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SEC Sues Retirement Planners who Sold Life Settlements

According to the Securities and Exchange Commission (“SEC”), it has filed suit against a Texas retirement planning firm and its principals in connection with their practices in the sales of life settlement investments.  The SEC’s Complaint filed in the United States District Court for the Northern District of Texas names as Defendants NFS Group, LLC d/b/a Novers Financial a/k/a Safe Retirement Experts and its owners Christopher A. Novinger and Brady J. Speers, both residents of Mansfield, Texas.

According to the Complaint, the Defendants made false and misleading statements to investors to induce them to purchase fractional interests in third-party life insurance policies known as life settlements. Investors in fractional life settlements receive a portion of the future benefits payable on the life insurance policy when the insured dies. Typically, life settlements can only be sold to “accredited” investors who meet specific income or net worth requirements (i.e. individual net worth of $1,000,000, not including primary residence, or income of $200,000 in each of the 2 most recent years.) According to the SEC, the Defendants improperly qualified some of the investors by including anticipated income that the investors had not yet received such as 20 years-worth of future Social Security and pension benefit payments.

The SEC alleges that, between February 2012 and January 2014, Novinger and Speers fraudulently misrepresented investments in life settlements as “safe, guaranteed investments” that were “risk free” and “federally insured.” The Complaint also alleges that Novinger and Speers held themselves out to the public on their radio show “Retirement Experts Radio Show” as licensed financial consultants and “experts”, when the SEC claims that they actually have little to no training or expertise in securities and financial products.  In addition, the pair has previously been sanctioned by securities regulators in Oklahoma, Texas, and California.

The SEC’s Complaint states that the life settlements at issue were issued by Conestoga International, LLC, a Puerto Rico company, and EDU Financial Strategies, LLC, an Indiana company.

In the SEC’s Complaint, it is seeking a permanent injunction against violations of federal securities laws, disgorgement of ill-gotten gains, pre-judgment interest, civil penalties, and other relief as the court deems appropriate.

Before making any investment, investors should research the potential investment and the broker. Some helpful sites offering free information for investors are FINRA.org, Investor.gov, and NASAA.org.