US hedge fund CarVal has walked away from a £40 million restructuring deal which would have seen 25,000 Lifemark investors repaid over a 14-year-period, according to sources close to the negotiations.

The options for Lifemark and the prospects for its investors, who put £350 million into the Luxembourg-based vehicle via Keydata, founded by Stewart Ford, have now narrowed.

Lifemark needs to secure funding through a restructuring deal or sell the life settlement policies it holds in order to bridge its severe liquidity problems.

We will continue to monitor and post updates…

Source: Citywire.co.uk – Read full article

Florida Insurance Agent Arrest

A Florida insurance agent was arrested on numerous counts of alleged fraud and grand theft in connection with a stranger-originated life insurance (STOLI) scheme involving $78 million in death benefits, according to the Florida Department of Financial Services.

Steven Brasner of Infinity Financial Group in Boynton Beach, Fla., was arrested at his office and booked into Palm Beach County Jail, according to the Financial Services department. He was arrested after an investigation by the Florida Division of Insurance Fraud and the State Attorney’s Office in Palm Beach County, Fla., the Financial Services agency said.

He allegedly submitted insurance applications to AXA Equitable Life Insurance Co. with false information on prospective insureds’ net worth and arranged for the policies to be sold on the secondary market in a STOLI scam.

A probable cause affidavit alleged that Brasner sought insurance for five seniors and said that the policies were not intended to be sold. It also alleged he earned $1.6 million in commissions on the $78 million worth of policies.

In addition to the AXA policies, the affidavit alleges that Brasner obtained another $6.5 million policy for an elderly woman with Transamerica Occidental Life Insurance Co., now known as Transamerica Life Insurance Co.

Brasner allegedly promised to pay the insureds 3% to 5% of the face value of the policies when they were sold after the two-year contestability period.

In the same case, AXA previously sued Brasner and others in June 2008 for alleged fraud in U.S. District Court for the Southern District of Florida.

Source: Press

Keydata Lifemark

Keydata Lifemark clients wait for restructure plan

Thousands of Keydata clients with life settlement products invested with Lifemark face a further wait to discover if they will recover their money as the company’s directors continue to work on a restructuring plan.

Lifemark announced on March 2 that a number of bonds underpinning several retail investment products provided and administered by Keydata had defaulted. As a result, 23,000 investors with £349m in these products will not receive the income payments due to them.

The bonds invest in life policies which require continuing premium payments. Lifemark believes is in the best interests of bondholders to use the remaining cash available to pay insurance premiums rather than making interest payments under the bonds, in order to preserve the value of the Lifemark portfolio.

The problem centres on mortality claims which have not occurred in line with expectations and therefore Lifemark’s advisers were made aware of the need for improved cashflow or amendments to the original aims of the bond.

Provisional administrator KPMG Advisory was appointed on November 20. Luxemburg regulator, the Commission de Surveillance du Secteur Financier is still considering a restructure proposal submitted by Lifemark on January 31.

Read complete article:
Money Marketing Keydata Restructure Plan

Wisconsin Life Settlement Bill

Senate Bill 513 is aimed at helping prevent Life Settlement Fraud in Wisconsin.

Currently the industry is unregulated in Wisconsin, which opens the door for fraud and abusive sales practices. Not to say that all life settlements are fraudulent – they certainly are not. AARP members fall into the age category where abuse typically occurs, which is why AARP is supporting this bill.

This bill will require full disclosure from life settlement providers, as well providing a licensing regime with continuing education requirements for brokers and consequences for defrauding consumers.

Full bill can be reviewed at:
www.legis.state.wi.us/2009/data/SB-513.pdf

Front paragraph:
Under current law, the owner of a life insurance policy that insures a person who has a catastrophic or life?threatening illness or condition, including AIDS or HIV infection, may sell the policy for an amount that is less than the expected death benefit under the policy in a transaction known as a viatical settlement. The person that makes the payment under the viatical settlement is known as a viatical settlement provider (provider) and must be licensed by the commissioner of insurance (commissioner). A person who, for a fee, offers or attempts to negotiate a viatical settlement between the owner of a life insurance policy and one or more providers is known as a viatical settlement broker (broker) and must be licensed by the commissioner. The commissioner may revoke, suspend, or refuse to renew a provider’s or broker’s license if the licensee misrepresented information in the application; engaged in fraudulent or dishonest practices or is shown to be untrustworthy or incompetent to act as a provider or broker; has been convicted of a misdemeanor or felony involving fraud, deceit, or misrepresentation; violated Wisconsin law regarding viatical settlements; or if licensed as a provider, failed to meet the minimum settlement payment requirements or demonstrated a pattern of making unreasonable payments to policy owners. Every provider or broker must maintain records for all viatical settlements and make those records available to the commissioner for inspection.

More info:
Life Settlement License
Wisconsin Life Settlement
Wisconsin Life Settlements

Richard Incandela

A two-time felon who Heritage Christian Schools officials say defrauded the school has been arrested in Florida on insurance fraud charges involving about $500,000.

Just before his arrest Monday, Richard Incandela, 57, attempted to solicit $528,000 from an undercover insurance investigator “to purchase life insurance policies not in existence,” according to an arrest affidavit filed in Hillsborough County, Fla. He was arrested on felony charges of scheming to defraud more than $50,000 and selling insurance without a license.

