Investment Scam Victims Include 403(b) Participants

A Texas state district judge approved the start of a claims process for Texans who invested with a Houston company accused of scamming retired teachers, state workers, and others out of more than $20 million.

According to the Austin American-Statesman, investors will now report how much they gave to National Life Settlements, which was charged by authorities in a civil lawsuit with selling unregistered securities. A principal in the Houston school district said she invested $55,000 with National Life, moving the money from her 403(b) retirement savings.

National Life Settlements allegedly solicited money from investors, who received promissory notes guaranteeing them a fixed rate of return, according to the Texas State Securities Board, the news report said. The company allegedly promised guaranteed returns of up to 10% a year for five years with little or no risk, according to the complaint.

The Board says the company secured the notes with proceeds from life insurance policies, but state investigators did not find in bank records any evidence that the company actually purchased policies.

According to the news report, National Life Settlements’ assets were seized earlier this year, and a receiver is overseeing millions of dollars in assets held by the company. State officials recovered about $20 million of the money that was invested with the company, according to the court-appointed receiver.

A Houston attorney who represents company officials said his clients weren’t dealing in securities and that they used investors’ money to buy beneficiary interest in policies. A separate company bought life insurance policies and paid the premiums, he said.