Contributor to Perry is facing state, local investigations

Posted Thursday, Sep. 08, 2011  comments  Print Reprints
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lieber When Gov. Rick Perry and his family flew to South Carolina last month to announce his presidential run, he rode on a private jet owned by a contributor facing major troubles from federal and state regulators.

Brian Pardo, chief executive of Life Partners Holdings of Waco, gave $50,000 last year to Texans for Rick Perry, state records show. He's a pioneer in the life-settlement investment industry, where investors buy death bonds. They pay for portions of strangers' life insurance policies, pay the premiums and collect after a person dies. If the people exceed life-expectancy estimates, the investments go bad.

At the federal level, the Securities and Exchange Commission notified Life Partners this year that it intends to file an enforcement action related to accounting and disclosure practices.

At the state level, the Texas State Securities Board, part of the executive branch, has investigated Life Partners for more than a year. Recently, the board -- working with the Texas attorney general's office -- filed a court petition seeking to force the company to honor its state-issued subpoenas for company records. In court papers, the board says the company engaged in fraudulent business practices.

Life Partners refuses to give information to state securities regulators. Company lawyers say the financial products are not securities and shouldn't be regulated as such.

No federal or state charges have been brought against the company, which has denied wrongdoing. But Life Partners also faces a slew of lawsuits from shareholders and disgruntled customers.

The governor's rides in Pardo's airplane -- one to Iowa in addition to the South Carolina trip -- were first reported on the front page of The Wall Street Journal.

Life Partners didn't respond to a request for an interview, but in an e-mail to the Journal, Pardo wrote, "I did not discuss the SEC investigation with the governor, to the best of my recollection."

Perry spokesman Mark Miner told The Life Settlements Report website, "Mr. Pardo was not on the airplane with Governor Perry." It wasn't clear which of the two flights he was referring to.

Pardo told the newspaper that the Perry campaign paid for both trips, as required by federal election law.

Neither the governor's office nor his campaign responded to a request for information from The Watchdog. The state securities board declined to comment, too.

Life Partners describes itself as a purchasing agent that matches people who can no longer afford or don't want to continue paying their life insurance premiums -- or people who bought policies to resell -- with investors who buy fractional interests in the policies.

Life Partners' estimates on when the original policyholders will die have been inaccurate, with many living longer than expected. As I wrote in March, The Life Settlements Report, an industry newsletter, said that for 262 deaths reported by the company, life expectancy was double the company's estimates.

The company's former life-expectancy estimator, a Reno, Nev., doctor, handled up to 200 individual medical reports a week. His job was to guess how long each person would live. By one estimate, he spent nine minutes per case compared with an industry standard of more than an hour reviewing a person's health history.

Cleaner air

Workers, visitors and residents in Fort Worth's hospital district might not notice in the summer haze, but the air is a little cleaner above the offices of the Tarrant County medical examiner.

The office recently shut down its 22-year-old incinerator, which was used for regular Sunday burnings of used medical supplies and hazardous-waste products (but not body parts, officials say). The shutdown happened quite suddenly.

Someone had complained to Fort Worth's Environmental Services Division about the incinerator and the smoke from its black chimney. A city investigator cited the incinerator for 13 violations ranging from an improper permit to not following incinerator safety rules.

But the matter went no further when Chief Medical Examiner Nizam Peerwani decided to close the incinerator permanently.

Now a hazardous-waste company picks up the biological waste weekly. The cost to taxpayers is greater, because burning was practically free, Peerwani said in an interview. But he said the new procedure makes sense.

"Whoever complained probably did us a favor," he said. "The area we are in right now with the hospitals -- it stands to reason that we should not be doing that. ... Society has progressed. We are much more conscious of clean air than we were 22 years ago."

Goodbye Ruth

I always told Ruth Wingfield of Arlington that she was the oldest citizen of my Watchdog Nation. I met her when she was 98. She accidentally wrote a check to her insurance company for $480 when she meant to write $4.80. The company was in no hurry to give her money back.

I taught her what to tell banks and insurance companies when they hurt her. Forever after, she shouted into her phone: "Who regulates you? I'm going to file a complaint."

She died Saturday at age 101. She always called me Dogpatch Guy. I always called her my favorite.

Sunday: Complaints start about the Bless 7 financial program.

The Watchdog column appears Fridays and Sundays.

Dave Lieber, 817-390-7043

Twitter @DaveLieber

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