I was thinking in terms of proving fraud. The trading of this stock over the years is, shall we say, curious? I am wondering what offshore trading, if any, was done out of the Pardo Family Trust or was traded off of it if used as collateral.
Did any of these guys invest in their own deals? It is beginning to sound as if they did not.
Pooling the policies would make things easier on paper...and it could also hide fraud. A lot will depend upon how knowledgeable the trustee is, and more importantly how hard he wants to work on behalf of the fractionals. His goal, and the goals of the fractionals, may be in conflict.
No, the carriers couldn't care less. Everything from expected lapse rates to policies l=held so long that they could endow are factored into the premium structure. The trustee will do whatever is necessary to keep the policies in-force. Some fractionals, particularly the ones who were screwed, will be screwed more.
This will be an absolute mess, with fractionals claiming they never received premium notices, other saying they paid the platform service change but had the policy taken away, etc.
Suvacrew brings this up every now and again. What was the end game? Was it to sell the company using the bogus LEs as a way to inflate the price? I am not so sure. A lot of schemes have no end game, with the promoters just wanting to bask in the limelight of being a big shot with jets, fancy cars and boats. I believe Pardo figured out that most of the suckers would break even, and that he could stay out of jail and live high on the hog forever using the "LE minus 50%" formula. What tripped him up was the revaluations that occurred with most LE providers in 2008. These reputable providers were at least 25% off, meaning the bogus Cassidy LE was a lot more that 50% off. This could be what sunk the company. Well, greed killed the company but the scheme could have lasted a lot longer if the LEs were only 50% off.
The trustee has a duty to investigate the financial affairs of the company. He could try to collect money that he believes belongs to the company. How far this goes is unknown.
Here is part of the code:
a) The trustee shall—
(1) collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest;
(2) be accountable for all property received;
(3) ensure that the debtor shall perform his intention as specified in section 521 (a)(2)(B) of this title;
(4) investigate the financial affairs of the debtor;
(5) if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper;
(6) if advisable, oppose the discharge of the debtor;
(7) unless the court orders otherwise, furnish such information concerning the estate and the estate’s administration as is requested by a party in interest;
(8) if the business of the debtor is authorized to be operated, file with the court, with the United States trustee, and with any governmental unit charged with responsibility for collection or determination of any tax arising out of such operation, periodic reports and summaries of the operation of such business, including a statement of receipts and disbursements, and such other information as the United States trustee or the court requires;
(9) make a final report and file a final account of the administration of the estate with the court and with the United States trustee;
(10) if with respect to the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in subsection (c);
(11) if, at the time of the commencement of the case, the debtor (or any entity designated by the debtor) served as the administrator (as defined in section 3 of the Employee Retirement Income Security Act of 1974) of an employee benefit plan, continue to perform the obligations required of the administrator; and
(12) use all reasonable and best efforts to transfer patients from a health care business that is in the process of being closed to an appropriate health care business that—
Since the entire industry wants nothing to do with Pardo (Ever attend a LISA conference?), I seriously doubt there is a "White Knight" left that want to be even remotely attached to this scheme.
Try reading the past 5 or 6 years of postings. YAHOO still showed this with having something like a $20 price target up until last week.
Whoever is appointed to oversee this mess has to audit how much of the premium charged the fractional investors actually made it to the carrier. Someone must eventually determine: 1) Was the carrier paid the correct premium?; 2) Was the premium calculated using appropriate assumptions?; 3) Was the premium not optimized in most policies as an effort to hide an artificially short LE?:and 3) Did the money the fractional investors pay all go to the carrier, or was there fraud?
This was mentioned before: New line items on the financials of LPHI usually portend something very wrong. We just saw a new foreign trading loss item that makes no sense (yet). I wonder if this foreign loss had anything to do with premium payments? Probably not, but you never know because this company is the perfect example of the Cockroach Theory, which states, "If you find one there are more hidden elsewhere." Life Partners is infested, so reconciling the books from the two trust companies with the billing of the fractional investors and the payments to the carriers is mandatory.
The shorts were long gone making Pardo's suit against naked shorts a joke, the index funds likely sold it all off after the Chapter 11 filing, and the only people wanting the share to rise are the Pardos and ________. I think just about all the stock has been in friendly hands for a long time, probably by those who were hoping for a short squeeze that never came or just people who believe the story. What does the Pasadena Pumper have to say? Is he still touting the stock? I haven't heard anything for some time.
I also remember that, and it shows that they are in the Catch-22. They stay alive by reselling policies, but reselling polices trips the Howey lever that will kill them.
