Here is another article about the past and on-going viatical fraud situations. This article touches on the Mutual Benefits fiasco, we have received numerous calls from past investors that are looking to sell their shares. At the current time we cannot assist, you will need to contact the Mutual Benefits Receiver.

SEC Aims to Block Attorney, Other Viatical Fraudsters From Future Scams

Last year, Fort Lauderdale, Fla., attorney Stephen Ziegler got sentenced to five years and had his law license suspended by the Florida Bar for his role in a $1 billion viaticals fraud through the now-defunct Mutual Benefits Corp.

Federal authorities are not done with him yet, though.

The Securities and Exchange Commission filed a complaint Feb. 15 against Ziegler and two other convicted Mutual Benefits officials: Raquel Kohler, the company’s chief financial officer, and Ameer Khan, former president and nominee shareholder of related company, Viatical Services.

The complaints aim to bar the individuals from participating in any type of securities fraud in the future or face the possibility of criminal contempt of federal court.

“We only have so many tools in our quiver and we felt this was an important complement to the criminal convictions,” said Teresa Verges, assistant regional director in the SEC office in Miami.

The way viatical settlements work is that life insurance policies for the dying and elderly are sold at a discount. Investors collect on the difference between the insurance payout at death and the purchase price.

Mutual Benefits started failing when people started living longer than the company projected.

In the end, the company became nothing but a shell for a Ponzi scheme, according to SEC investigators, with top company officials living in luxury while paying off early investors with money that arrived from later customers who were lured with promises of big returns.

From 1994 to 2004, the company bilked more than 30,000 investors worldwide of $956 million.

Last year, President Peter J. Lombardi was sentenced to 20 years in prison. Ziegler, Kohler and Khan each are serving five-year prison sentences. Lombardi agreed to pay $1.5 million to the receiver and a $6 million penalty to the SEC. “Ziegler was a substantial participant in the MBC offering fraud,” the complaint reads. “He served as a primary securities regulator counsel for MBC.”

Ziegler falsified documentation in connection with the purchase and assignment of group insurance polices, according to the complaint. He then filed false reports with the state regulators.

Kohler, according to the complaint, helped conceal the fraud and wired investor funds to accounts controlled by MBC’s principals. “Kohler also participated in the preparation and filing of false and misleading information with state of Florida regulators to conceal the fact that a convicted felon with a disciplinary history was a controlling principal of MBC,” the complaint reads. Khan tracked policies and performed post-investment services for MBC and “was well aware of MBC’s misuse of investor funds and helped conceal the fraud,” according to his complaint. The SEC has said the company really was run by Leslie and Joel Steinger, whom the SEC permanently barred from violating securities laws in 1998. According to the SEC, the Steingers and their relatives were paid $26 million in consulting fees from MBC.

Now that is what is happening to Ziegler, Kohler and Khan. Both Kohler and Khan have agreed to terms with the SEC but Ziegler has yet to consent to judgment. The SEC is not seeking monetary relief because the defendants have been ordered to pay millions in restitution by the U.S. District Court.

“It’s an important message to send given the roles,” said the SEC’s Verges. “If they ever violated securities law again, we can immediately apply to court for contempt and additional penalties. A judge can refer the matter to criminal contempt.

“The complaint isn’t good news for Ziegler if he ever wants to practice law again.”

Ziegler may reapply to practice law after his prison sentence is up, said Francine Walker, spokeswoman for the Florida Bar. “The process is fairly lengthy where the applicant has to prove rehabilitation under suspension,” she said. “It’s a process and not automatic.”

Walker said the new SEC complaint will find its way into Ziegler’s disciplinary file. She said investigators will determine if additional action is required against the attorney.

Source: Law.com

A viatical or life settlement is a transaction in which an investor purchases an interest in a terminally ill or elderly person’s life insurance policy death benefit in return for a lump-sum cash payment. An investor in a viatical or life settlement realizes a profit, if, when the insured dies and the policy matures, the policy benefit is greater than the price paid for the policy. The longer an insured lives, the more premium payments must be made to prevent the policy from lapsing and becoming worthless.

