H. Thomas Moran II is the chapter 11 trustee in the Life Partners Holdings Inc. (LPHI) bankruptcy case. On March 5, 2016, as I reported in No. 150 (posted March 16), Moran filed an extensive report describing the results of his investigation of the allegedly fraudulent business conduct that preceded the January 2015 bankruptcy filing. (See In re LPHI, U.S. Bankruptcy Court, Northern District of Texas, Case No. 15-40289.)
Adversary Proceedings
During the period from March 11 to March 13, a week after filing his extensive report, Moran filed 17 adversary proceedings. As I explained in Nos. 117 and 126 (posted September 21 and November 12, 2015), an "adversary proceeding" is a lawsuit filed within a bankruptcy case and assigned its own case number. In the above 2015 posts, I mentioned a pair of adversary proceedings that Moran had filed earlier: one against Brian D. Pardo, former chief executive officer and controlling shareholder of LPHI, and one against former licensees.
The 17 new adversary proceedings include several complaints against former licensees, a complaint against the former outside directors of LPHI, a complaint against former LPHI life expectancy estimator Dr. Donald T. Cassidy, a complaint against former shareholders who received dividends from LPHI, a complaint against former LPHI employees, several complaints against transferees who received funds from LPHI, and several complaints against local and national charities that received donations from Pardo. Here is a list, in numerical order, showing case numbers, abbreviated case names, and types of defendants:
As an example of the 17 complaints, I selected the complaint against the outside members of LPHI's board of directors: Tad M. Ballantyne (Racine, WI), Fred Dewald (Woodway, TX), and Harold E. Rafuse (Crawford, TX). The "Factual Background" section describes the procedural history of the bankruptcy case, the overall scheme to defraud, and LPHI's insolvency. That section also includes a 23-page, 19-part description of the involvement of the three outside directors.
The complaint contains 12 counts: one count of breaches of fiduciary duty, three counts of violations of securities laws, two counts of actual fraudulent transfers, two counts of constructive fraudulent transfers, one count of preferences, one count of unjust enrichment and constructive trust, one count of disallowance of defendants' claims, and one count of equitable subordination. The concluding section of the complaint reads:
Through these adversary proceedings, Moran is attempting to claw back as much money as possible for the benefit of those victimized by allegedly fraudulent business conduct over the years, especially for the benefit of investors in fractional interests in life settlements marketed by LPHI. He has cast a wide net; however, to what extent he will succeed in the effort remains to be seen. I plan to continue watching the progress of the case and reporting significant developments.
Available Material
I am making available as a complimentary 46-page PDF the complaint against the three former outside members of LPHI's board of directors. Email jmbelth@gmail.com and ask for the March 2016 Moran complaint against Ballantyne.
Adversary Proceedings
During the period from March 11 to March 13, a week after filing his extensive report, Moran filed 17 adversary proceedings. As I explained in Nos. 117 and 126 (posted September 21 and November 12, 2015), an "adversary proceeding" is a lawsuit filed within a bankruptcy case and assigned its own case number. In the above 2015 posts, I mentioned a pair of adversary proceedings that Moran had filed earlier: one against Brian D. Pardo, former chief executive officer and controlling shareholder of LPHI, and one against former licensees.
The 17 new adversary proceedings include several complaints against former licensees, a complaint against the former outside directors of LPHI, a complaint against former LPHI life expectancy estimator Dr. Donald T. Cassidy, a complaint against former shareholders who received dividends from LPHI, a complaint against former LPHI employees, several complaints against transferees who received funds from LPHI, and several complaints against local and national charities that received donations from Pardo. Here is a list, in numerical order, showing case numbers, abbreviated case names, and types of defendants:
16-04022: Moran v. A. Chris Ostler (Licensees)Complaint against Ballantyne
16-04024: Moran v. Happy Endings Dog Rescue (Charity)
16-04025: Moran v. Jonathan Brooks (Licensee)
16-04026: Moran v. Argentus Securities LLC (Licensees)
16-04027: Moran v. ESP Communications Inc. (Transferee)
16-04028: Moran v. American Heart Association (Charities)
16-04029: Moran v. Funds for Life Ministries (Charities)
16-04030: Moran v. Andrea Atwell (Employees)
16-04031: Moran v. Blanc & Otus (Transferees)
16-04032: Moran v. Averitt & Associates (Transferees)
16-04033: Moran v. Donald T. Cassidy (Life Expectancy Estimator)
16-04034: Moran v. Robin Rock Ltd. (Transferees)
16-04035: Moran v. 72 Vest Level Three LLC (Licensees)
16-04036: Moran v. James Alexander (Shareholders)
16-04037: Moran v. Garnet F. Coleman (Transferees)
16-04038: Moran v. A Roger O. Whitley Group Inc. (Licensees)
16-04039: Moran v. Tad Ballantyne (Outside Directors)
As an example of the 17 complaints, I selected the complaint against the outside members of LPHI's board of directors: Tad M. Ballantyne (Racine, WI), Fred Dewald (Woodway, TX), and Harold E. Rafuse (Crawford, TX). The "Factual Background" section describes the procedural history of the bankruptcy case, the overall scheme to defraud, and LPHI's insolvency. That section also includes a 23-page, 19-part description of the involvement of the three outside directors.
The complaint contains 12 counts: one count of breaches of fiduciary duty, three counts of violations of securities laws, two counts of actual fraudulent transfers, two counts of constructive fraudulent transfers, one count of preferences, one count of unjust enrichment and constructive trust, one count of disallowance of defendants' claims, and one count of equitable subordination. The concluding section of the complaint reads:
WHEREFORE, the Plaintiffs request that the Outside Directors each be ordered to return all funds received from Life Partners to the Debtor's Estate as a result of the conduct described herein, and that judgment be entered against them and in favor of Plaintiffs for the total amount transferred to Defendants. Plaintiffs request actual and consequential damages as determined at a trial on the merits, as well as exemplary damages where warranted. In the case that the funds were spent to acquire any real or personal property, Plaintiffs request that a constructive trust be imposed upon the property, and an order that such property must immediately be turned over to Plaintiffs. Plaintiffs ask for pre-judgment and post-judgment interest at the highest rates allowed by law. Further, Plaintiffs request recovery of their attorneys' fees and costs, and that they be granted any other relief, both special and general, to which they may be justly entitled.General Observations
Through these adversary proceedings, Moran is attempting to claw back as much money as possible for the benefit of those victimized by allegedly fraudulent business conduct over the years, especially for the benefit of investors in fractional interests in life settlements marketed by LPHI. He has cast a wide net; however, to what extent he will succeed in the effort remains to be seen. I plan to continue watching the progress of the case and reporting significant developments.
Available Material
I am making available as a complimentary 46-page PDF the complaint against the three former outside members of LPHI's board of directors. Email jmbelth@gmail.com and ask for the March 2016 Moran complaint against Ballantyne.
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Email: jmbelth@gmail.com
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