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

Case 1:12-cv-00033-JRN Document 12 Filed 02/29/12 Page 27 of 32For example, without any factual support, Plaintiff alleges that, "[d]espite their awareness thatthese policies may have been impaired when acquired, Defendants failed to properly evaluatepotential impairment.,,73 This allegation fails to satisfy the pleading requirements for scienter.Plaintiff further improperly alleges that "Pardo, Peden, and Martin understood that theCompany's impairment calculations depended on the validity of Cassidy's LEs.,,74 However,Plaintiff provides no factual basis to support the claim that (1) the policies at issue were allpurchased using Dr. Cassidy's LEs, (2) Defendants Pardo, Peden and Martin knew, at the timethat the policies were purchased, that the policies were "impaired," or (3) assuming Defendantsknew the policies were impaired, that Defendants knew the extent of the impairment.Next, Plaintiff contends that in the summer of 2010, in a response to a request by Ernst &Young, Defendants Peden and Martin provided a chart "on the most recent 300 maturities ofviatical and life settlement policies sold by Life Partners.,,75 Plaintiff then attempts to attach anefarious motive to the provision of the chart, when it alleges that Peden and Martin "failed toalert E&Y" that insureds underlying 1,200 of the outstanding policies had outlived Dr. Cassidy'sLEs.76 The absurdity of this claim is obvious - if, as readily admitted by Plaintiff, Peden andMartin provided E& Y with the "most recent" maturities, how was E& Y misled? Plaintiff doesnot allege that E& Y requested information regarding all outstanding policies, that Defendantsrefused to provide that information, or that Defendants provided false information in response tosuch hypothetical request. Absent such assertions, this allegation provides no basis to establishscienter related to LPHI's impairment analysis.73 Compl., ~119.74 Compl., ~126.75 Compl., ~127.76 Compl., ~127.DEFENDANTS LIFE PARTNERS HOLDINGS, INC. AND R. SCOTT PEDEN'S MOTION TO DISMISSAND BRIEF IN SUPPORT - Page 21