Read the Complaint - Law Offices of Howard G. Smith

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					                     UNITED STATES DISTRICT COURT
                      WESTERN DISTRICT OF TEXAS
                            WACO DIVISION

                                           ) No.
JEREMY GOAD, Individually and on Behalf of )
All Others Similarly Situated,             ) CLASS ACTION
                                           )
                               Plaintiff,  )
                                           ) COMPLAINT FOR VIOLATIONS
              v.                           ) OF THE FEDERAL SECURITIES
                                           ) LAWS
LIFE PARTNERS HOLDINGS, INC., BRIAN D. )
PARDO, DAVID M. MARTIN, and NINA PIPER, )
                                           )
                               Defendants. )
                                           ) DEMAND FOR JURY TRIAL
                                           )




                COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                           1
        Plaintiff Jeremy Goad, by and through his attorneys, alleges the following upon information

and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal

knowledge. Plaintiff's information and belief is based upon, among other things, his counsel’s

investigation, which includes without limitation: (a) review and analysis of regulatory filings made

by Life Partners Holdings, Inc. (“Life Partners” or the “Company”), with the United States

Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media

reports issued by and disseminated by Life Partners; and (c) review of other publicly available

information concerning Life Partners.

                        NATURE OF THE ACTION AND OVERVIEW

        1.      This is a class action on behalf of purchasers of Life Partners’ securities between May

29, 2007, and January 20, 2011, inclusive (the “Class Period”), seeking to pursue remedies under

the Securities Exchange Act of 1934 (the “Exchange Act”).

        2.      Life Partners, through its subsidiary, Life Partners, Inc., operates in the secondary

market for life insurance, generally known as “life settlements.” Life settlement transactions involve

the sale of an existing life insurance policy to another party. By selling the policy, the policyholder

receives an immediate cash payment to use as he or she wishes. The purchaser takes an ownership

interest in the policy at a discount to its face value and receives their ownership interest in the death

benefit under the policy when the insured dies. The Company acts as a purchasing agent for life

settlement purchasers. In performing these services, Life Partners identifies, qualifies and purchases

policies on behalf of its clients that match their buying parameters and return expectations. The

Company’s operating revenues are derived from fees for facilitating life settlement transactions

between sellers and purchasers. Since its incorporation in 1991, Life Partners claims to have

completed over 127,000 transactions for its client base in connection with the purchase of over 6,400


                        COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   2
policies totaling approximately $2.8 billion in face value.

       3.      On February 11, 2009, a research firm published a report that called into question

Life Partners business practices, specifically those relating to the determination of life expectancies

and the Company’s practice of charging egregious fees on their transactions.

       4.      On this news, the Company’s shares declined $2.82 per share, or 13.67 percent, to

close on February 11, 2009, at $17.82 per share, on unusually heavy trading volume.

       5.       In response to the report, Defendant Brian D. Pardo (“Pardo”) issued an open letter

to the Company’s shareholders stating that the report “contained inaccurate assumptions,

misinformation and erroneous facts about our company,” and that the Company “vehemently

disagree[d] with the conclusions reached by the author of the report and believe strongly that our

business model will continue to demonstrate the sustainable growth we have exhibited over the last

18 years.”

       6.      Thereafter, on December 21, 2010, The Wall Street Journal published an article

questioning the Company’s life-expectancy estimates and business practices. The article questioned

the Company’s business model and noted that Life Partners “has made large fees from its

life-insurance transactions while often significantly underestimating the life expectancies of people

whose policies its customers invest in.” In particular, the article highlighted that the Company relied

solely on life expectancy calculations provided by a doctor in Reno, Nevada, who is paid a monthly

retainer by Life Partners, and that an analysis of his calculations shows that he regularly provides

the Company with estimates that are significantly shorter – hence, more profitable for the Company

– than calculations provided by independent firms.

       7.      On January 20, 2011, the Wall Street Journal published an article disclosing that the


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  3
SEC was investigating Life Partners’ business practices relating to how the Company estimated the

life expectancies of the individuals whose life insurance policies the Company was selling the rights

to. Later that same day, the Company issued a press release in which it confirmed that the SEC was

conducting an investigation into the business of its operating subsidiary, Life Partners, Inc.

       8.       On this news, shares of Life Partners declined by $2.58 per share, more than 17%,

to close on January 20, 2011, at $12.46 per share, on unusually high volume, and further declined

another $0.64 per share, more than 5%, to close on January 21, 2010, at $11.82 per share, also on

unusually high volume.

       9.      On January 27, 2011, the Wall Street Journal published an article that disclosed that

Life Partners had drastically changed how it would market it products to investor. Specifically, the

article disclosed that Life Partners would now market their product as having an estimated return

of 7% over seven years, instead of the targeted 12% to 14% annual returns over shorter periods,

typically four to six years, it had previously promoted.

