A&O Life Gets $11 Million from Costa Rican Bond Co.
It's being reported that the A&O bankruptcy trustee settled with Provident Capital for $11 million:
The bankrupt A&O life settlement funds will receive $11 million under a legal settlement with Costa Rican bond insurer Provident Capital Indemnity.
About 720 investors and creditors are owed about $92 million from seven A&O life settlement funds that filed for Chapter 11 bankruptcy. Federal authorities and Texas securities regulators are investigating allegations of fraud on the part of A&O's principals, Marwil said. He said 23 life insurance policies held by A&O funds remain active.
Many of the policies were supposed to be insured by Provident Capital. Provident is not authorized to write insurance in the U.S., the Securities and Exchange Commission said in an unrelated case. Texas insurance and securities regulators have issued cease-and-desist orders against Provident.
The Provident bonds were to pay the face value of a policy in exchange for transfer of the policy itself if the insured didn't die by a certain date.
That's $11 million more than I thought they would get out of Provident.
Here are my prior posts on A&O.
PCI missed its June 15th payment for $833,000 and change-why am I not surprised? If there are continued payments- and that's a BIG IF, I'm sure they will be even slower to pay. PCI wants to make it look like they are providing an effort, but just like Mr. Mckinney, their strategy is to delay, delay, delay. Meanwhile, the Trustee will have to make payments to keep policies alive as they continue to string us out. Unfortunately, there is not much of an alternative. Their goal is to continue to protect the principals and their conspiring sales agents in trying to say that there is still a chance we might collect.We just spent nearly 1/2 million between the new Trustee and the Garden people. Looking pretty grim despite the good news of some recovery.
Mr. Investor, think what you will about PCI, but they were also duped in this scandal. Unlike anyone else involved, at least they've stepped to the table with some money. I completely understand their struggle for liquidity. PCI did not expect that every policy would require a claim. It is because the A&O gang presented PCI with bogus LEs from a hack LE company (Midwest Medical Review)...where the LEs are 50% shorter on average. I guess you could fault PCI for their poor upfront due diligence, but moving forward, they are not the bad guys as evidence of monies paid thus far and continued efforts to provide capital.
To me, the real crook is Russell Mackert. He purposely tanked the management of the fund in 2009 knowing that they were filing for b/k. I believe that he has tremendous liability and exposure here. He grossly failed his fiduciary duty.
As for the insurance agent, I don't believe they are the crooks here either. Imagine purchasing a Toyota and it turned out to be a lemon. Is it the salesperson's fault or the manufacturer of the car? Easy answer...the manufacturer. Same hold true here. The insurance guys were not the organizers here and were paid a modest commission. In my opinion, they are accountable at a very minimal level.
Dear Mr. Informed Guy,
I think you and Screwed have spent too much time with your life-size picture of Wahab. For your information this type of scam has been played out SEVERAL times before, including.... Secure Investments in the Sacramento SEC FRAUD case used PCI and Midwest Medical Review. PCI refused to pay on all six of its policies. PCI promised the Receiver to refund all the premiums paid to PCI by Secure Investments. They made one payment and that was it. They DEFAULTED on all six policies. PCI was issued a Cease and Desist by TDI in November, 2006, but PCI continued to sell bonding so the TSSB issued its C&D in January, 2008. PCI bonded wet paper policies and you suggest they have been the one scammed. They bonded all 57 of the A&O policies worth somewhere around $180,000,000 and they made a deal regarding just 2 of the policies. The Trustee can’t verify that PCI has the financial capability to meet even the negotiated $11,000,000. John Spalding also used PCI to bond the FRAUD he was selling. (John, this isn’t you, is it?) When you add up all the fraudulent bonding by PCI, even the worthless Dunn and Bradstreet evaluation (which is just about as good as the GLO crap), PCI re-insured more than its worth. D&B states any numbers that they show re: PCI are unverified and D&B disclaims even negligence on its part. PCI insured 57 policies for A&O. You mean PCI didn’t know Allmendinger was personal banker for Hibernia in 2004. Do you mean that PCI is an unauthorized insurer and unregistered in any state in the US because they didn’t know any better? That’s why no one wants to say they bought the PCI bond-TDI states specifically, anyone connected with the sale with an unauthorized insurer is responsible for any and all losses incurred. And you say PCI is the innocent victim. John, are you still selling this PCI backed FRAUD?
A&O used insurance sales agents to sell FRAUDULENT SECURITIES and you think they have limited blame. A&O couldn’t be successful without these conspirators. One such sales person suggested he made only 4% commission. I suppose there must be some really dumb criminals out there but since the going rate for Secure Investments was 15 to 20%, I have a hard time thinking that any of these guys would STEAL for less. These insurance agents certainly know what it means to sell an INSURANCE product that is unregistered and unauthorized. Are you saying they didn’t know? The government absolutely MUST pursue these sales agent thieves to prevent this from happening again. Tell me what happened to all the LaMonda brothers sales agents. The SEC Receiver for the case, won’t even publish a list of these thieves.
