Life Settlement Fraud

This is good news for investors who invested however, like most fraud cases the investors will most likely still lose a portion or all of their investment.

A judge approved the first step Monday in potentially paying back Texans who invested with a Houston company that is accused of scamming retired teachers, state workers and others.

With state District Judge Stephen Yelenosky’s green light, state officials will start a claims process by which alleged victims of National Life Settlements, LLC, can report how much they invested in the company. Authorities charge that the company was selling unregistered securities.

National Life Settlements allegedly solicited money from investors, who received promissory notes guaranteeing them a fixed rate of return, according to the Texas State Securities Board. NLS allegedly secured the promissory notes with life-settlement.

The company promised guaranteed returns of up to 10 percent a year for five years with little or no risk, according to the securities board.

But state investigators did not find in bank records any evidence that the company actually purchased any policies, said Texas Securities Commissioner Denise Voigt Crawford.

National Life Settlements’ assets were seized earlier this year and a receiver is now overseeing millions of dollars in assets held by the company. Of about $27 million that was invested with the company, about $20 million was recovered, according to the court appointed receiver, Houston attorney Janet Mortenson. She estimated about 300 Texans invested with the company, starting in 2006.

Should the company ultimately be found guilty, a judge could order the seized money to be returned to investors. Still, Mortenson said she doesn’t expect those investors to see all of their money returned.

A trial date has been set for Oct. 26.

Source: Stateman.com

The Securities and Exchange Commission accused Irvine financier Danny Pang on Monday of defrauding investors of hundreds of millions of dollars and obtained a court order freezing his assets and directing Pang to surrender his passports.

In a complaint filed in federal court in Los Angeles, the SEC accused Pang of defrauding investors by misrepresenting his background and the safety of his company’s investment products. The lawsuit also alleged that Pang used newer investors’ money to make interest payments to earlier investors.

U.S. District Judge Philip S. Gutierrez froze Pang’s assets and those of his company, Private Equity Management Group Inc. (PEMGROUP), and requested that he return any “ill-gotten gains” and any money that might have been sent overseas. Many of Pang’s clients lived in Taiwan, the SEC alleged. Gutierrez scheduled a May 11 hearing to consider whether to extend the emergency order.

This month Pang temporarily relinquished control of his company, which he said would conduct an internal review of management policies. The firm’s chief financial officer, Wilbur Quon, also stepped down temporarily.

In its complaint, the SEC alleged that Pang misstated to investors that he had earned a bachelor’s degree and an MBA from UC Irvine when he had no such degrees. He also told investors that he had previously worked as a senior vice president and high-tech merger advisor with Morgan Stanley when he had no such experience, the suit alleged.

Pang’s company has been offering securities since 2003, saying that it would invest in life insurance policies of seniors and in time-share real estate. It promised returns of 5.25% to 7% and said all investments were fully guaranteed by insurance policies, according to the SEC’s complaint.

More details will be shared once we get them.