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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
SECURITIES PAINE EXCHANGE COMMISSION VIATICAL INVESTMENTS UNITED STATES DISTRICT FLORIDA COMPLAINT SCHEME LIFE INSURANCE POLICIES JEFFREY PAINE STATES DISTRICT COURT JUDGEMENT ACT AGENT ABS SALE PURCHASE DEATH BENEFITS VIATICAL SETTLEMENTS INVESTORS NATIONWIDE NETWORK INDEPENDENT SALES AGENTS SOLD TERMINALLY-ILL VIATORS DISCOUNT NON-SPECULATIVE FINANCIAL INVESTMENTS PAID UNBEKNOWNST INVESTMENT FUNDS |
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17601 / July 8, 2002
Securities and Exchange Commission v. Frederick Brandau, Raphael "Ray"
Levy and Jeffrey Paine, (United States District Court, SD Fla., Civil
Action No.00-06618 CIV-HIGHSMITH)
The Securities and Exchange Commission ("Commission") announced today
that the Honorable Shelby Highsmith, United States District Court
Judge for the Southern District of Florida, entered a Judgment of
Permanent Injunction and Other Relief ("Judgment"), by consent,
against Jeffrey Paine ("Paine"), an attorney from West Palm Beach,
Florida. The Judgment enjoins Paine from violating Sections 5(a), 5(c)
and 17(a) of the Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5, thereunder. The
Commission's Complaint ("Complaint") alleged that from 1996 through
July 1999, Paine and others operated a massive Ponzi scheme through
American Benefits Services, Inc. ("ABS") and Financial Federated Title
& Trust, Inc. ("Federated"), two now-defunct Florida corporations.
Paine acted as escrow agent for ABS and Federated. The scheme involved
the unregistered, fraudulent offer and sale of investment contracts in
the form of fractional interests in the death benefits of life
insurance policies, commonly known as viatical settlements.
The Complaint alleged that the viatical investment scheme defrauded
over 5000 investors nationwide of between $80 million to $130 million.
The Complaint specifically alleged that ABS employed a network of
independent sales agents who sold the viatical investments on behalf
of Federated, which purported to purchase the life insurance policies
from terminally-ill viators at a discount. As offered, the viatical
investments were touted as fully secured, non-speculative financial
investments which paid a 42% return on a 36-month investment.
Unbeknownst to the investors, however, Federated only purchased a
small number of the policies and misappropriated the remaining
investment funds.
_________________________________________________________________
Modified 07/08/2002
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