Typically a viatical settlement involves a person who has a life expectancy of less than two years. This assessment is based on the nature of the illness or condition, and a review of the particular person’s records by doctors.

Questions have long existed if there a viatical settlement in the case of Terri Schindler-Schiavo, the brain damaged Florida woman who died on March 31, 2005, by court order from injuries suffered in a suspicious incident at her home 15 years earlier.

If so, no doubt only a few people know including her executor, guardian and beneficiary-her estranged husband and guardian, Michael Schiavo and his wife, Jodi Centonze Schiavo.

Last week, U.S. District Judge John A. Antoon, II,sentenced C. Keith LaMonda, 53; Jesse W. LaMonda, 61; and John L. Maynard, 61, for their roles in a multi-million dollar fraud scheme associated with their operation of ABC.

Keith LaMonda was sentenced to 20 years imprisonment, followed by three years of supervised release. His brother Jesse was sentenced to 13 years and four months imprisonment followed by three years of supervised release, and John L. Maynard was sentenced to 10 years imprisonment followed by three years of supervised release.

The LaMondas were also ordered to pay approximately $88 million in restitution to the ABC victims who invested during their involvement in the scheme, and Maynard was ordered to pay approximately $52 million in restitution to the ABC victims.

Both C. Keith LaMonda and Maynard were ordered to pay approximately $1.3 million dollars to the Internal Revenue Service for their roles in the tax fraud scheme.

Previously, a jury found the LaMondas guilty of two counts of conspiracy to commit mail fraud and wire fraud and 11 counts of mail fraud. The jury also found C. Keith LaMonda guilty of conspiracy to defraud the U.S. Department of the Treasury, Internal Revenue Service and making and subscribing to a false tax return.

Maynard, a business associate of the LaMonda brothers and a disbarred attorney, was found guilty of conspiracy to commit mail fraud and wire fraud and conspiracy to defraud the IRS.

The mail and wire fraud charges filed against the LaMonda brothers and Maynard stemmed from their roles in an investment scheme that ultimately collected millions of dollars from thousands of victims. According to court documents, the LaMonda brothers and Maynard fraudulently induced investors to purchase interests in viatical and life settlements through a series of material misrepresentations concerning the safety and security of the investments.

The defendants disseminated false and misleading marketing materials, promising that the insurance policies offered and sold by ABC were safe and secure investments because doctors independently determined how long insured individuals would live. Instead, individuals at ABC dictated life expectancy determinations to one of ABC’s doctors.

The defendants also misled investors by promising to pay premiums on the life insurance policies until the policies matured. The defendants falsely promised investors that the money reserved to pay premiums was held in a trust account maintained by an independent trustee. The evidence at trial showed that the premium money was not held in a trust account, and that C. Keith LaMonda and Maynard diverted over $1.2 million from the premium reserve account to invest in a failed oil and gas venture.

This diversion depleted 70% of the account and ABC was unable to pay premiums on all of the life insurance policies, causing the lapse of a $9.5 million dollar life insurance policy. As a result, investors lost over $6 million dollars on that policy alone. The total actual loss to the investors was about $88 million.

C. Keith LaMonda and Maynard were also convicted of conspiring to defraud the United States by impeding the IRS’s ability to ascertain and collect income taxes due on monies diverted from investor trust accounts and ABC’s operating account. Court documents show that LaMonda and Maynard diverted over $3 million from the trust accounts and concealed the income from the IRS by diverting the money to accounts held in nominee names and mischaracterizing the diversions as loans or expenditures on ABC’s books and records and on tax returns.

They also diverted $261,500 from ABC’s operating account and concealed the income by diverting it to an account held in a nominee name, creating an offshore entity and mischaracterizing the income as a loan from the offshore entity. C. Keith LaMonda was also convicted of filing a false partnership tax return on which he reported the $3 million of diverted funds as a loan from a trust account instead of income.

