Texas officials have asked a state district court judge to grant them authority to seize the assets Life Partners, a life-settlement provider accuse of fraud.
The Texas State Securities Board and Texas Attorney General Greg Abbott allege in the suit that the Waco, Texas-based company could run out of cash “as early as two months,” according to the Star-Telegram newspaper, citing court records.
Life Partners was among a flood of life-settlement companies that formed early in the decade, but struggled for additional funding to buy additional life insurance policies when the global economic crisis hit in 2008.
In the case of Life Partners, the U.S. Securities and Exchange Commission in January alleged that the company’s actuarial tables, crafted by an oncologist from Nevada with no formal actuarial training, were wrong. As a result, investors have been forced to pay premiums longer on the life insurance policies the company bought, thus delaying their payout when the person dies and depleting potential gains.
State District Court Judge Orlinda Naranjo issued an order freezing the Life Partners’ assets and prohibiting the firm from destroying any records or equipment, according to the newspaper report.
Even though state officials say the allegations are hurting the firm’s revenues, the company is paying dividends of $1.8 million to shareholders, despite net losses of $5 million.
The company has repeatedly denied the allegations.
