged for their life settlement investments based on inaccurate Dr. Cassidy life expectancies. In fact, the lawsuits allege that in many instances, Life Partners had life expectancy estimates from legitimate companies in the business of providing life expectancy estimates, but they withheld this information from their own customers.
Life Partners Under Investigation by SEC
Life Partners Inc. is also under investigation by the U.S. Securities and Exchange Commission (SEC) due to its accounting practices and alleged bogus life expectancy estimations. In January of 2012, the SEC filed a lawsuit against Life Partners in federal court in Waco, Texas. In this lawsuit, the SEC alleges that Life Partners and their officers Brian Pardo and Scott Peden engaged in a disclosure and accounting fraud that misled the Company’s shareholders about the sustainability of Life Partners’ revenues and profit margins and consumer demand for the life settlement investments.
The lawsuit further alleged that Pardo and Peden profited from the fraud by trading on inside information that Life Partners systematically uses life expectancy estimates that the Company knows to be materially short in brokering life settlements. The SEC asserts that Life Partners engaged in this practice to artificially inflate the Company’s revenues and profit margins. Read more about the SEC lawsuit against Life Partners.
Life Settlements Lawsuits Filed by Heygood, Orr & Pearson
The lawyers at Heygood, Orr & Pearson have filed class action lawsuits against Life Partners on behalf of investors in California, Texas, and those in other states. These lawsuits have accused Life Partners of fraudulently misrepresenting the value of its life settlements investments to consumers. Investors who purchased life settlements from Life Partners may be eligible to join one of the existing lawsuit or file their case individually.
Heygood, Orr & Pearson has also filed lawsuits on behalf of life settlement companies who were unable to collect the death benefits on a life insurance policy due to wrongful claims by the life insurance company. In these cases, insurers have claimed that the policies in question were “STOLI” policies (or “stranger originated life insurance”) or that the policies carried no insurable interest.
If you or someone you know purchased a life settlements policy from Life Partners, or if your company was unable to collect insurance policy benefits related to a life settlement policy, contact the attorneys at Heygood, Orr & Pearson to learn more about how we can help with your case. You can reach us by calling toll-free at 1-877-446-9001, or by filling out our free case evaluation form.