In 1992, Schiavo collected $10,000 from Terri’s insurance under a “living needs benefit” from Prudential. Schiavo said in a sworn 1993 deposition that he had opened a safe deposit box at First Union Bank in 1992. When asked what he had done with the money, he testified that he had “stuck it there for safekeeping.” From the time of her sudden collapse in 1990 until approximately the middle of 1992 when the payments stopped, he lived off Terri’s paycheck from Prudential Insurance Company. It’s unknown when he removed the $10,000 in cash how he’d spent it considering it was Terri’s money. http://www.northcountrygazette.org/articles/072906DeathBenefits.html

By his own admission, Schiavo lived off Terri’s Supplemental Security Income (SSI) check of approximately $600 per month for over two years until the court award was handed down from the medical malpractice claim in late 1992. It appears that Michael Schiavo used all of Terri’s money – from the SSI checks to the living needs benefit to the malpractice award that had been earmarked for her therapy and rehabilitation.

And after he expended all of her money, including paying for euthanasia advocate George Felos and other lawyers to end her life, he claimed she was indigent and with the assistance of Felos and Judge George Greer, placed her on Medicaid and Medicare so the taxpayers could pay for her care while he spent her money.

Terri’s mother, Mary Schindler says Schiavo received the living needs money from the insurance policy in 1990, not 1992 as he testified and she personally witnessed him stashing it in the safe deposit box, accompanied by a bank employee who stated that she “wasn’t supposed to be seeing this”. There is no indication what else he may have “stuck” in that safe deposit box for safekeeping or why the money was not deposited in the bank in an account for Terri or if he paid income tax on the money he received as income. So far, it appears that Michael Schiavo hasn’t been held accountable why he was expending Terri’s SSI checks.

Terri’s mother says she was present at the First Union Bank in 1990 when Michael placed $10,000 cash from Terri’s life insurance policy with Prudential in a safe deposit box. To date, no accounting has been found to explain how Michael Schiavo used the proceeds from Terri’s life insurance policy nor has any accounting been produced by Michael for the $250,000 received in August, 1992 for an out-of-court settlement in the malpractice suit against Dr. Joel Prawer.

In order to be admitted to the Woodside Hospice of Hospice of Florida Sun Coast, regulations require that the patient be terminal, a life expectancy of six months or less. Terri wasn’t terminal when she was admitted in April 2000 and she remained there for five years, paid for by Medicaid and Medicare while Schiavo used her money to pay Felos, Deborah Bushnell and others including Felos’ paralegal Cynthia Gay to insure that the disabled woman died.

When Michael Schiavo and Felos placed Terri in the hospice with Felos on the board of directors, they were banking that had a life expectancy of less than two years. Schiavo had expected her to die virtually immediately after Greer signed her first death order on Feb. 11, 2000. The first time the feeding tube was pulled on April 24, 2001 but it was ordered reinserted days later by court of Judge Frank Quesada. Schiavo never expected that his former paramour Cyndi Shook would call a radio show and tell the host that Michael Schiavo had absolutely no idea what Terri’s wishes were as he was claiming that she had previously expressed that she would not want to be kept alive by artificial means. However, at the time she allegedly made such a statement, feeding tubes were not deemed “artificial life support”. Terri was not on any machines such as a respirator.

Terri Schiavo was not terminal, she was handicapped. She had been placed in Woodside Hospice in April, 2000 which requires a certification that she was terminal with only six months to live. But that wasn’t true and the certification wasn’t properly signed by the two physicians as required.

Michael Schiavo’s concubine at the time, Jodi Centonze, now his wife, is a licensed insurance agent holding licenses with multiple insurance companies. Did she act as his viatical settlement broker?

According to filings made with the Florida Division of Corporations, Centonze was listed as a director for the Liberty American Insurance Agency in a filing with the state on April 26, 2001, two days after Terri’s feeding tube was removed the first time, indicating that the firm in which she was a director, Jerger and Sons, had been changed to be known as Liberty American in August, 2000. However, at the time of the annual filing for 2002 on April 28, 2002, Centonze’s name had been removed as a director but the change was not noted on the annual report.

