Life Partners Life Settlements
Life Partners Life Settlements Policy Holder Lawsuits
Life Partners Holdings | Lawsuits, Lawyers | Life Settlements, Viatical Settlements | SEC Investigation, Investor, Fraud Scam
Parker Waichman LLP is currently offering free consultations to investors who may be a victim of Life Partners life expectancy estimates of insured individuals. Life Partners Holdings Inc., a Texas company that has arranged for investors to buy several billion dollars worth of life-insurance policies, "life settlements", from their original owners. Recently, questions have been raised about the way Life Partners Holdings has estimated the life expectancies of insured individuals. These estimates—a way that they calculate how long the people might have to live—are a crucial part of the investment equation.
Our securities fraud lawyers are currently offering free consultations to Life Partner Holdings investors. The U.S. Securities and Exchange Commission (SEC) is reportedly investigating the methodology Life Partners Holding’ uses to estimate life expectancies. Recent media reports have also indicated that this methodology may be faulty. If this is the case, investors who trusted Life Partners Holdings may be entitled to compensation. If you believe you overpaid for a Life Partners Holdings investment, please contact our securities fraud lawyers to protect your legal rights.
Life Partners Holdings Life Expectancy Estimates
Companies like Life Partners Holdings arrange to buy life-insurance policies from individuals, and sell fractional interests to investors, who collect the death benefits when the insured people die. According to The Wall Street Journal, Life Partners says it has sold 6,400 policies with a face value of $2.8 billion to 27,000 clients since its 1991 founding. Clients typically put several years of future premiums into escrow when making their initial investments. Life Partners Holdngs promotes yearly returns of 10 to 15 percent, according to the Journal.
Life Partners Holdings' projections of how long the insured might have to live are a crucial part of the investment equation: The shorter an insured’s life span is expected to be, the more Life Partners generally can charge investors for that policy. If the insured lives longer than is estimated, the payout is delayed, and investors must keep paying premiums as the person lives on.
According to The Wall Street Journal investigation, those big returns promoted to Life Partners' investor clients may prove elusive for many: "In 2002, for instance, Life Partners brokered investments in 297 life policies. Actuaries say if life-expectancy calculations on a group of people are well done, half should die by their projected dates. But in 95% of these policies, the insured was still alive at the end of the life expectancy the company supplied to investors. Policies brokered in 2003 and 2004 show similar patterns."
According to the Journal piece, Life Partners Holdings gets life expectancy estimates “from a doctor in Reno, Nev., who has testified for a court case that he never checks the accuracy of his prior predictions."
Life Partners Holdings Escrow Practices
In a separate article, The Wall Street Journal also raised questions about the small law firm Life Partners Holdings uses to hold its clients' money is escrow. The escrow agent plays a key role in these types of investments, taking money from clients to procure the policies and pay the premiums, then collecting the death benefits for clients when the insured person dies.
According to the Journal, Life Partners tells clients their money is being looked after by a "third party, independent escrow agent." In 2008, Life Partners stopped using a bank for this function, replacing it with Waco law firm Dunnam & Dunnam LLP. Dunnam & Dunnam oversees about $220 million in client funds, according to the Journal.
Under Texas law, firms like Life Partners Holdings are required to use an independent escrow agent. But the Journal investigation has raised questions about the relationship between Life Partners and Dunnam & Dunnam, and the firm's qualifications.
According to the Journal, Dunnam & Dunnam is a nine-member general practice law firm. Its website doesn't even mention insurance matters. What's more, before becoming Life Partners’ escrow agent, Dunnam & Dunnam represented the firm in other matters - something that wasn't disclosed to Life Partners' investors when the law firm took over the escrow job, according to the Journal. Among other things, one of the partners in Dunnam & Dunnam reported owning at least 12,500 shares of Life Partners stock at the end of 2009.
According to the Journal article, Life Partners responded that the Dunnam & Dunnam partners were in the process of forming a state-chartered trust company to take over the escrow function, in part to "eliminate any kind of concerns that exist." Life Partners also said it would switch its escrow services on February 1, 2011 to this new Dunnam-run trust company.
Legal Help for Life Partners Holdings Investors
Our securities fraud lawyers are aggressively investigating the practices of Life Partners Holdings, and we want to hear from investors who feel they may have been misled because of faulty life expectation predictions made by Life Partners Holdings. To discuss the legal remedies open to you, please fill out our online form or call 1-800-YOURLAWYER (1-800-968-7529) today.