Then, on Monday, an insurance fraud investigator posing as the couple’s nephew met with Incandela in a St. Petersburg office. During that session, Incandela solicited money that he claimed would be used to purchase four insurance policies from two other people in deals known as life settlement transactions, Hirst said. In life settlements, people sell their life insurance policies to third parties who would then be entitled to any death payments.

Incandela was released from county jail on a $17,000 bond early Tuesday. It will be up to the Hillsborough County state’s attorney’s office whether Incandela should be formally charged with the crimes alleged in the arrest affidavit.

Incandela has two prior convictions, one for a $1.1 million fraud in Illinois and a second for grand larceny in Florida. Both convictions occurred in the early 1990s.

Source: Cary Spivak and Amy Hetzner of the Journal Sentinel

The Financial Services Authority (FSA) has warned of a liquidity gap at the heart of Keydata’s Defined Income Plans and accused the firm’s founder Stewart Ford of trying to mislead its investigators over £4 million paid to him by the business, court documents reveal.

The problem uncovered by the FSA is that the underlying US policyholders with the life settlement contracts held by Lifemark were not dying fast enough.

Although Lifemark’s $1.3 billion of life settlement assets are ultimately thought to be sufficient to meet its obligations, the 23,000 investors with £350 million in Lifemark could face delays in payouts in 2012-13.

The Lifemark bonds which underpin Keydata customers’ investments are managed by a Luxembourg-based company called Tandem Partners Sarl. ‘Lifemark is not making any comment at this time,’ said Colm Smith, director of Lifemark and Tandem.

Full Article:
www.citywire.co.uk/professional/-/news/wealth-management/

Ronald George Spomer Jr. has been charged with selling unregistered securities, engaging in fraudulent securities practices and failing to properly register as a broker, the newspaper reported.

The Wyoming investors were among 320 people who bought about $30 million worth of insurance-backed notes from National Life Settlements, a Houston company.

Texas securities regulators settled a lawsuit against the firm in September. Earlier this week, a Texas securities commissioner said investors will get back $19.8 million, or 69% of the money they invested in the company. Many of the investors were teachers and state retirees who put their retirement savings in the investment.

Source: News Story

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A Pentecostal pastor who bought a portion of the life insurance policy of an AIDS patient and Life Partners Inc., the Waco-based company that brokered the deal 13 years ago, settled their breach of contract lawsuit Tuesday after a day and a half of trial.

Under the terms of the settlement ironed out during the noon hour, Life Partners agreed to pay $150,000 to Earl Parchia, of Orlando, Fla., and Parchia agreed to surrender his interest in the life insurance policy.

Scott Peden, president of Life Partners, and David Tekell, a Waco attorney who represents Parchia, both said that they were pleased with the manner in which the lawsuit was resolved.

In an agreement dated Dec. 4, 1996, Parchia contracted with Life Partners to buy 42.8 percent of a policy on the life of a 36-year-old man who had been diagnosed as HIV-positive and with “full-blown AIDS,” according to the lawsuit.

The policy had a death benefit of $534,000, and Parchia and other investors paid $465,102 for the policy, the suit says.

As part of the deal, Life Partners reportedly agreed that Parchia would not have to pay more than a “policy purchase deposit” of $199,099. However, within two years, Life Partners told Parchia that “an escrow account established at the time of the funding had been depleted” and that he would have to start paying about $5,680 a year to maintain the policy.

“In response to these demands, and being totally at the mercy of Life Partners Inc., Parchia relented and paid $5,679.76 annually each year since 1998,” according to the lawsuit.

The AIDS patient is still alive, Tekell said.

By Tommy Witherspoon Tribune-Herald

The department said it was its largest fine against an individual in recent memory.

Michael Antonello

Michael J. Antonello, 57, of New Brighton did not admit guilt in the consent order. His attorney, Joe Wentzell, said his client’s practices were legal and said the settlement indicated the state could not prevail in a courtroom.

In the order, Antonello was accused of misrepresentations on multiple life insurance policies and engaging in “fraudulent, coercive or dishonest practices.” State regulators also alleged that he changed a client’s beneficiary forms after she died in 2006 by forging her signature.

The settlement is the conclusion of months of negotiations after the department filed civil charges against Antonello last spring. Department spokeswoman Nicole Garrison-Sprenger said Antonello can reapply for his license after two years.

The case revolves around the complicated purchase and sale of seniors’ life insurance policies.

Attorney Wentzell said Antonello was involved in what’s known as “life settlement,” the legitimate practice of a life insurance policyholder selling his or her policy to a third party.

The Commerce Department maintained otherwise, claiming that Antonello was involved in stranger-originated life insurance — or STOLIs — in which an outside party initiates the policy and offers cash payouts in exchange for having the speculator named as the beneficiary.

Source: Star Tribune

“This level of transparency is needed in our unstable economy when people may feel pressed to sell life insurance policies for their cash value,” said Bill Deal, director of the Idaho Department of Insurance.

To date 27 states, including Idaho, have passed legislation to protect the owners of life insurance policies.

Idaho’s Life Settlements Act is only three months old, but already department investigators are looking into several possible cases of fraud, said Gina McBride, supervisor of the department’s consumer affairs section.

Idaho law also makes it illegal for an unrelated adviser or investor to solicit someone to purchase a life insurance policy just to sell it to the investor. This is called stranger-originated life insurance, or STOLI.