She had been added as an officer of Jerger and Sons in April, 1998. Other officers and directors listed for Jerger and Sons in April, 1998, the month prior to Schiavo and his attorney, George Felos, filing their petition to end Terri’s life with Judge George Greer in May, 1998, were Richard M. Jerger, Centonze’s partner; Jerger’s brothers, Bruce Meyer and Raymond Blacklidge. Blacklidge, a lobbyist with the Florida Legislature, was also the registered agent of the corporation.

After the name change of Jerger and Sons to Liberty American in August, 2000, on Jan. 11, 2001, a certificate of incorporation was filed for the Jerger and Centonze Insurance Agency Inc., listing the address of the Clearwater home of Centonze and Michael Schiavo, property owned by Centonze, according to Pinellas County assessment records.

Officers and directors of the corporation were listed as Richard M. Jerger Jr., Michael Schiavo and Catherine M. Quinn-Jerger. Schiavo was not a licensed insurance agent or salesman. Could he have been listed for purposes of obtaining a viatical settlement?

The corporation was administratively dissolved on Oct. 4, 2002, scarcely three months after Schiavo had petitioned Greer to place his estranged wife on Medicaid which Greer approved despite the more than $1 million received from medical malpractice claims in 1992, the proceeds of which were earmarked to provide rehabilitation for Terri Schiavo. In determining Medicaid eligibility, all marital assets must be considered, including Michael Schiavo’s salary, real estate holdings and bank accounts.

In a viatical settlement, the owner of the life insurance policy (who is typically, but not necessarily, the individual with a life-threatening illness) receives cash for the policy, and the owner transfers the policy to the person buying the policy. In these transactions, the viatical settlement provider becomes the new owner and/or beneficiary of the life insurance policy and is responsible for paying all future premium payments, and collecting the entire death benefit of the policy upon the death of the insured.

In many cases the process is handled by a broker who serves as the intermediary between the person with the life threatening illness (which Terri did’t have) and the person buying the policy. Viaticals are based on a legitimate concept: Allow investors to purchase the life insurance benefits from a terminally ill person, allowing the sick person to receive a partial payment on the policies while they are still alive, which can be a godsend to terminally ill people and their families. The investor pays about 60 to 70 cents on the dollar for the policy, then collects the full death benefit on the policy.

Unfortunately, these programs are often run by scammers and can be disastrous for investors.

Fraudulent viatical settlements schemes have taken off as they can attract people who are desperately in need of more money from their small investment funds, by offering returns that are above market rates. Often most of the money collected from investors go toward purchasing.

Source: North County Gazette

Death Trap Ahead
Death bonds may sound like a good investment–but are they?

When I started seeing articles last summer about something called death bonds, it took me back to the ’90s when I was a personal finance columnist in Tampa, Florida, witnessing the tail end of the viatical settlement movement. Viaticals were contracts calling for an investor to pay part of a seller’s life insurance policy upfront and wait to collect the full amount when that person died. Viaticals originally catered to AIDS patients but were later marketed to all sorts of terminally ill folks. The viatical business worked in theory, but in practice, it attracted shady characters and enough fraudulent behavior to keep a personal finance columnist busy for years.

With death bonds, it seems the viatical settlement industry has matured and drunk the Wall Street Kool-Aid. Life settlement-backed securities are essentially spiffed-up viaticals. But this time, companies are bundling them up, dividing them into bonds and selling them mostly to institutional investors. Providers market them as good investments because they’re not correlated with traditional investments–undoubtedly true–and because they can generate returns of 8 percent a year or better. The return figures might not be exaggerated, though history tells me to keep a hand on my wallet when listening to claims made by the people who dream these things up. As long as Wall Streeters are bundling the bonds for sale to hedge, pension and mutual funds, I’ve got no complaints. But don’t be surprised to hear a sales pitch arguing that sophisticated individual investors could use some death bond diversification, too.

A couple of simple online searches tell me what I need to know for now: Many of the same characters from the old viatical business are now working the life settlement trade, which is to say that securities regulators are beginning to unearth scams. In some cases, promoters have attempted to persuade people (who aren’t terminally ill) to take out life insurance strictly for the purpose of selling it. In others, they’ve inflated the expected returns based on the life expectancies of insurance holders. It’s no wonder the National Association of Securities Dealers recently issued a warning about abusive practices in the industry.

