Saturday’s Wall St. Journal had this report on the growing crackdown in the life settlement arena. The story focuses on a Florida insurance became rich selling the policies, but who now faces criminal charges. According to the article:

Mr. Brasner’s reversal of fortune is part of a post-bubble crackdown by state authorities, aimed at the middlemen who played a crucial role in filling the pipeline for stranger-originated policies. In a frenzy that bears some similarities to the subprime-mortgage debacle, billions of dollars of stranger-originated life insurance was sold to senior citizens between 2004 and 2008 with the intention of selling the policies to investors. The investors thought they spotted an opportunity in policies that seemed underpriced; some funds accumulated hundreds of such policies.

This is yet another example of why individual investors should stay away from life settlement investments. There are just too many crooks in the business.

For more information on this topic, read about A&O Life Funds.