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Life Partners Holdings, Inc. (Nasdaq GS: LPHI), parent company of Life Partners, Inc., announced today that a Texas district judge on Friday refused to grant state officials the right to block Life Partners’ business or appoint a receiver. Judge Orlinda Naranjo’s order allows Life Partners to continue conducting its business in the ordinary course pending a temporary injunction hearing. An evidentiary hearing on the state’s petition for a temporary injunction is set for August 30, 2012.
The Texas Attorney General, acting for the State Securities Board, had filed suit against Life Partners, Life Partners, Inc., its Chairman and President, Brian Pardo, and its General Counsel, Scott Peden. Pardo and Peden are also directors of Life Partners.
The suit sought a temporary restraining order preventing Life Partners from doing business and appointment of receiver based generally on allegations that Life Partners’ life settlements are securities under Texas law and that Life Partners made various misrepresentations in the sale of the life settlements, including misrepresentations about the life expectancies of the insureds.
The judge did not rule that Life Partners’ sale of life settlements was fraudulent and constituted unlawful sales of unregistered securities as the state had alleged. The judge did require that Life Partners not destroy books and records or dissipate assets, including the payment of dividends pending the temporary injunction hearing. Life Partners has not declared dividends that are scheduled for payment before the injunction hearing.
Life Partners’ Chairman, Brian Pardo, responded, “The result of the hearing is that we can continue our business as usual. The court refused to jump to the conclusions urged by the state. The court essentially ordered a standstill pending an evidentiary hearing. We welcome the opportunity to present our case. The facts refute the state’s claims. What we regret is the damage done to our shareholders by the state’s misrepresentations.”