Waco Based Life Partners Holdings, Inc.–Future Uncertain

December 22, 2014-Waco, Texas

Life Partners Holdings, Inc. , the Waco company that has been a pioneer in selling interests  in life insurance policies on the  lives of third parties to investors (also known as a “viatical settlement”) was recently ordered to pay $15 million in illegal profits and penalties of $23.7 million, by U.S. District Court Judge James Nowlin. In his ruling, Nowlin noted that the company has “at best a casual attitude” toward securities laws.

In a recent SEC action, Brian Pardo, CEO and founder was hit with a civil penalty of $6.2 million and general counsel and secretary of Life Partners Holdings, R. Scott Peden was ordered to pay a penalty of $2 million.

Business Model of Life Partners Viatical Settlements

The investment model is relatively simple. Using money raised from investors, Life Partners buys the rights to the proceeds of a life insurance policy from an individual who is generally elderly and/or ill, by paying something less than the death benefits of the policy, and the investor agrees to continue making the premium payments until the person dies. Upon death, the investor receives a portion of the insurance proceeds, less fees.

For example, consider the situation described in the Wall Street Journal in a 12/21/2010 article. In summer of 2005, Life Partners investors bought a $2 million policy on the life of Marvin Aslett, who was then 79. At the time the investors were told that he had 2 to 4 years to live. Had he died during as projected at the time the policy was purchased, investors would have realized a tidy return. Unfortunately for the investors,  (and of course fortunate for Aslett and his beloved family) at the time of the WSJ article, Aslett was  alive and well at age 84 , while the investors in the policy were  paying premiums .

Life Expectancies Routinely Underestimated

Obviously if the person on whose life the policy is written dies sooner than projected life expectancy, the investors realize a more favorable return since they pay less in annual premiums and reach payout quicker. This makes the accuracy of the prediction of the longevity of the insured (the actuarial prediction) extremely important.

According to the WSJ article, as well as the allegations in Stone, et al v Pardo, Life Partners, et al pending in the Western District of Texas, those life expectancies are provided to Life Partners by a single person, Dr. Donald T. Cassidy, of Reno Nevada, who is paid a monthly retainer of $15,000, plus $500 for every life policy he assesses.

The allegations are that Cassidy’s life expectancy calculations regularly conclude a life expectancy substantially shorter than the longevity projected by independent firms, a factor that works in favor of Life Partners since it results in a quicker payout, fewer premiums to pay and a greater return to the investor, making it much easier to sell. The Stone case alleges that Cassidy’s predictions are routinely inaccurate in favor of the company and cite a  study in which 283 of 297 policies the insured outlived Cassidy’s predictions, sometimes by as much as twice as long. Thirty-four percent lived triple the estimate of Cassidy per the Stone complaint.

Recourse for Investors

If you invested in Life Partners on the recommendation of your broker or broker dealer or a registered investment advisor you may be able to recover damages. Financial professionals have a duty to perform due diligence on the products they sell and to make recommendations that are suitable given the age, health and level of financial sophistication of the investor. Call to discuss your rights with an experienced securities attorney.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors in Texas and  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Losses on Oil Stocks – Oil ETFs and ETNs May Be Recoverable

December 21, 2014

Earlier this week oil fell to nearly $54 a barrel, its lowest level in over five years and down nearly 50% since the start of 2014.  Naturally those holding investments directly related to the price of crude have suffered significant losses. If you are among that group, you are not alone.

The Wall Street Journal reported this week that some very savvy investment gurus, including Carl Icahn , have been hit hard by the sudden and unanticipated decline. Icahn’s investment in Talisman Energy stands to lose nearly $300 million at the time of this writing.

Stockbrokers and investment advisers have a duty to make suitable recommendations  to their customers. If you or one of your loved ones has suffered a significant loss on an investment related  to the price of crude oil, you would be wise to consult with a knowledgable professional  regarding the suitability of that recommendation.

