Judge stops Life Partners from selling securities in Colorado

A Denver District Court judge has issued a restraining order against Life Partners Inc. and Life Partners Holdings Inc., Colorado Securities Commissioner Fred Joseph said Wednesday.

Joseph filed a complaint on Wednesday alleging that the two entities were violating the registration, licensing and anti-fraud provisions of the Colorado Securities Act.

Judge Robert McGahey’s order temporarily prohibits the Waco, Texas-based companies, along with Life Partners President Scott Peden, from offering or selling securities in Colorado.

The defendants are accused of raising more than $11.5 million from more than 110 Colorado investors through fractionalized interests in viatical and life settlements. A viatical or life settlement is the sale of a life insurance policy by a dying or elderly person at a price discounted from the face value of the policy.

Investors pay the premiums and receive the face value of the life insurance policy when the insured dies. In turn, the insured receives a portion of the proceeds of the life insurance policy as a lump sum.