The trust companies, acting in a fiduciary capacity, could also find themselves in deep doo-doo since they must act in the interest of the plan participants and their beneficiaries. Have they done this? I have no idea, but in the world of ERISA where you base fiduciary conduct on court decisions, things could get complicated for trustees even if they dotted every "i" and crossed every "t" in regards to handing the funds. N.B.: Under ERISA a fiduciary MUST act solely in the interest of the plan's participants and beneficiaries and for the exclusive purpose of providing benefits to their participants and beneficiaries. "Solely in the interest" and "for the exclusive purpose" are words not taken lightly by the courts.
I am not sure the trust companies did this. The trustees should have treated the ERISA accounts separately in order to provide the plan administrators with the information necessary to make prudent and appropriate decisions.
What suvacrew said above makes the most sense. Good luck to those who have their investments in IRA or ERISA accounts.
Hey, what about the RMDs that must be made to these senior investors? Does anyone know what the trustees are telling these investors what they can and cannot do? What if there is no other IRA the investor owns that a distribution can come from? Will they allow a conversion to a Roth IRA and then distribute the illiquid fractional shares? I'll bet the licensees, including the Pizza Man, won't answer these questions!
IIRC the financials showed that Pardo only bought from a couple of settlement brokers. I once saw this as an interesting company, the only public one of its kind. So I called them up with a $10mm convertible term policy (the key-man policy blew up when the board dumped the CEO after he became ill) to sell with something like a 66 mth EMSI. The kid that plays with trains told me he didn't need another settlement broker. Something told me this would be an eventual short, because their margins were too high and they didn't want a good policy. I totally missed the upside, but made money once it collapsed.
Although I no longer have a dog in this fight, I still follow this for obvious reasons (few here know who I am, and I like it that way). suvacrew nailed this again. If everyone gets on board there will be a good change of getting out of this mess for most people. The crooks who sold these policies knew exactly what they were selling for the last couple of years, since we detailed the fraud right here on this board before any regulator figured it out. ASR, Abundant, BGS and the Pizza Man may have drank the Kool-Aid, but they knew exactly what was happening--fraud-- once the resales went through the roof because the the LEs were proven to be bogus. We also detailed why the trust investment would flop before anyone else, too. Anyhow, the master licensees are not to be believed. What bothers me most about this isn't that scam that took in so many fractional investors (they were greedy), but that there have not been criminal charges filed. Pardo, Peden and the master licensees deserve jail time.
What are the odds a person with 1-100 policies will have the "law of large #s" work for them if LEs on average are at least 100% off? Not very good. What is the chance a stock investor can diversify a portfolio with only 16 stocks? Actually, very good. Regardless, fractional investors will be better off doing what suvacrew recommends.
Mary is 100% correct, but the reason is not understood by some posting here. If the fractionals win ownership--and they do not have ownership now for the same reasoning--a policy can and will lapse if some of the fractionals don't pay or cannot pay (ERISA law is complicated, people forget, heirs forget, etc.) their premiums. Do you want your investment to depend upon hundreds of people you do not know paying their premiums? I didn't think so.
If this law firm can actually get clients and is actually successful in a lawsuit, how do they expect to collect for their clients? Life Partners is bankrupt. Most of the licensees don't have a pot to #$%$ into. Only Pardo and the master licensees have money, and I believe there are other suits against them. I am not saying do respond to the letter (I am not an attorney and won't give legal advice), but to ask questions if you do.
What about the fractional investors who were fraudulently sold policies and were fraudulently convinced to sell them back through licensees, with the policies eventually ending up into a "fund" (now likely considered a security) controlled by a master licensee? What about people who refused to pay the outrageous servicing fees claiming suck fees are illegal, and subsequently lost their policies? Is it possible they can get their policies back? This could get very complicated unless the trustee gets what he wants.
suva.crew: Didn't the financials state, Q after Q, that LPI only bought policies from a small number of brokers (e.g., 2 or 3)? If so, it can't be difficult to trace the deals and see if there was a pattern of illegal actions on the part of the broker (I am not sure there is).
I called them once with a corporate owned $10mm convertible policy on an exec. booted from the company he started. Sweet deal due to his declining health, but LPI didn't want anything other than from their then-current suppliers of policies. I think I spoke with "He Who Plays with Trains," An arrogant SOB. Never called them again.
I agree. The two (I think it was only two) brokers that sold the preponderance of policies could have been part of the scam, but how would you prove it? If they had other customers and got them the best deal, it will be hard to prove they did anything wrong. If LPI paid up for the policies...well, that isn't the brokers' fault.
You choose several and average. The trustee has to avoid the appearance of subjecting the fractionals to another Cassiday LE.