Crude related investments take many forms, including:

  • Oil stocks- most obvious are Royal Dutch Shell (RDSA), ExxonMobil (XOM), Chevron (CVX) are the most obvious but there are literally hundreds of publicly traded oil stocks, including Icahn’s big bet Talisman Energy.
  • Structured Products- Structured products are generally only suitable for sophisticated investors. Various structured investments related to the price of crude oil & natural gas have been marketed in recent years, including exchange traded notes (ETNs) and exchange traded funds (ETFs). These type of  investments  include:

Exchange Traded Funds

 

  • AXEN – iShares MSCI ACWI ex US Energy Sector Index ETF
  • CHIE – Global X China Energy ETF
  • DBEPowerShares DB Energy ETF
  • EMLP – First Trust North American Energy Infrastructure ETF
  • ENFR – Alerian Energy Infrastructure ETF
  • ENY – Claymore/SWM Canadian Energy Income ETF
  • ERX – Direxion Daily Energy Bull 3X Shares ETF
  • ERY – Direxion Daily Energy Bear 3X Shares ETF
  • FILL – iShares MSCI Global Energy Producers Fund
  • FXN – First Trust Energy AlphaDEX ETF
  • ICLN – iShares S&P Global Clean Energy Index ETF
  • IPW – SPDR S&P International Energy Sector ETF
  • IXC – iShares S&P Global Energy Sector ETF
  • IYE – iShares Dow Jones US Energy Sector ETF
  • JJE – iPath DJ-UBS Energy Total Return Sub-Index ETN
  • OGEM – EGShares Energy GEMS ETF
  • ONG – iPath Pure Beta Energy ETN
  • PSCE – PowerShares S&P SmallCap Energy Portfolio
  • PUW – PowerShares WilderHill Progressive Energy ETF
  • PXE – PowerShares Dynamic Energy Exploration & Prod ETF
  • PXI – PowerShares Dynamic Energy ETF
  • RGRE – RBS Rogers Enhanced Energy ETN
  • RJN – ELEMENTS Rogers International Commodity Energy ETN
  • RYE – Rydex S&P Equal Weight Energy ETF
  • UBN – UBS E-TRACS CMCI Energy Total Return ETN
  • VDE – Vanguard Energy ETF
  • XLE – Energy Select Sector SPDR

Natural Gas ETFs

 

  • DCNG – iPath Seasonal Natural Gas ETN
  • DDG – The Short Oil and Gas ProShares ETF
  • FCG – First Trust ISE-Revere Natural Gas ETF
  • BOIL – ProShares Ultra DJ-UBS Natural Gas ETF
  • KOLD – UltraShort DJ-UBS Natural Gas ETF
  • FRAK – Market Vectors Unconventional Oil & Gas ETF
  • GASL – Direxion Daily Natural Gas Related Bull 3X Shares ETF
  • GASX – Direxion Daily Natural Gas Related Bear 3X Shares ETF
  • GASZ – ETRACS Natural Gas Futures Contango ETN
  • GAZ – iPath DJ AIG Natural Gas TR Sub-Index ETN
  • IGAS – Global Natural Gas Small Cap Equity ETF
  • MLPG – UBS E-TRACS Alerian Natural Gas MLP Index ETN
  • NAGS – Teucrium Natural Gas Fund
  • UNG – United States Natural Gas ETF

Crude Oli ETF’s 

 

  • BARL – Morgan Stanley S&P 500 Crude Oil Linked ETN
  • BNO – United States Brent Oil Fund
  • DBO – PowerShares DB Oil ETF
  • DNO – United States Short Oil Fund ETF
  • DTO – PowerShares DB Crude Oil Double Short ETN
  • DUG – UltraShort Oil & Gas ProShares ETF
  • IOIL – Global Crude Oil Small Cap Equity ETF
  • FRAK – Market Vectors Unconventional Oil & Gas ETF
  • OIH – Market Vectors Oil Services ETF
  • OIL – Goldman Sachs Crude Oil Total Return ETN
  • OILZ – ETRACS Oil Futures Contango ETN
  • OLEM – iPath Pure Beta Crude Oil ETN
  • OLO – PowerShares DB Crude Oil Long ETN
  • SCO – ProShares UltraShort DJ-AIG Crude Oil ETF
  • SZO – PowerShares DB Crude Oil Short ETN
  • USO – United States Oil Fund ETF
  • USL – United States 12 Month Oil Fund ETF
  • UHN – United States Heating Oil Fund ETF
  • UCO – ProShares Ultra DJ-AIG Crude Oil ETF
  • DDG – The Short Oil and Gas ProShares ETF
  • CRUD – Teucrium WTI Crude Oil Fund
  • WCAT – Jefferies TR/J CRB Wildcatters Expl& Prod Equity ETF
  • FOL – FactorShares 2X Oil Bull/S&P500 Bear ETF
  • SNDS – Sustainable North American Oil Sands ETF

