Financial adviser warns clients about investigators

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A year ago, Sharon Brady, a retired Tarrant County sheriff’s deputy, and her husband, Thomas, visited their Fort Worth financial planner intending to invest in a security bond.

But when they arrived at the Camp Bowie Boulevard office of James E. Poe, owner of Senior Retirement Planners, Poe told them there a was change in plans.

That bond sale was over, he said, but he had something else. He introduced the couple to Bruce Collins, chief operating officer of Retirement Value LLC., a New Braunfels company that specialized in life settlement investments.

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As Poe explained it, the company helps investors buy life insurance policies for older people who want to cash out and sell their benefits to investors. Investors pay the premiums, and when the original policyholder dies, investors reap the death benefits. The quicker the person dies, the greater the payoff.

Poe and Collins were quite enthusiastic about the investment, Sharon Brady recalls.

“They really played it up. They told us how bad these people’s health were, and if they died before the predicted time, we would get even more in return.”

The Bradys wrote a check for $50,000.

“And we regret it,” she says.

A month ago, the couple read in a Watchdog column that the Texas State Securities Board issued an order to Retirement Value to stop selling in Texas. The board accused the company of selling unregistered securities and failing to disclose relevant facts to investors.

Worried, the Bradys contacted Poe, who told me in an interview that Sharon Brady was “easily spooked.” He had about 20 clients he put into Retirement Value, so he decided to send each a letter.

The Bradys showed me Poe’s “Dear client” letter.

Poe wrote that the securities board had made similar claims against other life settlement companies but that the allegations never stuck. He predicted the same for the case against Retirement Value.  He predicted the same for the case against Retirement Value and called the securities board’s tactics “a serious abuse of authority.”

He continued, “Your money is safe.” Then he gave advice about what the investors should do if state investigators contact them:

“The TSSB will probably call you at least once, possibly several times, seeking a witness who will say that we failed to inform you of several material facts. The TSSB has, in the past, called other clients of ours, and asked a series of questions which imply that we have failed to explain how the products work.”

“We describe these calls as a ‘witch hunt’ to try to get evidence against the targeted companies. If the TSSB can collect a series of complaints of misrepresentations, they can use that leverage against the subject company in order to extract fines and concessions and, they hope, put the company out of business.

“We have been through this process before. We are proud to inform you that not a single client of our firm has ever asserted that we misrepresented these products. We don’t expect that result to be any different this time.

“The questions you can expect have been phrased as ‘did you know that?’ or ‘were you told that?’ or ‘explain what you were told about.’ Our clients have reported that the tone of the questions implied that their money might not be safe, the company might not be safe, there are convicted felons operating in some support company, Jim Poe might be in trouble, etc.”

He added, “We think that you should know that your response to the TSSB inquiry is totally voluntary. You are under no obligation to respond, or even to continue the conversation. We are not trying to discourage you from talking with the caller, just pointing out your choices.”

He concluded by writing, “We believe that RV will prevail once the facts are placed in evidence.”

Sharon Brady told me the letter offended her. She decided to file a complaint with the securities board.

She said, “When somebody tells you to be quiet, you go ‘Oh yeah? I’m an American. I don’t think this is right. If I’m quiet, all it takes for bad to happen is for good people to do nothing.’”

When I called Poe and asked about his letter, he answered: “Had I known that Sharon Brady was going to send it to you and you were going to print it in the newspaper, I might not have written it. But that’s the way it is. I stand behind it. Every word of it is true.”

I asked the securities board about the letter. In response, a spokesman showed me a copy of a temporary injunction approved May 28 by a judge in Austin.

The state has seized the assets of Retirement Value and placed a receiver in control of the company. The company is now apparently closed. No one answers the telephone.

I couldn’t reach a company lawyer for comment, but Christopher Bebel, a Houston lawyer who represents Chief Executive Richard Gray, is quoted in The Life Settlements Report, an industry newsletter, as saying that the allegations against Retirement Value are a “massive injustice.”

Poe told me that the Bradys’ money is safe because it is in an escrow account controlled by a law firm.

Court-appointed receiver Eduardo Espinosa told me in an interview that his job is to protect the investors and their money. He estimated that of the $50,000 invested by the Bradys in the company, about $35,000 went into the actual investment with the rest going for commissions, fees and profits for Poe, Retirement Value and the other buyers and sellers involved in the multi-layered sales system.

He said “hundreds of customers” are involved.


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Receiver Eduardo Espinosa


Espinosa said he believed false statements were made to potential investors and too-good-to-be-true high rates of return were promised. Retirement Value promised that the insured would die within the predicted time frame about 98 percent of the time. Actually, the number of those dying at the predicted time is closer to 50 percent, he said.

Sharon Brady said, “We feel helpless. We’re retired. We can’t go out and earn this money again and save it again. We depend on that money to guide us through our final years.”

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Update: Poe says in the above post, “We believe that RV will prevail once the facts are placed in evidence.”

Well, not so fast. In June 2010, Bruce Collins, the company’s former chief operating officer, agreed to a $319,000 settlement with the court-appointed receiver who now controls Retirement Value.

The securities board charged the company with selling unregistered securities and engaging in deceptive trade practices when it lured investors into buying insurance policies from policy owners.

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Read a previous report by Dave Lieber about how “Life settlements are the wild west of the investment industry.”

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

Dave Lieber's Watchdog Nation book won two national awards for social change.

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  1. [...] Advisers are about to be reigned in somewhat with the new consumer financial protection bill weaving through Congress. One provision requires full disclosure of broker fees, commissions and other charges levied on investors. In the past, some folks thought if they invested $50,000 they actually invested $50,000. Read about one such case here. [...]

  2. [...] There was the financial adviser who convinced his clients to invest $50,000 in a life settlements, but the company they invested in was put out of business by state regulators. Read that here. [...]

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