SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
Litigation Release No. 14849 / March 20, 1996
SECURITIES AND EXCHANGE COMMISSION v. LIFE PARTNERS, INC. and
BRIAN D. PARDO, Civil Action No. 94-1861 (D.D.C.)
On March 19, 1996, Judge Royce C. Lamberth granted an
emergency motion made by the SEC to prohibit the defendants from
proceeding with plans to resume sales of fractional interests in
viatical settlements under purportedly revised procedures. The
order comes just eight weeks after the Court specifically
enjoined the defendants from selling such unregistered investment
contracts. See SEC v. Life Partners, Inc., 912 F. Supp. 4
(D.D.C. 1996). That order, in turn, followed a decision issued
by the Court last August in which it held that the SEC had made a
strong prima facie showing that the defendants were making
materially false and misleading representations and omissions in
connection with the offer and sale of unregistered securities,
and directed the defendants to bring their operations into
compliance with the federal securities laws "forthwith." See SEC
v. Life Partners, Inc., 898 F. Supp. 14 (D.D.C. 1995).
In the order issued yesterday, the Court rejected the
defendants' claim that their changed procedures had taken their
offerings outside the scope of the securities laws. The Court
described the changes as "artificial and technical" and held that
the "so-called 'new' procedures are virtually identical to the
old ones from the perspective of the investor." "[I]t is neither
realistic nor feasible," the Court said, "for multiple investors,
who are strangers to each other, to perform post-purchase tasks
without relying on the knowledge and expertise of a third party."
The Court further noted that the third party would "almost
certainly be Sterling Trust," which has previously provided such
services in connection with the defendants' offerings and whose
president, Mike Posey, has just been installed as president of
Life Partners.
The defendants' appeals from the Court's orders of August
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. LIFE PARTNERS, INC. and BRIAN D. PARDO, Civil Action
On March 19, 1996, Judge Royce C. Lamberth granted an emergency motion made by the SEC to
The order comes just eight weeks after the Court specifically enjoined the defendants from
See SEC v. Life Partners, Inc., 912 F. Supp.
the Court rejected the defendants' claim that their changed procedures had taken their
"t is neither realistic nor feasible," the Court said, "for multiple investors, who are
The Court further noted that the third party would "almost certainly be Sterling Trust,"
The defendants' appeals from the Court's orders of August 30, 1995, and January 22, 1996,
As to the commencement of the action and the Court's prior orders, see Lit.
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