DALLAS, March 15, 2011 /PRNewswire/ -- Attorneys from Dallas' Heygood, Orr & Pearson have filed a class-action lawsuit in Dallas County on behalf of investors who claim Waco-based Life Partners Inc. is wrongfully withholding thousands of dollars investors paid in order to purchase so-called "life settlement" policies.
Life Partners purchases life insurance policies from policyholders for the purpose of selling interests in those policies to groups of investors. Policyholders receive an immediate, but reduced, payment with Life Partners' investors receiving the full face value upon the policyholder's death.
A portion of the money investors pay goes into an escrow account that funds the premiums until the policyholder's death. If the policyholder dies before a date that is assigned by Life Partners, then the remaining escrow funds are supposed to be returned to the investors.
The lawsuit alleges Life Partners failed to return escrow funds to investor Helen Z. McDermott, who paid $12,500 for a 0.23 percent interest in a life settlement. Although the policyholder who sold the policy to Life Partners in 2008 had a 5-year life expectancy, the individual died the following year.
According to the lawsuit, Life Partners claimed the remaining escrow money was no longer available because it made additional "early" payments to the insurance company that held the underlying policy.
Her attorneys are asking the court to certify other Life Partners investors as a class because of the many people who owned shares in the same policy as Ms. McDermott, and because it is believed that other investors may be in the same position on other policies.
"We believe this is not the only time Life Partners has done this," says James Craig Orr Jr., the lead attorney for Ms. McDermott and a name partner in Heygood, Orr & Pearson. "There are hundreds, if not thousands, of similarly situated investors who are owed significant sums by Life Partners."
The lawsuit, Helen Z. McDermott v. Life Partners Inc., No. DC-11-02966, was filed on March 11 in Dallas County's 191st District Court.
Life Partners also is facing an investigation by the U.S. Securities and Exchange Commission over its life expectancy estimations after other groups of investors claimed that the company intentionally underestimated life expectancies as a way to entice investors to purchase shares of life settlements. Once those policyholders exceed their life expectations, investors are required to pay additional money to maintain the life insurance policy premiums.
For information, please contact Mark Annick at email@example.com or 800-559-4534.
SOURCE Heygood, Orr & Pearson