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

24. R. Scott Peden, age 47, has served as Director, General Counsel, Secretary andPresident of Life Partners Holdings, Inc. since 2000. Since its incorporation in 1991, Peden hasserved as Vice President and General Counsel of Life Partners, Inc. Peden is an attorney and hasbeen licensed to practice in Texas since 1990.25. David M. Martin, age 53, has served as the Chief Financial Officer for LifePartners Holdings, Inc. since February 2008. Martin is a Certified Public Accountant, licensed inTexas since 1984.FACTSFRAUDULENT AND MISLEADING REPRESENTATIONS TO SHAREHOLDERSA. Life Partners’ Business Model26. Life Partners, through its wholly-owned operating subsidiary, brokers the sale oflife insurance policies by policy owners (typically the insureds under the policies) to investors inthe secondary market, a transaction referred to as a “life settlement.” In general, Life Partnerspurports to distinguish between “viaticals” and “senior life settlements” based on whether or notthe insured covered under the policy is terminally ill or elderly. In the former case, it categorizesthe policies as viaticals, and, in the latter, as senior life settlements. Life Partners refers to seniorlife settlements and viaticals collectively as “life settlements.”27. The Company’s revenue model is designed to capture the residual monies in thelife settlement transactions it brokers (i.e., the difference between the buy and sale prices of theinsurance policy, minus transactional costs).28. Life Partners facilitates sales of fractionalized interests in a single policy tomultiple investors, a structure the Company refers to as “direct fractional ownership.” At thedate investors purchase an interest in a policy, they also contribute funds to escrow for futureSEC v. Life Partners Holding, Inc., et al. Page 9Complaint