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

agreement to sell the policy for any reason. Moreover, death of the insured covered by thepolicy prior to or during the Rescission Period triggers an automatic rescission under the SellerAgreement.71. While it processes the Seller Agreement, Life Partners sends the medical file forthe insured underlying the policy to Cassidy for his review and analysis. Once Cassidycompletes his analysis, Life Partners prepares a confidential case history for each insured, whichcontains Cassidy’s LE. Licensees submit reservations on behalf of interested investors topurchase specified interests in a particular policy or policies. To secure their reservation,investors mail or wire money to the escrow agent to be used to purchase life settlements atclosing, and they deliver signed, but undated, “Policy Funding Agreements” to the Company.The Policy Funding Agreement specifies the policy or policies to be purchased, the acquisitionprice, and the escrow arrangements for receipt and disbursement of funds.72. After receipt of the Policy Funding Agreement, the Seller Agreement, and theaccompanying assignment documents, Life Partners forwards to the escrow agent the documentsnecessary for closing. A Life Partners employee responsible for coordinating funding sends theescrow agent a closing letter that provides instructions regarding the payment of funds at closing,including the amount to be paid to the seller, the amount to be placed into escrow for futurepremiums, and the residual amount to be sent to the Company. The closing of a life settlementtransaction occurs when the seller gets paid – i.e., on the Closing Date, as defined in the SellerAgreement.73. At all times relevant to the Commission’s claims, Pardo, Peden, and Martinparticipated in and/or monitored the process by which the Company processed and recordedrevenue from life settlement transactions. Martin, as CFO and head of the AccountingSEC v. Life Partners Holding, Inc., et al. Page 24Complaint