Death-benefits broker paying dividends in spite of lawsuits

[TexasTowelie]

Brian Pardo is not only the founder and CEO of Waco-based Life Partners Holdings but also the biggest shareholder, controlling more than 50 percent of the stock.

So when the troubled corporate parent of a death-benefits broker paid out $11 million in cash dividends last year, Pardo received $4.4 million -- despite three straight quarters of net losses.

And this month, he's getting more than $500,000 as Life Partners, whose business hasn't materially improved, announced yet another quarterly dividend -- 10 cents a share, down from 20 cents.

The dividends are being paid despite multi-front battles against state and federal regulators, class-action lawsuits lodged by angry shareholders and another by investors unhappy about the fractions of life insurance policies they bought through Life Partners. It didn't help that the auditor, Ernst & Young, resigned in June and another disowned an earlier financial statement.

Read more here: http://www.star-telegram.com/2012/03/17/3816096/death-benefits-broker-paying-dividends.html#storylink=cpy

[font color=green]BTW, Life Partners was the company that furnished an airplane to Governor Rick Perry early in his presidential election campaign.

I have mixed regard to the viatical industry. While I understand that it provides financial stability to those with terminal illnesses and chronic conditions to live their lives to the fullest, some people also treat it like they just won the lottery.

I also question why anyone would make an investment in a contract whose profit depends on whether a person is dead by an expected date (an euphemism for expiration date).

Based on the article, the business is a cash cow for the owner and his family.[/font]

[hobbit709]

1. Your last sentence answers the question.

[TexasTowelie]

2. True.

However, the point I was driving at was what investors would buy the fractional shares of the contracts that Life Partners purchased? Normally, most people go around and wish that people can live their lives to the fullest and longest--this group of investors may be at the next party that the insured attends and hoping that they choke on the appetizers.

The Pardo family serve as brokers of a product that they are attempting to redistribute their risk to poorly informed investors for a profit. The fact that they are withdrawing money from the company at alarming rates is a sign that many will end up losing their investments.