A Texas district court has ordered a life settlement firm to return about $19 million to state employees, retired educators and others who put money into investments that were allegedly backed by life insurance policies.

The case was brought by the Texas State Securities Board and the Texas attorney general. The Securities Board and the attorney general alleged that the life settlement investments sold by National Life Settlements L.L.C., Houston, were fraudulent and sold by unregistered brokers and agents.

Investors paid $28.1 million to National Life Settlements.

National Life Settlements said it was securing high-yielding promissory notes for investors with life settlement contracts, but state regulators have no evidence that the company actually bought any life insurance policies, according to an order issued by Texas State District Judge Stephen Yelonosky.

The settlement order means investors will get back about two-thirds of the money they invested in National Life Settlements, according to the Securities Board.

Janet Mortenson, a Houston lawyer who has been serving as the court-appointed receiver in the case, told the court that investors could see funds returned to them in December.

Texas Securities Commissioner Denise Voigt Crawford says such a large recovery in a securities receivership case is rare.

Crawford characterized life settlements as “highly speculative investments,” asserting that, “Investors should not be misled by claims that they offer safe, guaranteed returns.”

The Securities Board says National Life Settlements marketed its investments as safe products that would pay investors a steady return of 10% a year. The company solicited money from retired state employees and retired educators, and those retirees transferred millions of dollars from public retirement plans into National Life Settlements investments, according to court documents.