One jury finding is tossed in Life Partners fraud case
03/13/2014 5:16 PM
03/13/2014 5:16 PM
A federal judge has reversed one of four jury findings against Life Partners Holdings in a fraud case brought by the Securities and Exchange Commission.
Last month, the federal jury found in favor of Life Partners on eight of 12 claims brought by the Fort Worth office of the SEC, including insider trading allegations against Chief Executive Officer Brian Pardo and General Counsel Scott Peden.
On Wednesday, U.S. District Judge James R. Nowlin ruled that he was “unable to locate a single piece of evidence” to support the jury’s conclusion that the company violated securities laws by misleading investors about its revenue recognition practices in January and February 2007.
He affirmed the jury’s findings that the Waco-based company, which sells insurance death benefits to investors in a practice called life settlements, made misleading regulatory filings and that Pardo falsely certified them.
In a statement released Thursday, the company said the federal court ruled that the SEC “failed to prove any of its fraud claims against Life Partners” and its top officers.
“As a result of this ruling, the company, Mr. Pardo and Mr. Peden have been completely exonerated from any allegations of fraud alleged by the SEC,” the statement said.
SEC spokesman John Nester declined comment on the ruling, but said the agency is “considering the appropriate penalties to seek from the court for the remaining claims, which are serious violations.”
The lawsuit alleged that Life Partners, Pardo and Peden illegally benefited by providing investors with misleading life-expectancy estimates received from a Nevada oncologist with no actuarial training. The Nevada doctor’s estimates often predicted a much shorter life span for the insured, boosting the value of the life insurance policies in investors’ eyes.
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