Life Partners Holdings, Inc. (NASDAQ:LPHI) is in the secondary market for life insurance. In No. 78 posted January 5, I reviewed developments through December 31 relating to the Final Judgment Order (FJO) handed down on December 2 by Senior U.S. District Court Judge James R. Nowlin in a lawsuit filed by the Securities and Exchange Commission (SEC) against LPHI and its two top officers: Brian D. Pardo, chairman and chief executive officer; and R. Scott Peden, general counsel. The FJO required LPHI to pay the SEC disgorgement of $15 million and a civil penalty of $23.7 million. The sum of those items was more than twice the total assets of LPHI. The order also required Pardo and Peden to pay civil penalties of $6.2 million and $2 million, respectively. Here I briefly discuss six developments through January 7 as LPHI struggles with the court-ordered death sentence. (SEC v. LPHI, U.S. District Court, Western District of Texas, Case No. 1:12-cv-33.)
SEC Motion for Appointment of Receiver
On January 5, the SEC filed an opposed emergency motion for appointment of a Receiver. The motion is "opposed" because, according to the SEC, "the Defendants are opposed to the relief sought by this motion." The motion consists of three requests. In this major motion, the SEC asks Judge Nowlin to appoint a Receiver for LPHI and its affiliates, and gives detailed reasoning for the motion. The SEC says "a highly qualified Receiver candidate is prepared to act immediately," and recommends the appointment of H. Thomas Moran II, chief executive officer of Asset Servicing Group (Oklahoma City, OK), "a market leader in the life settlement industry." As an alternative, the SEC asks the Court to appoint a Monitor to "oversee and approve all LPHI financial transactions" and "report observations and recommendations to the Court." As another alternative, the SEC asks the Court to appoint a Receiver under the "Texas turnover statute," and explains the statute.
Denial of Intervention Motion
On January 6, Judge Nowlin denied the intervention motion I discussed in No. 78. He says he previously refused to allow the petitioners to intervene, and nothing has changed to justify changing course.
SEC Supplement Supporting Appointment of Receiver
On January 6, the SEC filed supplemental evidence to support its motion for appointment of a Receiver. The evidence consists of three recorded teleconferences held in December following the FJO and featuring Pardo discussing with his sales staff recent developments in the case. Pardo harshly attacks Judge Nowlin and the SEC.
Referral to Magistrate Judge
On January 7, Judge Nowlin issued an order referring all nondispositive motions to U.S. Magistrate Judge Andrew W. Austin for resolution. Also, all pending and future dispositive motions were referred to Magistrate Judge Austin for report and recommendation.
LPHI Opposition to SEC Motion Regarding Stay
On January 7, LPHI filed its objection to the SEC motion concerning conditions for a stay. LPHI also responded to the SEC's objection to the alternate security proposed by LPHI.
Scheduling of a Hearing
On January 7, Magistrate Judge Austin issued an order setting a hearing for January 14 on the SEC's motion for appointment of a Receiver. Also, LPHI was ordered to file a response by January 12 to the SEC's motion for appointment of a Receiver.
General Observations
It appears that further significant developments will occur during the next week or two. I plan to continue reporting on this important and complex situation.
Meanwhile, I offer a complimentary 28-page PDF consisting of four documents: (1) 12-page SEC motion for appointment of a Receiver, without exhibits; (2) 1-page Order denying intervention motion; (3) 5-page SEC supplemental evidence about Pardo's comments; and (4) 10-page LPHI opposition to SEC motion regarding stay. Send an e-mail to jmbelth@gmail.com and ask for the SEC-LPHI January 7 package.
SEC Motion for Appointment of Receiver
On January 5, the SEC filed an opposed emergency motion for appointment of a Receiver. The motion is "opposed" because, according to the SEC, "the Defendants are opposed to the relief sought by this motion." The motion consists of three requests. In this major motion, the SEC asks Judge Nowlin to appoint a Receiver for LPHI and its affiliates, and gives detailed reasoning for the motion. The SEC says "a highly qualified Receiver candidate is prepared to act immediately," and recommends the appointment of H. Thomas Moran II, chief executive officer of Asset Servicing Group (Oklahoma City, OK), "a market leader in the life settlement industry." As an alternative, the SEC asks the Court to appoint a Monitor to "oversee and approve all LPHI financial transactions" and "report observations and recommendations to the Court." As another alternative, the SEC asks the Court to appoint a Receiver under the "Texas turnover statute," and explains the statute.
Denial of Intervention Motion
On January 6, Judge Nowlin denied the intervention motion I discussed in No. 78. He says he previously refused to allow the petitioners to intervene, and nothing has changed to justify changing course.
SEC Supplement Supporting Appointment of Receiver
On January 6, the SEC filed supplemental evidence to support its motion for appointment of a Receiver. The evidence consists of three recorded teleconferences held in December following the FJO and featuring Pardo discussing with his sales staff recent developments in the case. Pardo harshly attacks Judge Nowlin and the SEC.
Referral to Magistrate Judge
On January 7, Judge Nowlin issued an order referring all nondispositive motions to U.S. Magistrate Judge Andrew W. Austin for resolution. Also, all pending and future dispositive motions were referred to Magistrate Judge Austin for report and recommendation.
LPHI Opposition to SEC Motion Regarding Stay
On January 7, LPHI filed its objection to the SEC motion concerning conditions for a stay. LPHI also responded to the SEC's objection to the alternate security proposed by LPHI.
Scheduling of a Hearing
On January 7, Magistrate Judge Austin issued an order setting a hearing for January 14 on the SEC's motion for appointment of a Receiver. Also, LPHI was ordered to file a response by January 12 to the SEC's motion for appointment of a Receiver.
General Observations
It appears that further significant developments will occur during the next week or two. I plan to continue reporting on this important and complex situation.
Meanwhile, I offer a complimentary 28-page PDF consisting of four documents: (1) 12-page SEC motion for appointment of a Receiver, without exhibits; (2) 1-page Order denying intervention motion; (3) 5-page SEC supplemental evidence about Pardo's comments; and (4) 10-page LPHI opposition to SEC motion regarding stay. Send an e-mail to jmbelth@gmail.com and ask for the SEC-LPHI January 7 package.
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Email: jmbelth@gmail.com
Blog: www.josephmbelth.com