Aug. 17--The chief executive of Life Partners labeled as "spurious" claims of fraud leveled by Texas Attorney General Greg Abbott and the State Securities Board, which are asking a judge to appoint a receiver to run the company.
In a statement, Brian Pardo described Abbott's assertion that the company could collapse in two months as "outlandish and irresponsible."
On Thursday, Abbott asked a state district judge to allow the state to seize control of the Waco life settlement broker. A decision was expected today.
Shares in the Nasdaq traded company (ticker: LPHI) skidded downward 12.6 percent in late morning trading.
"We deny the allegations in the strongest possible terms," CEO Brian Pardo said in a company statement, refuting allegations that buying life insurance policies from elderly people and selling fractional pieces to investors meant it was trading in securities.
He said Life Partners already had proven its point in court on more than one occasion. Moreover, he refuted the state's claim that policyholders' life expectancy projections given to investors were rigged.
"First, the Federal D.C. Circuit Court of Appeals and Texas state courts have reviewed our life settlements and ruled that they are not securities," Pardo said. "Secondly, we did not misrepresent our life settlements. The life expectancy estimates we provided to purchasers were made by a third party in good faith."
The Securities and Exchange Commission in January said that a Reno oncologist with no actuarial training prepared the company's life expectancy reports, which it said proved to be wildly inaccurate.
Pardo also hotly contested the state's claim that the company was on the brink of collapse.
"The allegation that we are nearing insolvency is spurious," the Vietnam-era combat chopper pilot said. "It is speculation drawn from innuendo.
"The facts are that we currently have more than $10 million in cash on hand, $45 million in assets, and virtually no debt," he went on.
Referring to a federal insider trading suit, Pardo said: "Our business has largely stabilized after the blow we suffered with the SEC enforcement action last year."
The CEO said that Life Partners has liquidated "non-strategic" assets to raise $1.4 million and has another $1 million in net income.
"Given our asset base and cash position, our financial losses are manageable and do not threaten our ability to continue as a going concern. The objective facts refute the outlandish and irresponsible financial claims made in the suit."
Barry Shlachter, 817-390-7718
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