If you suffered significant losses on oil related investments, contact us to discuss your legal options.

 

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Michael Egan Indicted for Securities Fraud

December 18, 2014-Charlotte, North Carolina

The NY Daily News reports that Michael F. Egan III was indicted for securities and wire fraud by a grand jury in Charlotte, North Carolina. According to the report he is charged with operating a scheme from 2007 to 2012 in which he convinced investors he was a close associate to the CEO of a major bank and that the owned interests in famous hotels in Las Vegas. Investors were led to believe they were investing land development and TV shows, but instead Egan spent the money on personal expenses.

Earlier this year Egan filed high profile suits accusing ‘X-Men” director Bryan Singer and other Hollywood executives of abusing him as a teenager.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Non-Traded REIT Empire of Nicholas Schorsch Feeling Pressure

December 19, 2014

According to a recently filed lawsuit against Nicholas Schorsch by Lisa P. McAlister,  ex-chief accounting officer, Schorsch ordered subordinates to manipulate financial results of his firm American Realty Capital Properties (ARCP) and tried to pin the blame on her. 

The Wall Street Journal reports that McAlister alleges Schorsch instructed her and former CFO Brian Block to shift numbers to cover up errors and that she repeatedly expressed concerns about the directive, including an email to Grant Thornton, the real estate investment trusts auditor, but that her concerns were ignored.

Her suit is against Schorsch, American Realty Capital Properties and David S. Kay, , who suceeded Schorsch as CEO in September and alleges damages of $50 million for defamation.

In late October, ARCP disclosed that there were errors in the first quarter accounting and that they had intentionally concealed the error in the second quarter report. Earlier this week the company announced that Schorsch had resigned from the ARCP board of directors.

Since mid December Schorsch has resigned from boards of more than 10 companies related to Cole Capital Advisors and ARCP related companies.    Schorsch companies and affiliates have sponsored and/or sold a number of nontraded REITs, including the following:

  • American Realty Capital-Retail Centers of America II
  • American Realty Capital Daily Net Asset Value Trust
  • American Realty Capital Global Trust II
  • American Realty Capital Healthcare III
  • American Realty Capital Hospitality Tr
  • American Realty Capital NYC REIT
  • ARC Realty Finance Trust
  • ARC III
  • ARC IV
  • Business Development Corp of America 
  • Business Development Corp of America II
  • Cole Credit Property Trust
  • Cole Office and Industrial REIT
  • Cole Real Estate Income Strategy

Nontraded REITs sponsored by American Realty Capital Properties were widely sold by financial advisers like LPL Financial, Cetera Financial Group and First Allied. If you have suffered damages as a result of investments made into nontraded REITs contact us to learn about your recovery options.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Wells Fargo Hit with $1.5 Million Regulatory Fine Over Anti Money Laundering Compliance Issues

The Financial Industry Regulatory Authority (FINRA) fined Wells Fargo Advisors $1.5 million due to its failure to comply with anti-money laundering regulatory requirements.

According to the FINRA action, from 2003-2012 Wells Fargo failed to properly review about 220,000 new customer accounts by performing the required identity verification, which requires firms  to maintain customer identification and verify information about who is opening an account. Wells Fargo discovered the problem in January 2012 and remedied it, ultimately prohibiting activity in 345 accounts where it could not complete verification of customer identity.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Douglas Furth Charged By SEC With Manipulation of SearchPath HCS Stock

December 15, 2014

The US Securities and Exchange Commission (SAC) filed a civil injunction in the Eastern District of New York charging stock promoter Douglas Furth of Solon, Ohio, with manipulating the common stock of SearchPath HCS, Inc.

