They were perfect for an IRA (lol)! Why? According to the promotors:
- Diversification can be accomplished with 10 or more policies, thereby giving an income stream to cover the RMD.
- The money was guaranteed to compound (Everyone dies, right?), giving tax-deferred accumulation.
- According to Pardo during a speech, the initial investment was calculated to cover the premiums to maturity.
- Life Partners found a first rate trust organization to ensure (I love that word) the IRA is protected.
Well, perhaps these things weren't perfect for IRAs and ERISA accounts.
I doubt Pardo is even in the USA anymore. His money is in Gibraltar, or was in Gibraltar (I'll bet he is moving it around). The lawsuit reads like the message board here from 2008-2014 or a Seeking Alpha article from 2011.
Worse, how does an IRA investor make a premium call if the yearly IRA contribution isn't enough to cover the call? These people are in deep doo-doo.
No exactly correct: 1) Read the policy. What the insurance company can and cannot do is printed in the policy. 2) A 25% reduction in premium does not equate to a reduced paid-up option of 75% of the policy proceeds, It is far, far more complicated than that. It could result in a 40% payout of the original face value (as a wild example), and would be mathematically correct since the formulas used are valid. On a UL policy, no "short" payment will keep it alive forever unless there was enough cash value in it to begin with. Most of these are policies that were minimally funded.
Because they were the same people posting for the past 7 years! First they were posting to harass people who were questioning the scam (publishing names, hiring people to follow them, etc.,), then to question are argue each point we found against the firms, and now to keep themselves out of jail.
I am not a CPA or tax attorney. I still have a question for you: When did you take a loss? The fact that a policy hasn't yet matured doesn't mean you can currently define the value of the loss, unless you previously sold it back to Life Partners.
Or, were you an investor in the stock LPHI? If so, you should have been aware of potential fraud if you invested within the past 5 years or so. There were publicly available articles to warn you from Citron Research (Stock Lemon), several articles in Seeking Alpha, etc. Regardless, what to do with the stock loss seems to be well established. If you find someone with a different opinion, kindly link an article in a journal we can all read.
Investors should pursue fraud charges if they were indeed defrauded, if only because there is a moral obligation of honest people to stop future fraud. Suggesting they should not for a possible tax treatment makes me very curious about your motives.