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 9 of 32which are life insurance policies sold by a tenninally-ill person to another party.! More thanninety percent (90%) of the viatical settlements that LPI facilitated were for viators living withAIDS.2 Although only first identified in the early 1980s, as of mid-1997, more than 500,000people in the U.S. had been diagnosed with AIDS, and approximately half of those had died. 3 Inorder to address this catastrophic illness, a multitude of experimental drugs were introduced,with mixed results. As of 2003, studies emerged indicating that antiretroviral therapy appearedto prolong survival in HIV/AIDS patients by 4 to 6 years, although "no long-tenn survival data[was yet] available.,,4 Such antiretroviral therapy had been introduced in response to a prior drugtherapy thought to be significantly life-sustaining, but which was later shown to provide only aone-time, six-month benefit. s The foregoing exemplifies the era of uncertainty in which AIDSpatients lived during the first three decades of the known existence of the disease.While,ultimately, medical discoveries resulted in the extension of the lives of AIDS patients, suchlongevity extensions could not have been predicted, but rather, were only detennined inhindsight, after lengthy in-depth studies.In light of the unprecedented medical breakthroughs in the treatment of AIDS patients,beginning in fiscal year 2004, LPI began facilitating retail life settlements. 6A life settlementinvolves the sale of a life insurance policy by an insured who is not tenninally-ill but, rather, is a1 LPHI 2006 Form 10-KSB, p. 3, found at www.sec.gov. On a motion to dismiss, the Court may rely on '''mattersof which a court may take judicial notice.'" Dorsey v. Portfolio Equities Inc., 540 F.3d 333, 338 (5th Cir.2008)(quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). This includes documentsrequired to be filed with the SEC. See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1018 (5th Cir. 1996).2 LPHI 2005 Form 10-KSB, p. 6, found at www.sec.gov.3 Michael L. Closen, Symposium on Health Care Policy: What Lessons Have We Learnedfrom the AIDS Pandemic:Article: The Decade of Supreme Court Avoidance of AIDS: Denial of Certiorari in HIV-AIDS Cases and itsAdverse Effects on Human Rights, 61 Alb. L. Rev. 897, at 906 (1998).4 Joseph T. King Jr., MD, MSCE, et al., Long-Term HIVIAIDS Survival Estimation in the Highly ActiveAntiretroviral Therapy Era, Medical Decision Making, Jan.-Feb. 2003, at pp. 9-10, 14.5Id. at p. 15.6 LPHI 2004 Form 10-KSB, p. 3, found at www.sec.gov.DEFENDANTS LIFE PARTNERS HOLDINGS, INC. AND R. SCOTT PEDEN'S MOTION TO DISMISSAND BRIEF IN SUPPORT - Page 3