The complaint alleges that in 2010, Furth engaged in a fraudulent broker bribery scheme designed to manipulate the market for SearchPath through matched trades.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Bernard McGee, Former Cadaret Grant Broker- Barred From Securities Industry

December 19,2014- Syracuse, New York

In FINRA Disciplinary Proceeding No. 2012034389202, Bernard G. McGee was barred in all capacities from associating with any FINRA member for making unsuitable recommendations to a customer who was advised to sell 4 annuities and purchase a charitable gift annuity.

McGee denied the charges and after a hearing June 2-6, 2014, the Extended FINRA Hearing Panel ordered the bar from the industry and ordered McGee to disgorge commissions and pay restitution to the affected customer.

The customer incurred charges of over $36,000 when she surrendered about $490,000 in annuities and the surrender also created taxable income.

According to FINRA records McGee was registered with Cadaret Grant & Co. from 4/2007-10/2012. He was most recently registered with Independent Financial Group.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Rockwell Global Capital Loses To Customer in Florida Arbitration Proceeding

November 24, 2014-Tampa, FL

In a recent arbitration proceeding before the Financial Industry Regulatory Authority (FINRA) Rockwell Global Capital was ordered to compensate an investor for losses suffered in his investment account. Frederick Griffin v Rockwell Global Capital, FINRA Case# 13-0295. 

In the case, before an all public, three person arbitration panel, the investor sought compensatory damages to his brokerage account of $200,000, attorney fees, interest costs and punitive damages on the following causes of action:

  • violation of the Florida Securities and Investor Protection Act
  • breach of fiduciary duty
  • common law fraud
  • excessive trading (churning)
  • breach of contract
  • restitution
  • negligence
  • negligent misrepresentation
  • omission
  • negligent supervision

After a 5 day hearing, the panel unanimously decided in favor of Mr. Griffin and awarded him:

  • Damages of $119,000 plus interest pursuant to the Florida Securities and investor Protection Act
  • Punitive damages of $119,000-based upon the fact the Panel found evidence of continued excess in fees being hidden from Mr. Griffin by Rockwell Global Capital while at they same time they were representing to Mr. Griffin that minimal or no commission charges were being assessed. The panel found that conduct to be fraudulent and the basis for the punitive award.
  • Attorney fees of $55,200
  • Costs of $12,632

The panel also assessed the entire FINRA hearing session fees of $10,125 against Rockwell Global Capital.

Punitive damages are awarded in legal proceedings, in addition to compensatory damages , as a punishment and example to others for malicious or particularly fraudulent acts.

Rockwell Global Capital is headquartered in Melville, New York.

 

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

SEC Suspends Trading in Geo Finance Corp. ( GEFI)

December 16, 2014

Trading was temporarily suspended by the US Securities and Exchange Commission in the securities of Geo Finance Corp (GEFI) of Henderson Nevada …“because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative activity related to GEFI common stock”.

According to press reports, the stock has been the target of pump and dump schemes recently.

In a pump and dump scam the value of penny stocks, which the promoter has already acquired large positions in at very low prices, are “pumped” up using artificial press releases containing false and misleading statements. Once the price rises, the scammers “dump” their positions in the overvalued  shares, the price falls and the investors lose their money.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Kevin Sniffen Sentenced to Three Years-Investment Fraud Scheme

December 19, 2014-Baltimore, MD

Kevin Sniffen, 53, of Phoenix, Maryland was sentenced by US District Judge J. Frederick Motz to three years in prison, followed by three years supervised release, for conspiring to commit wire fraud. He was also ordered to pay restitution of nearly $16 million.

Sniffen, a Maryland licensed attorney, together with Sean Krondak, Patrick Belzner and Brian McCloskey were part of a scheme to obtain real estate loans from various lenders that was to be placed in Sniffen’s escrow account. According to the FBI Press Release, the loans were made based upon false representations and the money received on the loans was immediately released from the escrow  accounts without the lenders’ knowledge or permission.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Current information for investors seeking information on recovery of investment losses due to the negligence or fraud of stockbrokers and brokerage firms. Nationwide representation.