Case 1:12-cv-00033-JRN Document 12 Filed 02/29/12 Page 1 of 32

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Case 1:12-cv-00033-JRN Document 12 Filed 02/29/12 Page 16 of 32As conceded in the Complaint, Dr. Cassidy did not begin providing LE estimates to LPIuntil after his predecessor, Dr. Kelly, passed away.28 Thus, Dr. Cassidy's first LE estimates werenot provided until October 1999. 29 According to Plaintiff, the average LE generated by Dr.Cassidy from 2000-2005 was 3.8 years. 30 By way of example, then, the insureds underlyingpolicies facilitated for the first half of calendar year 2000 would not have reached the estimatedLE until, on average, the latter half of calendar year 2003. For policies facilitated in latter half ofcalendar year 2000, the insureds would not have reached the estimated LE until, on average, thefirst half of calendar year 2004, and so on.Despite the foregoing, Plaintiff relies on LPHI Audit Committee minutes discussing thenine months ended November 30, 2002 in alleging that "at least as early as 2003, it was apparent... that the LEs used ... were materially short.,,31 Plaintiff then assumes that the reference inthe minutes related to Dr. Cassidy's LEs when Plaintiff alleges that Pardo and Peden did not"determine why Life Partners was not seeing the expected number of maturities based onCassidy's LEs.,,32 However, neither the minutes nor Plaintiffs conclusory allegation establish"knowledge" regarding the purported inaccuracy of Dr. Cassidy's LEs as of November 2002,especially when considered in light of Dr. Cassidy's 3.8 year average LE. As the U.S. SupremeCourt has noted, "[ d]etermining whether a complaint states a plausible claim for relief will, ...be a context-specific task that requires the reviewing court to draw on its judicial experience andcommon sense." Iqbal, 129 S.Ct. at 1950; see also United States v. Lloyds TSB Bank PLC, 639F. Supp. 2d 326, 342 (S.D.N.Y. 2009)(applying common sense in rejecting the Government's28 CompI., ~5.29 Dr. Kelly passed away on September 20, 1999. See the redacted, certified copy of Dr. Kelly's death certificate,included in the Appendix as Exhibit B.30 CompI., ~40.31 CompI., ~49 (emphasis added).32 CompI., ~50.DEFENDANTS LIFE PARTNERS HOLDINGS, INC. AND R. SCOTT PEDEN'S MOTION TO DISMISSAND BRIEF IN SUPPORT - Page 10
Case 1:12-cv-00033-JRN Document 12 Filed 02/29/12 Page 17 of 32claim of securities fraud). Common sense dictates that Plaintiffs conclusory leap of faith mustbe rejected as a basis for imposing knowledge, and thus, securities fraud liability on Defendants.What is most shocking about the Complaint's allegations is the inexcusablemisrepresentation of LPI's annual filings with the Texas Department of Insurance ("TDI").More specifically, Plaintiff represented that "[t]he reports filed by Life Partners for 2003 through2009 reveal that insureds underlying approximately 80% of matured policies that the Companybrokered had outlived Cassidy's LEs.,,33 To the contrary, however, the TDI reports establish that45.6% of the matured policies from 2003-2009 that were arguably based on Dr. Cassidy's LEsactually matured before, or in the month of, the estimated LE. 34Moreover, the reportsestablish that an additional 14.64% of the policies matured within 1 year of the LE projection,and another 12.97% matured within 2 years of the LE projection. 35 Therefore, more than 73%of the maturities from 2003-2009 were on, before, or within 2 years of Dr. Cassidy's estimateshardlyan indication that Dr. Cassidy's LEs were 8 to 9 years off. 36In addition to the foregoing, Plaintiff provides its own table in the Complaint, fromunknown origin, claiming that it purports to depict the policies exceeding Dr. Cassidy's LEs "forthe universe of policies from which his success rate is measurable.,,37 However, the chart andsurrounding allegations fail to satisfy the Rule 9(b) requirements, as the chart fails to specificallyallege the source of the information, and fails to specify whether each of the Defendants receivedsuch information, in what form, when, and whether the conclusions Plaintiff now draws weredrawn by Defendants during the relevant time periods. Absent that information, the chart and33 Compl., ~51.34 Included in the Appendix as Exhibits C-l through C-7 are true and correct copies of the portions of LPI's reportsfiled with the TDI from 2003-2009 showing the maturities during each of those respective years. It is appropriatefor Defendants to include same with the Motion to Dismiss because they are referred to in the Complaint. Dorsey,540 F.3d at 338. Exhibit D in the Appendix is a chart summarizing the Cassidy-related data set forth in Exhibit C.35 See Exhibits C and D in the Appendix.36 See Compl., ~40.37 Compl, ~~41, 54.DEFENDANTS LIFE PARTNERS HOLDINGS, INC. AND R. SCOTT PEDEN'S MOTION TO DISMISSAND BRIEF IN SUPPORT Page 11
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Case 1:12-cv-00033-JRN Document 12 Filed 02/29/12 Page 1 of 32

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