So unless or until the industry gets absorbed by the mainstream investment community and sheds its sketchy past, steer clear.

Source: Scott Bernard Nelson is a newspaper editor and freelance writer in Portland, Oregon.

Life Partners had hoped the top court would resolve conflicting opinions on the matter in two federal circuit courts.

Life Partners had appealed a U.S. 4th Circuit Court of Appeals case in Richmond, Va., that went against the company on April 30. It upheld a lower court that said viaticals are to be considered part of the insurance business and thus can be regulated by states.

A 1996 decision by the U.S. Court of Appeals in Washington, D.C., ruled that Life Partners transactions did not constitute the business of insurance.

The Virginia case involved a viatical policy sold by a terminally ill woman who had invoked the state’s minimum pricing provision. Life Partners had paid her $29,000 for her $115,000 policy. But she later learned that she would have been entitled to at least $69,000 under the state’s pricing policy.

Utah insurance regulators met last week with representatives of the life settlement and life insurance industries to discuss proposed revisions to the state’s viatical law. Utah officials have not yet decided whether they’ll support a five-year waiting period before new policies can be settled.

Not surprisingly, the proposed waiting period was the most controversial item discussed at the Oct. 17 meeting. The waiting period is supported by the National Association of Insurance Commissioners (NAIC) as a means to thwart stranger-originated life insurance (STOLI) policies. These are policies taken out by people who intend from the start to sell them, primarily to benefit investors who don’t have any relationship with the insured.

“There were a lot of hard feelings between the two industries and it was apparent it will probably remain that way for years to come,” said Brad Tibbitts, director of the life and property casualty divisions for the Utah Insurance Department.

Those attending included Michael Freedman, senior vice president of government affairs for Coventry First, a Fort Washington, Pa., provider; Doug Head, executive director of the Life Insurance Settlement Association; Michael Lovendusky, vice president and associate general counsel for the American Council of Life Insurers; Michael Sonntag, Utah lobbyist for the National Association of Insurance and Financial Advisors; and Brent Scott of Equitable Life and Casualty Insurance in Utah.

Tibbitts said his staff plans to meet in another week or so about the five-year waiting period.

“It’s one of those issues that if it’s going to drag our bill down to the point where they [legislators] throw it out, we’re not going to make a big issue of the five-year thing,” Tibbitts said.

An apparent STOLI scheme prompted about 50 calls to the Utah Insurance Department
earlier this year from Utah residents about offers of free insurance, Tibbitts said.

“We had a rush of phone calls in the spring and summer months on stranger-owned life
insurance,” Tibbitts said. “Some were pretty bad. ‘You sign up for this and we’ll give you $100,000.’ In essence you loan us your name and we’ll give you all this money.”

The state believes several producers were involved in the situation and their names were sent to the department’s market conduct section for review, Tibbitts said.

Other changes to Utah’s viatical law proposed by the state’s insurance department include an expansion of Utah’s rescission period from 15 to 30 days after the insured receives his or her proceeds, and a new financial responsibility requirement for providers, according to Betsy Jerome, senior life analyst for the insurance department. The department also intends to establish a new rule requiring providers to put up a $250,000 surety bond. They’re currently required to put up only a $50,000 bond.

Jerome said the department wants to ensure that death benefits go to the insured person’s beneficiary in cases where the rescission periods on policies are still in effect when the insured person dies. In one family trust case in the state, it took four to five months for a beneficiary to receive death benefits, after the insured died during the rescission period, Jerome said.

Source: Life Settlements WireÂ

Two indicted men pushed bonds that were supposed to ensure ‘viaticals’ payoff.

By Dale Kasler

Pouring $430,000 into obscure investments called “viaticals,” John Wilson never wavered. The deal came with a security blanket: bonds issued by a Michigan company ensuring his payoff.

“It was guaranteed and insured, and there was no way in the world you could lose a dime,” the Paradise resident said.

But the bonds were pure fiction, prosecutors say, a scam perpetrated by two Detroit-area men who played key roles in an alleged Northern California Ponzi scheme that swindled Wilson and hundreds of others.

