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

60. Pardo and Peden reviewed and signed Life Partners’ Forms 10-K and 10-KSB forfiscal years 2006 through 2010. Martin reviewed and signed each of Life Partners’ Forms 10-Kfor fiscal years 2008 through 2010.H. Pardo Misrepresented Investor Returns During Conference Calls with Analysts andShareholders61. In at least two quarterly conference calls following earnings announcements bythe Company, analysts inquired about the average ROI for investors in Life Partners’ lifesettlements. In an October 2007 conference call, Pardo misrepresented that:Most of our clients are looking for IRRs in the 12 to 14 % range, and thisis quite common. Some will pay a little less, some a little more. But Iwould say that’s a fair assessment of what they are looking for and alsosomewhat on the conservative side of what we think they are going toactually get.In an October 2008 conference call, Pardo misrepresented that “I think if [clients] are expecting[11-12% returns], they will not be disappointed.”62. Contrary to Pardo’s representations, as of the 2007 and 2008 conference calls, theaverage or mean ROI for investors since the Company started brokering life settlements wasnowhere near the “conservative” 11% to 14% returns touted by Pardo.63. As alleged above, Pardo was fully aware of the known practice and undisclosedtrend of the Company’s use of materially short LEs. Pardo later acknowledged that theinformation Life Partners conveyed about historic ROI for its investors did not take into accountpolicies that remained active beyond their LE. He also acknowledged that, for such policies,investor returns could only decline, and more so with each passing day that the policy remainedactive.SEC v. Life Partners Holding, Inc., et al. Page 21Complaint