It wasn't only insurance agents selling this investment. Our state licensed financial adviser sold us this load, and I have it on good authority he was well compensated on the sale. He sold it to several retired teachers, who liquidated part of their teacher retirement lump sums. I also am aware that the company who held his license as a securities broker may have some liability in this, even though he sold "away" from his company. They are liable for all of his activities while in their employ, and we intend to pursue this when it makes sense to do so, i.e, after resolution of the bankruptcy, or default on the original contract in 2012.
Mr. Investor, by your rationale, anyone with a pulse is a criminal. You could make the case that the following people are criminals...
1) Your car salesman - for either selling you the "wrong" car or the "wrong" financing program.
2) Your doctor - for writing your prescriptions on more expense drugs.
3) Your real estate agent for making the representation that your last real estate purchase was a "good value"
4) You p&c insurance agent - for putting with a company that he has close relations or potential "incentives".
and the list goes on and on and on...
How are the sales ppl to know what is approved and/or registered and what's appropriate? Ultimately, this is the responsibility of the sponsor (A&o). I will concur that there is some liability on the part of the agents, but certainly not as criminals. When you buy a car, does the warranty come from the dealership or the manufacturer? Let's not pile on sales agents. Again, they are not boys scouts, but they aren't responsible for the fraud that occured at the management levels of A&O.
Dear Mr. Informed Guy,
You and I do agree on some points:
1. If a car salesman sells me a used car that he knew or should have known was from a flooded area, yeah, it’s a fraudulent sale.
2. If my doctor does an angiogram and places a stent in my heart without any indication, he committed fraud against me and my insurance company.
3. If a real estate agent sells me a house next to a proposed city dump that agent was fully aware of, yeah, it’s a fraudulent sale.
4. If my insurance agent sells me an insurance policy and uses an unauthorized and unregistered insurance company that fails to pay my claim, yeah, he committed fraud. An insurance agent is LICENSED by the State Insurance Department. You mean to tell me that it’s not an agent’s BASIC knowledge to see if the company the insurance agent intends to sell a customer is not registered with that SAME insurance agency from which the agent obtains his LICENSE. The FRAUDULENT agents relied on the naiveté of the investors who bought this FRAUD. If the investors knew enough to call the State Insurance Agency, they NEVER would have bought this FRAUD. The agents many times would say anything to make a sale. They relied on the notion that it’s his word against mine.
5. You want me to think that the guy who says “I didn’t know that the guys who got in my car, just robbed the bank. How was I to know?”
6. “I had NO idea that the TV sets I was selling out of the back of my truck were stolen. How was I to know?”
7. Your right, THIS list goes on. Because our government agencies have continued to FOSTER this CRIMINAL activity by not only allowing these sales agents to escape justice, but to continue to defraud other customers, one might consider those agencies as ACCOMPLICES in a twisted way. Let’s face it, the sales agents are unlikely to be APPROPRIATELY punished. We INVESTORS must pursue these criminals in the only avenues we have; namely,
a. file a report against these guys to the state agency that licenses them (insurance or securities).
b. File lawsuits against the sales agents or file for FINRA arbitration, if appropriate. This is the only way this will stop. These FRAUDS cannot survive without the FRAUDULENT sales agents.
I spoke with the investigator at the State Securities Board months ago and was told that there was derogatory information about A & O available to anyone selling these products way before the Blue Dymond sale...a prudent agent wouldn't have sold this to the investors involved. They were promised above average compensation for these sales, and they went for it. They breached their fiduciary responsibility to their customers, plain and simple.
Mr. Investor,
I can certainly appreciate your passion and frustration with this process. For that, I truly sympathize with you.
Regarding the sales agents being fraudulent, I just simply disagree. They sold A&O not PCI. As far as I know, no PCI bonds were sold directly, therefore it's not the sales agent's responsbility to police A&O. Yes, PCI was NOT admitted to do business in Texas (and other states), but that responsibility falls on the sponsor/organizer...A&O.
In any event, it's a sad situation for all.
Mr. Informed Guy,
You have revealed one of the major recruiting tools that A&O and other FRAUDS like them have used to recruit you and others; namely, "don't worry, you can't blamed, it's all the company's fault(A&O). Maybe you joined later in the game but A&O originally sold unregistered promissory notes along with executed securities agreements in 2006. If you sell that, the sales agents are EQUALLY as guilty as the owners. After TDI C&D, A&O moved to IL. Wahab applied for an exemption form D the SAME DAY Illinois Securities filed an Order of Prohibition. It didn't take effect till January, 2008. That means, Mr. Informed Guy, that those agents were selling these securities without being registered or having an exemption for all of 2007. These agents (insurance and securities) are GUILTY,GUILTY, GUILTY! The whole thing collapsed in 2008. No different than selling a customer an unauthorized insurer and every bit as liable for any and all losses.
In case anyone missed it the trustee has filed a motion with the court to proceed with the sale of some of the policies to try to recover some money. There's a 70 page filing on the trustee website, www.lifefundstrustee.com, for review. The hearing is scheduled for August 18. No telling how much they'll get for all this, but hoping for more than nothing.