I call this BS. Using a simple HHS table cannot by definition use the most recently available medical data available to construct an appropriate LE. Appropriate medical data did exist at the time the Cassidy LEs were manufactured, and this data was always used by EMSI, Fasano, etc. "Real insurance companies" also use more recent medical data in different ways, which is precisely why there are differences in how they rate policies. Regardless, insurance companies are not rating policies the same way LE providers determine mortality.
I addressed your ridiculous use of Monte Carlo simulation in another post.
You are a troll for another seller of fractional life settlements, right?
Monte Carlo simulation is pretty much dead for financial portfolio analysis right now, and for good reason. The only people using it are retail financial advisors attempting to distinguish themselves from others selling the same old asset allocation.
In order for Monte Carlo to work accurate assumptions must be made, and in life settlements they cannot be made. To begin with you have to estimate a current portfolio value, and even the “Architect of Life Settlements” could never get that right with the investments in life settlements or the trust investment. 250 policies is a portfolio, not 15.
Portfolios are run by taking contributions from early maturities and using them to pay off future premiums on policies that have not matured. How can you run a Monte Carlo simulation with the future contributions are unstable in a portfolio of 250 policies? 15 policies? You are smoking crack.
Monte Carlo simulation assumes an average return. Pardo came up with a number based upon a bogus LE. Honest LE providers were proven wrong in 2008, and will be proven wrong again someday with medical advances. Regardless, no dependable ROR can be assumed with 15 policies.
A key to this type of simulation is volatility, which can be minimized with 250 policies to something that can at least be measured (usually incorrectly). 15 policies? You are on crack.
In terms of ROR, suvacrew already addressed that. He knows more than all of us combined about the valuing life settlements.
" BTW, I also lost a ton on the stock before I dumped most of my shares at around $5."
Just curious...did your licensee/salesperson convince you to buy the stock? Did he use an annual LPHI report in the sales presentation? If so, some people here know what I am thinking!
The filings say monthly, but it is not clear if these are annual premiums being paid on a particular month or monthly payments to satisfy annual premiums. I cannot figure it out based upon the filing.
I do know that when a new line item appears in the LPHI financials (usually the balance sheet) something later comes up to show a major problem. This happened with the investment in policies, the trust investment, and now with some sort of foreign exchange loss (why the heck would LPHI have that kind of gain or loss?). Does this have anything to do with the premiums, an unnamed investor, a related party transaction, funds being shifted offshore, etc.? Whoever the court appoints should follow up on this since it is so out of the ordinary.
The bulk of the sales were on policies valued pre-2008 VBT and were never, ever revalued. So the old bogus Cassidy LEs remained.
A portfolio needs at least 250 policies for any reasonable degree of confidence, not 15 policies. That is why life settlements is usually considered an institutional investment and a gamble of individuals. There is nothing wrong for if individuals gamble on 15 policies provided they are aware of the risks. In this case, individual investors were not fully aware of the risks and were told by links in the LPHI website that they were adequately reserved.
LE plus 2 is not an adequate reserve with an actual-to-expected ratio that mirrors the experience of Life Partners. It should be LE x 2 + 2 or something like that.
It a nutshell, the money went out the door in dividends (half going offshore into the Gibraltar domiciled Pardo Family Trust), outrageous salaries (considering the business model is flawed or in some people's opinion a scam), into related companies (Pardo's daughter), etc. There would have been enough to pay the penalties recently levied if the above events did not happen.
The fractional investor's money is another story. A lot of money disappeared in commissions and fees going to LPHI and the licensees, which where never fully disclosed to the fraction investors. If the policies were priced properly using mainstream LEs, investors would not be lining up to sell what they have while waiting for maturities.
1) Those figures suggest this whole thing implodes.
2) If it does implode, it means the trust companies and Life Partners knew about this for some time since the the premium reserves are obviously too low and must have been for some time (or trending that way).
3) There shouldn't be any resales without a new LE being determined to properly value the policy. Why isn't this being done? Well, we know why. Getting another LE proves the one from Cassidy is bogus.
4) UL illustrations are based off assumptions of what the policy will earn. Anyone see the yield on the 10-year lately? It should be crystal clear that some of these policies need to have new illustrations run. Why isn't Life Partners and the Trust Companies doing this? Isn't there a fiduciary responsibility to do so? There are certainly lawyers in these companies and people with calculator who can add and subtract.
5) Does the Response to Debtors Motion state Life Partners directs the trust companies how much to pay on each policy and when? This is critical to me. If so, there is a lot of post transaction entrepreneurial effort going on. Hello, Howey! Also, it means the amount paid to the insurance companies might be changing (otherwise the trust companies would simply pay the same premium every month).