LPHI is the parent of Life Partners, Inc. (LPI), an intermediary in the secondary market for life insurance. In January 2012, the SEC filed a civil lawsuit against LPHI and its top officers alleging violations of federal securities laws. The case was assigned to U.S. Senior District Court Judge James R. Nowlin. After the trial in January 2014, the jury found in favor of the defendants on some allegations and against the defendants on some allegations.
On December 2, 2014, Judge Nowlin handed down an Order. On January 16, 2015, he handed down a Final Judgment confirming the terms of his December 2 Order. He imposed civil penalties on LPHI of more than twice the company's total assets. Also, he imposed large civil penalties on two LPHI officers: Brian D. Pardo, chairman and chief executive officer; and R. Scott Peden, general counsel.
Other Recent Developments
On January 5, 2015, the SEC filed a motion for the appointment of a receiver to "protect investors and LPHI's creditors," "ensure that its current officers...are unable to continue to waste assets," and "ensure that LPHI is operated in compliance with the federal securities laws." The SEC recommended that Moran be appointed the receiver. (See SEC v. LPHI, U.S. District Court, Western District of Texas, No. 1:12-cv-33.)
On January 20, LPHI filed for protection under Chapter 11 of the federal bankruptcy law. The case was assigned to U.S. Bankruptcy Court Judge Russell F. Nelms. On March 10, Judge Nelms ordered the U.S. Trustee to appoint a Chapter 11 Trustee for LPHI. (See In re LPHI, U.S. Bankruptcy Court, Northern District of Texas, No. 15-40289.)
It will be interesting to see Moran's progress reports. In light of the comments by Judge Nelms in the March 9 hearing that preceded his March 10 Order (I offered the hearing transcript in No. 89), I think he and Moran will do everything possible to protect those with fractional interests in LPI's life settlements.
I offer a complimentary 14-page PDF consisting of the 2-page March 13 notice of Moran's appointment and the 12-page January 5 SEC motion for appointment of a receiver in the district court case. Send an e-mail to firstname.lastname@example.org and ask for the SEC-LPHI March 17 package.