Life Partners Holdings Inc. and its officers were not only the target of permanent injunctions, but were also ordered to pay nearly $50 million in disgorgement and penalties after being charged by the SEC in 2012 with running a fraudulent disclosure and accounting scheme.
Also among recent enforcement actions by the SEC were charges against a California resident for selling shares of stock he never actually owned and fraud charges against two former executives of an assisted living provider.
California Man With Many Aliases Charged With Fraudulent Stock Sales
The SEC has charged Vinay Kumar Nevatia with fraudulently selling shares of stock that he never owned himself, but had bought for others several years before.
According to the agency, Kumar, who held himself out as an investment professional and used several aliases, sold $900,000 worth of stock he claimed to own in a privately held information technology company called CSS Corp. Technologies (Mauritius) Limited.
He’d bought the CSS stock in 2008 on behalf of the true owners, claiming to be legitimately able to do so, but then later told the new buyers that the shares were his own. Through a series of secret wire transfers and managing to induce the stock transfer agent into recording the fraudulent sales, he resold the CSS shares that were never his to begin with, and kept the money for himself.
But he didn’t stop there. He sent the original true owners of the stock phony updates on their now-gone holdings for more than a year after he had disposed of their stock in these subsequent sales in 2011 and 2012. The SEC said that Kumar has never been registered with the SEC nor licensed to trade securities.
The SEC has charged Kumar with violating the antifraud provisions of the Securities Act of 1933 and Securities Exchange Act of 1934, and seeks permanent injunctions, the return of ill-gotten gains, and a financial penalty.
LPHI Ordered to Pay $50 Million in Final Judgment
Life Partners Holdings Inc. and two of its executives, Brian Pardo and R. Scott Peden, who were charged by the SEC in 2012 with running a fraudulent disclosure and accounting scheme involving life settlements, were permanently enjoined and ordered to pay a total of nearly $50 million in a final judgment.
In the original action, the SEC had said they “misled shareholders by failing to disclose a significant risk to Life Partners’ business: the company was systematically and materially underestimating the life expectancy estimates it used to price transactions.”
According to the order, LPHI was ordered to pay $15 million in disgorgement and a civil penalty of $23.7 million; Peden was ordered to pay a civil penalty of $2 million; and Pardo was ordered to pay a civil penalty of $6,161,843. Former Execs Listed Fake Senior Center Occupants in Lease Deals
The SEC has charged Laurie Bebo and John Buono, then-CEO and then-CFO, respectively, of a Wisconsin-based assisted living provider, with listing fake occupants at some senior residences in order to meet the requirements of a lease to operate the facilities.
According to the agency’s enforcement division, the two put together a scheme involving false disclosures and manipulation of internal books and records when it looked as if their company, Assisted Living Concepts Inc. (ALC), would default on financial covenants in a lease agreement with a Chicago-based real estate investment trust called Ventas Inc., which owned the facilities.