The two men, David Goldenberg, 49, of Bloomfield Hills, Mich., and Mark Eric Wolok, 42, of West Bloomfield, Mich., were among eight people indicted on fraud charges in August by a federal grand jury in Sacramento.

The scheme centered on a Redding investment firm, but the Michigan men were essential components, officials say. The bonds they issued gave investors the confidence to put their money in.

For Wolok and Goldenberg, the indictment is the latest in a series of legal problems. The men and their various companies have been dogged for years by lawsuits, disciplinary actions, multimillion-dollar judgments and a contempt citation, almost all stemming from their involvement in the world of viaticals.

They’ve allegedly pocketed millions from phony bond sales. Yet Wolok filed for personal bankruptcy earlier this year.

Their company, International Fidelity & Surety Ltd., has its home office in Michigan, but its Web site says it’s incorporated in the South Pacific island nation of Vanuatu. In truth, it exists only on paper, prosecutors say.

“There is no company, it’s just Goldenberg and Wolok playing house,” said Michael Quilling, the court-appointed receiver who’s trying to recoup money for investors in the Redding case. Quilling is suing the pair in a separate case in Texas.

The two men, like all the defendants in the Redding case, have pleaded not guilty.

Wolok’s lawyer, Robert Joseph Peters of Sacramento, said Wolok mostly handled construction bonds. “It appears that Mr. Goldenberg handled the viaticals; he was the hands-on player,” Peters said.

Goldenberg’s lawyer, David J. Cohen of San Francisco, noted his client’s not-guilty plea but had no further comment.

The case involves Secure Investment Services Inc., a Redding firm that sold $25 million worth of viaticals since 2001.

Viaticals, or life settlements, are shares in a life insurance policy that was purchased by someone else but sold for cash. When that person dies, the investors share in the death benefit.

Besides hefty returns, Secure Investment promised safety. Bonds sold by Wolok and
Goldenberg guaranteed that clients would get paid on time if the insurance policyholders didn’t die when they were expected to.

“I wouldn’t have invested otherwise,” said Stan Finberg of El Dorado Hills, who invested $10,000.

The insurance policies are legitimate, and some Secure Investment clients did get paid. Wilson made $80,000 early on and invested another $430,000.

But officials say the Redding firm fed its clients bogus information about policyholders’ life expectancies. When the policyholders didn’t die on time, and the bonds turned out fraudulent, the scheme unraveled.

Secure Investment has known for some time of the problems with the bonds. The Redding firm, also known as American Financial Services Inc., sued Goldenberg and International Fidelity in October 2005 in Shasta Superior Court, accusing them of defaulting on their obligations. Secure Investment owner Donald Neuhaus, one of those under indictment, contends he spent $2 million for the bonds.

“It is Don’s position that he relied on them to do what they had contracted to do,” said Neuhaus’ lawyer, Bruce Locke of Sacramento. Neuhaus’ lawyer in Redding began warning investors in 2005 of serious problems with International Fidelity.

Yet Neuhaus’ firm was in trouble well before then. It was hit with a state cease-and-desist order in February 2003 for failing to register its investment securities. And officials say Neuhaus continued luring investors with phony promises long after it sued International Fidelity.

“Up to the day of their indictment … Neuhaus and his associates were continuing to sell viatical/life settlement investments by false statements and omissions,” says an affidavit by Special Agent Michael Woo of the Internal Revenue Service.

Locke, however, said Neuhaus believed he “was in compliance with the law right up to the time that they closed him up.”

Still, Quilling said Neuhaus should have known International Fidelity was a sham.

“A reasonable, legitimate businessman would have seen red flags all over this thing and would have realized a bonding company in Vanuatu and no audited financials … was not a legitimate bonding company,” the receiver said.

The South Seas connection dates to the mid-1990s, with formation of a company called
United Fidelity Corp. It was incorporated in the Cook Islands, east of Australia, and its principals were Wolok and his father, Sanford, court records show.

Just two years after it was founded, brochures distributed to viaticals investors said United had assets of $307.4 million, according to a suit filed against it by some investors in 2001. The suit,which called United a fake, is pending in Denver.

