Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Robert Dixon
Two former Texas investment executives have been sentenced to 10 years each in prison in connection with a life settlement fraud scheme they operated until 2009.
Howard G. Judah Jr. of Houston, former chairman and chief executive officer of National Life Settlements, and Gregory Jablonski of Castle Rock, Colo., identified as a principal at the firm, were sentenced Feb. 21 by a Harris County State District Court judge in Austin. The pair agreed to the sentences last November, after pleading guilty to charges of securities fraud and the sale of an unregistered security in the case more than two years earlier, according to the Houston Business Chronicle.
The two men faced up to 99 years in state prison. Judah has three prior convictions, including one for wire fraud resulting from an investment fraud in New York.
National Life Settlements sold unregistered securities that claimed to be backed by life insurance policies, the Texas State Securities Board said in a Feb. 20 statement. Regulators shut the company down in 2009 following an undercover investigation and resulting litigation, according to news reports.
The investment fraud attracted $30 million from investors through promises of an 8 percent to 10 percent return resulting from investments in life insurance policies, the state securities board said.
However, no investments were ever made, a court-appointed receiver testified in 2009 after the Texas State Securities Board seized the company. Characterizing it as a Ponzi scheme, the receiver testified that investments from new investors were used to pay older ones. Company executives used the investments to purchase real estate and cars, the receiver said.
In 2009, an Austin judge granted 320 investors in the company $19.8 million in a settlement agreement, enabling them to recover about 69 percent of the amounts they invested with National Life Settlements, the Houston Business Chronicle reported.
National Life Settlements allegedly skirted securities laws by offering investments through insurance agents, many of whom were not licensed or registered as securities dealers. The company allegedly paid some $4 million in sales commissions.
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