Life Partners Holdings Inc., a Texas company that sold fractional life- insurance investments to nearly 30,000 people, was found liable for revenue- recognition fraud and several other allegations filed by federal regulators in a civil lawsuit, but the federal jury found for the defense on more sweeping fraud claims involving the company's underlying business practices, according to an attorney for the company.
The jury verdict in the Securities and Exchange Commission's civil case against Life Partners Holdings was returned late Monday evening, and further details weren't immediately available.
Elizabeth Yingling, an attorney for Life Partners, said the defendants, who included the company and two executives, had moved to have the remainder of the claims dismissed as a matter of law. "It was a definite win for our client," said Ms. Yingling.
A government attorney said "we won on most of the claims," and said the civil-fraud revenue recognition claim on which the jurors found in the SEC's favor was "a lead" claim in the case.
S. Cass Weiland, an attorney for one defendant, Life Partners' general counsel, R. Scott Peden, said the verdict was a "resounding win for the company and the individuals." An attorney for Life Partners' CEO, Brian Pardo, another defendant in the case, didn't respond to emails requesting comment.
The verdict came after two days of juror deliberations, which followed a four-day civil trial in U.S. District Court in Austin, Texas. The verdict was read out in court on Monday evening but hadn't yet been filed in electronic court records.
The SEC sued Life Partners in early 2012, alleging a years-long disclosure and accounting fraud, centered on what the agency claimed were the company's misleading marketing practices in selling its life-insurance investments to individual investors. The company and the individuals denied the allegations.
Life Partners, of Waco, Texas, has been a major player in the secondary market for life insurance, in which investors buy the right to receive death benefits. The original policyholder gets a lump sum upfront, while the investors continue to pay premiums, betting they will eventually collect more than they spend.
write to Mark Maremont at mark.maremont@wsj.com
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(END) Dow Jones Newswires 02-04-14 0120ET Copyright (c) 2014 Dow Jones & Company, Inc.
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