More legal problems quickly piled up. A 2002 lawsuit in Michigan accused Goldenberg and Mark Wolok of viaticals fraud. A cease-and-desist order in Florida said International Fidelity was selling viatical bonds and construction bonds illegally. Texas ordered the firm to stop selling insurance products.

Wolok and Goldenberg were sued in two more viaticals cases this year, in Michigan for $600,000 and in Texas for $45 million.

In the Texas case, Quilling, serving as court-appointed receiver, obtained judgments against Wolok and International Fidelity. The judgment is almost surely uncollectible, he said.

Wolok’s problems nearly boiled over last winter. The judge in the Denver case fined him $272,000 for contempt of court, for violating an earlier order against transferring property. When Wolok said he hadn’t remembered the earlier order, the judge said the claim was “simply not worthy of belief” and threatened to have him arrested if he didn’t pay the fine.

Just before the deadline, Wolok filed for bankruptcy in Michigan. The fine was put on hold. Wolok and Goldenberg’s next brush with the law came in August, with their arrest in the Redding case.

Other Viatical Fraud and Scam Links:
Viatical Settlement Company Pleads Guilty
Mutual Benefits
SEC Charges Brothers in Insurance Scam

The problem with this article is that his numbers do not make any sense at all. An $8 million life insurance policy selling for $4 million, then a life settlement company buying it for $6 million, and then an investor buying an $8 million dollar policy for $8 million. Even it is a paid up policy there is not return on investment. Also unless this is the case of a viatical, there is no way they are selling for that price. Life Settlements are usually 10 to 40 percent of the face value. Article is below, feel free to post your comments as well.

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A banking lawyer who spent two years in US federal prison in the early 1990s following a racketeering conviction told a Cayman conference this week that failing hedge funds are fertile ground for money launderers.

Kenneth Rijock now earns his living as a financial crime consultant for the banking industry helping spot questionable investments before cash from those schemes enters the financial system.

“I’m afraid of hedge funds,” Mr. Rijock told the Global Compliance Solutions conference at the Marriott Resort on Monday.

“If I’m a money launderer, I’m going to look for some hedge funds that are very distressed and maybe even about to go under,” Mr. Rijock said. “And I’m going to be the angel, the saviour. I’m going to come in there and say that I represent some South African investor, or some other well contrived story.”

“I’m going to put enough cash in (the fund) so that the manager can refund money, knowing that I’m not going to get a huge amount of due diligence (in determining where that money came from).”

“(Bank compliance officers) should understand, if you have a hedge fund you’re working with, and all of a sudden they have a major problem and then later, a huge influx in capital I’d sure like to know what the source of funds is on that.”

Mr. Rijock said there’s been a lot of international press lately on problems with the US sub-prime lending market which has affected hedge fund investments. However, he said there are other investments hedge funds make in what are usually called “traded life or life settlement” policies which he considers equally troubling.

“It’s part of the reason why (hedge funds) are failing,” Mr. Rijock said.

To help explain those types of investments, he set out a fictitious scenario for conference attendees. In that scenario, the retiring vice president of a prominent US automaker decides he doesn’t want to keep the $8 million key employee insurance policy his company had on him because the premium payments are too high.

The $8 million policy in Mr. Rijock’s scenario is sold to an insurance broker for $4 million. The broker turns around and sells it to a life settlement company for $6 million, who in turn sells it to an investor for $8 million.

“Hedge funds have been buying up these policies, because they know the returns are so high,” Mr. Rijock said. “The problem is, that some of the companies are marginally unethical and they play with these (life settlement policy) figures. They modify and alter some of these items, and some of these companies are just fraudsters.”

“So you have a bunch of hedge funds (that) are holding assets which are not performing. This is fertile ground for some money launderer to get in there.”

Mr. Rijock listed failing hedge funds among the new areas which those seeking to launder money from illicit drug sales or other illegal activities may use to hide their profits.

Source: Cay Compass

Life Settlement Info and Life Settlement Magazine are both working on life settlement hedge fund pieces, keep checking back.

