Hagens Berman represents the court-appointed lead plaintiff in this action, and filed a 150-page Amended Complaint on behalf of the plaintiff alleging that Life Partners Holding, Inc. (“LPHI”) (and certain of its officers) made numerous material false statements regarding the Company and its prospects during the class period.
 
Specifically, the Amended Complaint alleges that LPHI’s main business is as a “life settlement broker,” buying life insurance policies in the secondary market, and reselling fractional pieces of those policies to “accredited investors” through a multi-level marketing style network of licensees. LPHI makes money by being the buyers’ agent in these transactions and has strong incentives to make the life insurance policies appear more attractive to potential investors to encourage them to purchase such policies and allow LPHI to earn a commission. Because LPHI made its money in selling commissions, its income was dependent upon the volume of purchases it arranged – not the level of returns achieved by investors in the policies. The most important factor used by an investor in determining whether or not to purchase a life settlement is the life expectancy (“LE”) of the insured.  If the LE is calculated correctly, the policy will mature when expected, and the investor will achieve his targeted returns. If the LE is too short, the investor will receive less than his targeted returns.
 
The Amended Complaint alleges that, during the time period from May 26, 2006 through June 17, 2011, LPHI and the officer defendants made numerous material false statements regarding the company and its financial prospects. Specifically, the Amended Complaint alleges that Life Partners systematically used materially understated life expectancies to prospective purchasers of life settlements in order to induce them to purchase the life settlements at higher prices than they would, had the actual LEs been disclosed.
 
The Defendants filed a motion to dismiss the action, arguing that, among other things, Plaintiff had not sufficiently alleged material false statements, and that the Plaintiff had not alleged that the Defendants had acted with the requisite scienter, or fraudulent intent.
 
On May 15, 2014, the Court denied Defendants’ motion to dismiss in its entirety, allowing Plaintiffs’ claims under Section 10(b) and 20(a) to proceed against all defendants. The case will now proceed to the discovery phase and ultimately to trial according to a schedule that will be set by the Court.

# # #

About Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in nine cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List eight times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.

Media Contacts
Hagens Berman Sobol Shapiro
Ashley Klann
[email protected]
206-268-9363