NLS investors to get most of their money back

Texans who invested with a Houston company accused of scamming state workers, retired teachers and others will get most of their money back.

State District Judge Stephen Yelenosky on Tuesday approved distribution of checks to hundreds of investors. Starting Thursday, they will get back nearly 70 percent of their money that was invested with National Life Settlements. Authorities have said the company sold unregistered securities and reached a settlement with the company in September.

National Life Settlements’ assets were seized this year, and a court-appointed receiver is overseeing millions of dollars in assets held by the company. Court officials said they were able to recover nearly $20 million of the $28.1 million invested with the company.

That’s an unusually high amount, said the receiver, Houston attorney Janet Mortenson.

Mortenson has estimated that about 300 Texans invested with the company, which had offices in Austin as well as Houston and South Texas. As part of a settlement with National Life, state officials agreed to waive any civil penalties against executives Howard Judah and Gregory Jablonski.

Neither Judah nor Jablonski have been charged criminally in the case. However, Mortenson said Tuesday that the Harris County District Attorney’s Office has contacted her about the case and has asked her for access to seized NLS computers and other possible evidence.

National Life Settlements solicited money from investors, who received promissory notes guaranteeing them a fixed rate of return, according to the State Securities Board. The company allegedly secured the notes with proceeds from life insurance policies.

But at the time the company went into receivership, investigators did not find any evidence in bank records that the company actually purchased policies, state officials said.

Mortenson called it a Ponzi scheme.

Ben Dominguez II , a Houston attorney who represents Judah and Jablonski, has said his clients had a legitimate business model. The men used investors’ money to buy beneficiary interest in policies, Dominguez said. A separate company bought life insurance policies and paid the premiums, he said.

Dominguez maintained that his clients didn’t do anything criminally wrong. The only reason all the money wasn’t accounted for, he said, is because the receiver sold the company’s assets at a “substantial loss.” “The bottom-line problem is that the receiver did not understand the business model,” he said.

Mortenson said there was evidence of partial interest in three life insurance policies held by a trust, but said they were bought late in the company’s life.