Life Partners Holdings, Inc., Brian D. Pardo, R. Scott Peden, and ...

historical experience, Cassidy’s average LE for all policies (including viaticals) funded from2000 through 2005 should have been at least 8 years longer. Cassidy’s average LE for lifesettlements funded from 2000 through 2010 should have been at least 9 years longer thanestimated.41. Cassidy’s success rate in accurately estimating LEs was abysmal. The followingchart shows, for the universe of policies from which his success rate is measurable, thepercentage of policies that have exceeded Cassidy’s LEs since Life Partners started brokeringpolicies based on those LEs:Fiscal YearPolicies Exceeding LE2006 88%2007 88%2008 89%2009 90%2010 91%42. In an effort to conceal Life Partners’ practice of using Cassidy’s flawedmethodology to systematically underestimate LEs, and the accompanying risk that Life Partner’sreliance on underestimated LEs posed to the Company’s business, Peden misrepresented thatCassidy’s methodology was consistent with industry practices. Peden misrepresented thatCassidy’s LEs were based on the 2008 VBT, a table published by the Society of Actuaries that iswidely used in the life settlement industry.43. In October 2008, Peden misrepresented to an investor that “the average LE isbased on how old the insured is right now and what the 2008 VBT tables say your LE [is].”When he made this statement, Peden knew that Cassidy used a census table that included allpersons, not a table, like the VBT, that includes data only for persons underwritten for lifeSEC v. Life Partners Holding, Inc., et al. Page 13Complaint