Life Partners LLC Under SEC Investigation for Life Settlements

Life Partners Holdings – Viatical Settlements Lawsuit

The law firm of Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor, PA is offering free claim evaluations to investors who believe they may have been damaged by Life Partners Holdings, Inc. (LPHI).  The Waco, Texas financial services company is under SEC investigation for its method of estimating life expectancies when matching investors with “life-settlements.”  An article in The Wall Street Journal reported that the 10% or 15% yearly returns promoted to Life Partners' clients may prove intangible for many investors. 

For example, Sean Turnbow, a Texas client, paid additional premiums on two life-settlement policies he bought in 2006. "I was under the impression that their physicians made very conservative estimates with life expectancies, and that doesn't appear to be the case."

Victims of Life Partners Holdings, Inc or LPHI’s practices may have better legal alternative’s for recovering losses than the current class-action law suit filed against Life Partners Holdings, Inc. To find out if you have a case, please fill out our brief claim evaluation form and a member of our staff will contact you.

Importance of Life Expectancy in Viatical Settlements

Viatical settlements allows people to invest in another person’s life insurance policy. Generally, the investments are made on life-insurance policies of terminally ill patients and the elderly. Investors collect when the insured person dies.

Life Partners Holdings arranges for investors to buy fractions of various insurance policies, which are held like any stock or bond investment.  The WSJ investigation found that many of the insured people are living beyond Life Partner’s life expectancy estimate, reducing the return on investment. In fact, the Journal found that insured people outlived Life Partners' projections about 90% of the time for policies sold from 2002 through 2005.

Projections of how long the insured might live are a critical part of the investment equation. Life Partners can generally charge more for policies that come from sellers’ with a short expected life span because investors expect a faster payout. If the policyholder lives longer than estimated, the investor must continue paying insurance premiums and the payout is delayed.

Jacqueline Keller of Colorado said she is still paying premiums on pieces of two policies she bought from Life Partners in 1996 on AIDS patients. She said her investment was, in part, to help the original owners in their final months.  She says, "every time I get a bill in the mail, I get ticked off."

How does Life Partners Holdings Earn Fees?

According to The Wall Street Journal, Life Partners has sold 6,400 policies with a face value of $2.8 billion to 27,000 clients since its 1991 founding.  LPHI earns fees by connecting sellers of life insurance policies with investors who agree to front the money for the life insurance premiums. Investors pay fees upfront in exchange for receiving the policy payout amount once the policyholder dies. In its most recent fiscal year, the firm reported receiving an average of $308,000 in fees from 201 policies sold.

In 2002, a third of the 297 policies sold by Life Partners had a life expectancy of two years or less on the insured person.  All but a handful of others had a life expectancy of four years or less.  That means, by the end of 2009 almost all of the policyholders should have met their life expectancy and died.  Instead, 283 of the 297 policyholders were still alive with investors waiting for their viatical settlement to “mature.”

Shares of LPHI dipped by $2.61, or about 17 percent, to $12.43 after Life Partners Holding, Inc. confirmed the SEC investigation. Today the stock trades for less than $10 per share. In December 2010, and prior to news articles from The Wall Street Journal, the LPHI stock traded as high as $18.34.

Legal Help from Life Settlement Attorneys

A Securities and Exchange Commission task force in July noted, "the SEC has brought a number of successful actions alleging fraud in connection with life-settlement securities." It said misrepresentation of life expectancies was an alleged problem in many cases.

Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor, PA is currently offering free evaluations to investors who may be a victim of life expectancy predictions made by Life Partners Holdings Inc.  As our investigation continues, we want to hear from investors who have been affected.

Levin Papantonio investment fraud lawyers represent victims of stockbroker and investment fraud and other financial fraud. Often, victims of stock broker fraud have lost a significant portion of their life savings and we understand it may be impossible to recover. As a result, victims of stock broker and investment fraud deserve strong and effective representation.

Related News:

Life Partners Sued by SEC

January 4, 2012

The Securities and Exchange Commission sued Life Partners Holdings Inc. and three top executives, alleging a years-long disclosure and accounting fraud that involved misleading financial statements and backdated documents shown to auditors.

SEC Probes Company Over Life-Span Data

January 31, 2011

The Securities and Exchange Commission is investigating Life Partners Holdings Inc., a Waco Texas, company that has arranged for investors to buy several billion dollars of life-insurance policies from their original owners, according to four people who have been contracted recently by the agency.

Life Partners Will Change Sales Pitch

January 27, 2011

A company that arranges for individual investors to buy pieces of strangers' life-insurance policies is altering the way it sells to those investors, amid growing scrutiny of the firm's practices.

Life Partners Uses Law Firm With Close Ties to Hold Client Funds

January 13, 2011

Hundreds of millions of dollars held in escrow for clients of a firm that buys and sells life-insurance policies for investors are being looked after by a small law firm with limited experience in that role and close ties to the company. Legal experts say the arrangement is unusual but not improper.

Odds Skew Against Investors Bets on Strangers' Lives

December 21, 2010

In the summer of 2005, a firm called Life Partners Holdings Inc. said Marvin Aslett, an Idaho rancher 79 years old, had two to four years to live. Marvin Aslett, 84, has outlived a longevity estimate given to investors in his life insurance by Life Partners.