Law360, New York (October 28, 2015, 6:13 PM ET) -- Life Partners Holdings Inc. Chapter 11 trustee H. Thomas Moran II on Wednesday hit 30 defendants with a $92 million fraudulent transfer suit, accusing them of fibbing about the value of policies controlled by the bankrupt life insurance concern as they sold interests to investors.
The top-grossing seller, defendant James Sundelius, took in more than $13.1 million in fees and commissions, according to the adversary proceeding, which claims fraudulent transfers.
The complaint, and a $41 million filing targeting former Life Partners CEO Brian Pardo, are part of Moran's broad recovery effort before Ft. Worth, Texas, U.S. Bankruptcy Judge Russell F. Nelms.
The sellers — referred to as licensees — "aggressively marketed the fractional interests mainly to investors with little or no expertise ... and wholly concealed from these investors that Life Partners held industry-standard life expectancy estimates that predicted the insured would likely live longer," the suit says.
Policies tied to shorter life expectancies are typically more valuable.
Commissions paid to the sales team sometimes exceeded the price of the policies, the complaint says.
The suit says other top-paid licensees include BG&S Management Consultants, Life Insurance Settlements Inc., Life Settlement Exchange LLC, American Safe Retirement LLC and Advances Settlement LLC. They were paid amounts ranging from more than $10 million to about $6 million, court filings say.
The suit against Pardo, lodged in September, seeks an order for Pardo to pay back nearly $6 million in compensation and bonuses and more than $35 million in dividends he allegedly took out of Life Partners, as well as disallowing Pardo's Chapter 11 claims.
Life Partners hit Chapter 11 in January in an effort to buy time while it appeals a $47 million judgment in a case brought by the U.S. Securities and Exchange Commission against the company, Pardo and others.
Since then, Pardo has attacked the trustee as being too close to the SEC.
Attempts to reach several of the licensee-defendants were unsuccessful on Wednesday.
The trustee is represented by David M. Bennett, Richard B. Roper and Jennifer R. Ecklund of Thompson & Knight LLP.
The defendants are listed as representing themselves.
The adversary proceeding is Moran v. Sundelius et al., case number 4:15-ap-4087, in the U.S. Bankruptcy Court for the Northern District of Texas. The bankruptcy is In re: Life Partners Holdings Inc., case number 4:15-bk-40289, in the same court.
--Editing by Kelly Duncan. All Content © 2003-2015, Portfolio Media, Inc. |
