SEC Accuses LA Firm of $100M Life Settlement Scam
By Arthur D. Postal
InsuranceNewsNet
WASHINGTON – A Los Angeles-based life settlement broker is being cited by the Securities and Exchange Commission for alleged fraud in sale of life settlements.
The SEC is seeking an injunction against Pacific West Capital Group and its owner, Andrew B. Calhoun IV.
The company is based in Beverly Hills. The complaint was filed Tuesday in the U.S. District Court for the Central District of California
Calhoun declined to respond, as did Jason S. Lewis, his listed counsel at Greenberg Taurig in Los Angeles.
The SEC suit seeks an injunction against Pacific West, which is not registered with the SEC, and Calhoun. The complaint also seeks to recover fraudulent gains and civil penalties. The SEC also charged PWCG Trust of Ohio, which held the insurance policies, and five Pacific West sales agents.
The SEC charged in its complaint that that since 2004, Pacific West and Calhoun, a Beverly Hills-based life insurance agent, have raised nearly $100 million from life settlement investors. Since at least 2012, Pacific West and Calhoun allegedly defrauded investors by using proceeds from the sale of new life settlements to continue funding life settlement investments sold years earlier, the complaint said. Pacific West and Calhoun did not disclose this practice to investors and undertook it to make life settlement investments appear successful when, in fact, Pacific West had used up the primary reserves to pay premiums on those policies, the SEC complaint alleges.
According to the SEC’s complaint filed in U.S. District Court for the Central District of California, Pacific West and Calhoun made false and misleading statements about the risks of investing in life settlements, including the risk of investors having to make increased premium payments as insured individuals lived longer than Pacific West and Calhoun anticipated.
The SEC also charged that Pacific West and Calhoun misled investors about annual returns and have falsely represented to investors that their investments had nothing to do with Pacific West’s efforts and fortunes.
The SEC’s complaint charges Pacific West and Calhoun with violating the antifraud, securities registration, and broker-dealer registration provisions of the federal securities laws.
“Investors are entitled to fair disclosures about the risks associated with their investments,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office. “We allege that Pacific West and Calhoun did the opposite here by hiding and minimizing those risks in order to sell more life settlements.”
InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].
© Entire contents copyright 2015 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.
Souhegan Nursing Association facility to close; will consolidate with Merrimack’s Home Health Care and Hospice
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News