Editor's note: This article has been modified from its original version in print and online to include the correct name of the bankruptcy trustee.
The chief financial officer of Life Partners Holdings, hired last week by the Waco life settlements broker that stands accused of accounting fraud by the Securities and Exchange Commission, was fired on Friday, the company disclosed in a government filing.The abrupt dismissal of Scott Dubs came as the Star-Telegram was inquiring about financial problems he faces, including a personal bankruptcy case and circumstances of his 2009 firing by firms controlled by Fort Worth filmmaker Johnny Langdon.Dubs filed for bankruptcy in November 2010, five months after state District Judge Dana Womack ordered him to pay a $480,285 judgment. Dubs, who stated assets of $1.45 million and debts of $2.8 million, tried to withdraw the bankruptcy case this summer but the court ruled against him. It was his second bankruptcy filing in 10 years.The judgment stemmed from a lawsuit filed by a group of six companies for which Dubs previously served as CFO. The firms operated by Langdon, a colorful Westover Hills millionaire, accused Dubs of giving himself huge raises without authorization and having a company bank account pay more than $100,000 of his wife's personal credit cards, according to the complaint.It also claimed that Dubs concealed that his license as a certified public accountant had been revoked several years ago by the Texas State Board of Public Accountancy, whose website said he failed to pay fees for three years.Dubs was hired on Aug. 21, but his appointment was not disclosed until Aug. 27. On Friday, Life Partners said that neither Dubs, 56, nor the company would have any comment on the court cases.A career biography of Dubs released by Life Partners when he was hired, as required by federal securities law, did not mention his work for the Langdon companies, which include Bumbershoot Productions, which bought and then sold film rights to the comic novel A Confederacy of Dunces. Langdon, who is chairman of Fort Worth's Lone Star Film Society, is on a cruise and would have no comment, said Lisa Arent, an assistant.Life Partners was not required by law to immediately disclose Dubs' bankruptcy in federal filings with the Securities and Exchange Commission, said Neal Newman, a professor at Texas Wesleyan Law School who teaches securities law."The SEC disclosure laws do not specifically require a reporting company to disclose immediately that one of its recently hired officers has filed for bankruptcy," Newman said. "But the company is required to include such information in its annual report, which is filed once a year with the SEC."Life Partner's shares, which are traded on the Nasdaq exchange (ticker: LPHI), have lost more than 70 percent of their value from their 52-week high, apparently hurt by the SEC's insider trading suit filed in January, which also accuses the company of accounting fraud. Then there's new litigation by the state.On Aug. 16, Texas Attorney General Greg Abbott and the State Securities Board sued, alleging securities violations. Texas has asked a state district judge to have the corporation placed under control of a state-appointed receiver.A hearing on the issue was postponed until Sept. 24 by state District Judge Orlinda Naranjo on Thursday. But she kept in place a temporary restraining order that bars Life Partners from paying out a $1.8 million dividend, which was announced for mid-September. Half would have gone to CEO Brian Pardo and a Gibraltar-based family investment vehicle.Life Partners has vigorously denied all allegations by state and federal authorities, maintaining that there was no insider trading and that it traded in unwanted life insurance policies -- not securities.The bankruptcyIn their bankruptcy, Dubs and his wife, Rita, were able to claim their $1.2 million, 6,800-square-foot home in Fort Worth's Lake Country Estates as an exempt homestead. They were later given permission to sell it, but they owed $964,000 on two mortgages. They also owed more on a vacation condo than it was worth.Dubs' attorney, Kenneth Harter of Carrollton, confirmed that his client tried to withdraw his bankruptcy petition this summer -- with the backing of Langdon, a major creditor -- but the bankruptcy trustee, attorney Marilyn Garner of Arlington, blocked the move in Judge D. Michael Lynn's court. Garner has asked to sell a 41-foot luxury yacht, a Sea Ray 410 Sundancer, that was not listed on Dubs' original statement of assets.Harter said nothing has been paid on the $480,285 judgment owed to Langdon but said there may be proceeds from the sale of the yacht. Garner has found a buyer willing to pay $100,000, a filing said.Life Partners' Aug. 27 announcement of Dubs' hiring cited a 36-year career that included a long stint at the national accounting firm PricewaterhouseCoopers and three years as CFO at the defunct Fort Worth motorcycle maker American IronHorse.It said Dubs worked for Bothwell Capital Holdings of Oklahoma from 2006 to 2010. Not disclosed was a 32-month period during which Langdon asserts that Dubs worked for his Fort Worth companies, which overlapped some of the time at Bothwell.Life Partners also did not mention Dubs' 2006 brief experience as a Fort Worth-based recruiter for Robert Half, a national executive search firm.According to the lawsuit, Langdon was seeking to hire a CFO when he met Dubs at Robert Half in December 2006.The suit claims Dubs presented no suitable candidates other than himself and falsely stated being a licensed CPA. Dubs began work the following month for Langdon's companies at a salary of $120,000.Asked whether employees could accept positions for which they are recruiting candidates, Robert Half spokeswoman Meghan Lockhart denied that Dubs went directly from its employ to Langdon's.The lawsuit claimed that Dubs manipulated the payroll system he oversaw to raise his own salary by $55,000, then $80,000 a year. The extra funds amounted to more than $348,000 -- and was still undetected -- when he was fired for moonlighting at Bothwell in August 2007, the lawsuit alleged.Barry Shlachter, 817-390-7718Twitter: @bshlachterHave more to add? News tip? Tell us