Then, in 2005, the “Agents Insurance Association,” (AIA) a New York organization, contributed $5,000 to the NDGOP. AIA shares an address with a “InsCap,” the major
player in the viatical settlement industry. (Google the AIA and see if you find anything more about them than I did about them. I found next to nothing.)

In 2006 — a year when Jim Poolman wasn’t even running for office — a “Sara Bachrach” contributed $25,000 to Jim Poolman’s political campaign. The same year, an “Ira Brody” made a $15,000 contribution to the NDGOP. Bachrach and Brody shared the same street address. Brody is an executive at InsCap, the big company that does viatical settlement work of the type most benefitted by Poolman’s back-room handywork. That’s $40,000 from one New York household.
New submitted by: Jared HochelÂ

On August 24, 2007, the Florida Office of Insurance Regulation (OIR) published a notice that it intends to develop a new rule that would require viatical settlement providers and brokers to make detailed and comprehensive disclosures to viators regarding the terms of the offer and the compensation to be paid to brokers in viatical and life settlement transactions. A viator is an owner of a life insurance policy who sells the policy to an investment company, known as a viatical or life settlement provider, for a purchase price that is greater than the cash surrender value of the policy. A broker acts as the agent of a viator in a viatical or life settlement transaction. Viatical and life settlements are regulated by OIR pursuant to Florida Statutes Part X, Chapter 626.

Under the preliminary text of the proposed rule, to be numbered 69O-204.101, Florida Administrative Code, a viatical settlement provider would be required to give a disclosure statement to a viator and obtain the viator’s signature on the statement prior to the viator’s execution of a viatical settlement contract. The disclosure statement would be required to include the following:

- The name of each viatical settlement broker who receives compensation and the amount of compensation received by that broker. As used in this rule, the term “compensation” would include anything of value paid or given to the viatical settlement broker in connection with the viatical settlement contract.

- A complete reconciliation of the gross offer or bid by the viatical settlement provider to the net amount of proceeds or value to be received by the viator. As used in this rule, the term “gross offer or bid” would mean the total amount or value offered by the viatical settlement provider for the purchase of one or more life insurance policies, inclusive of commissions, fees, or other expenditures related to the viatical settlement transaction.

A viatical settlement provider would have to give the viator an amended disclosure statement if anything changed regarding the broker compensation or gross offer or bid. The amended disclosure statement would have to identify clearly any information that changed from the preceding disclosure statement. The viator’s signature also would be required for the amended disclosure statement.

In addition to requiring the viator’s signature on the disclosure statement, the preliminary text of the proposed rule indicates that the viatical settlement provider also may be required to obtain the signature of any brokers who receive compensation in connection with the viatical settlement transaction.

Although viatical settlement brokers have been required since 1999 to disclose their compensation to viators pursuant to Florida Statutes Section 626.99181 OIR has not required a particular form to be provided for that disclosure, and the obligation is not placed directly on the viatical settlement provider to ensure that the disclosure has been made by the broker. The disclosure requirements of the proposed rule appear to be aimed at preventing certain practices that OIR has characterized as “fraudulent or dishonest.” The preliminary text of the proposed rule contains requirements that are similar to the new disclosure requirements of the amendments to the Viatical Settlements Model Act adopted by the National Association of Insurance Commissioners in June 2007.

OIR scheduled a workshop on September 11, 2007 in Tallahassee, Florida to receive public comment regarding the development of proposed rule 69O-204.101. If you have any questions regarding this proposed rule development, please contact Wes Strickland.

Source: Wes Strickland

Call 1-888-973-8377 to discuss your Viatical situation.

The Meteor Senior Life Settlement Sterling fund, which comes to market on 1 October, invests in policies issued by American-based life assurance companies such as AIG
and Prudential.

ViaSource, the specialist life settlements provider, is the investment adviser and is responsible for selecting policies. EEA’s Simon Shaw then picks from these to build the portfolio.

The product largely mirrors EEAs existing Life Settlement fund, launched in November 2005, although Meteor’s vehicle will invest in policies from slightly higher-quality companies.

Source: Investment Week

For more Viatical and Life Settlement Portfolio info, visit Life Settlement Information.