       10.      On this news, shares of Life Partners declined by $1.16 per share, 9.60%, to close on

January 28, 2011, at $10.92 per share, on unusually high volume.

       11.      Throughout the Class Period, Defendants made false and/or misleading statements,

as well as failed to disclose material adverse facts about the Company's business, operations, and

prospects. Specifically, Defendants made false and/or misleading statements and/or failed to

disclose: (1) that the Company had routinely used unrealistic life expectancy data that produced

inaccurately short life expectancy reports, which were subsequently used to sell life settlement

policies to investors; (2) that the Company had purposely concealed the historical rate in which

individuals insured by life settlement policies sold by Life Partners had lived past the life expectancy


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  4
rates previously provided to investors, such that the Company’s investors were unable to assess the

accuracy or reliability of such data; (3) that by underestimating the life expectancy data to investors,

the Company was able to charge substantially larger fees when brokering life settlement policies;

(4) that the Company’s revenues had been significantly increased through the employment of such

business practices; (5) that, as a result, the Company’s financial statements were false and

misleading at all relevant times; (6) that such business practices, when they were discovered, would

initiate an investigation by the federal authorities into the Company’s business practices; (7) that the

Company lacked adequate internal and financial controls; and (8) that, as a result of the foregoing,

the Company’s statements about its financial well-being and future business prospects were lacking

in any reasonable basis when made.

       12.      As a result of Defendants' wrongful acts and omissions, and the precipitous decline

in the market value of the Company's securities, Plaintiff and other Class members have suffered

significant losses and damages.

                                  JURISDICTION AND VENUE

       13.      The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act

(15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. §

240.10b-5).

       14.      This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa).

       15.      Venue is proper in this Judicial District pursuant to §28 U.S.C. §1391(b), §27 of the

Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the alleged fraud or the

effects of the fraud have occurred in this Judicial District. Many of the acts charged herein,


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  5
including the preparation and dissemination of materially false and/or misleading information,

occurred in substantial part in this District. Additionally, at times relevant hereto, the Company

maintained an office within this Judicial District and was also incorporated under the laws of this

Judicial District.

        16.     In connection with the acts, transactions, and conduct alleged herein, Defendants

directly and indirectly used the means and instrumentalities of interstate commerce, including the

United States mail, interstate telephone communications, and the facilities of a national securities

exchange.

                                             PARTIES

        17.     Plaintiff Jeremy Goad, as set forth in the accompanying certification, incorporated

by reference herein, purchased Life Partners securities during the Class Period and suffered damages

as a result of the federal securities law violations and false and/or misleading statements and/or

material omissions alleged herein.

        18.     Defendant Life Partners is a Texas corporation with its principle executive offices

located at 204 Woodhew Drive, Waco, Texas 76712.

        19.     Defendant Pardo was, at all relevant times, President and Chief Executive Officer

(“CEO”) of Life Partners.

        20.     Defendant David M. Martin (“Martin”) was, at all relevant times, Chief Financial

Officer (“CFO”) of Life Partners since February 4, 2008.

        21.     Defendant Nina Piper (“Piper”) was, at all relevant times, CFO of Life Partners until

February 4, 2008.

        22.     Defendants Pardo, Martin, and Piper, are collectively referred to hereinafter as the


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  6
"Individual Defendants.” The Individual Defendants, because of their positions with the Company,

possessed the power and authority to control the contents of Life Partners’ reports to the SEC, press

releases and presentations to securities analysts, money and portfolio managers and institutional

investors, i.e., the market. Each defendant was provided with copies of the Company's reports and

press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the

ability and opportunity to prevent their issuance or cause them to be corrected. Because of their

positions and access to material non-public information available to them, each of these defendants

knew that the adverse facts specified herein had not been disclosed to, and were being concealed

from, the public, and that the positive representations which were being made were then materially

false and/or misleading. The Individual Defendants are liable for the false statements pleaded

herein, as those statements were each “group-published” information, the result of the collective

actions of the Individual Defendants.

                                SUBSTANTIVE ALLEGATIONS

                                             Background

        23.     Life Partners, through its subsidiary, Life Partners, Inc., operates in the secondary

market for life insurance, generally known as “life settlements.” Life settlement transactions involve

the sale of an existing life insurance policy to another party. By selling the policy, the policyholder

receives an immediate cash payment to use as he or she wishes. The purchaser takes an ownership

interest in the policy at a discount to its face value and receives their ownership interest in the death

benefit under the policy when the insured dies. The Company acts as a purchasing agent for life

settlement purchasers. In performing these services, Life Partners identifies, qualifies and purchases

policies on behalf of its clients that match their buying parameters and return expectations. The


                        COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   7
Company’s operating revenues are derived from fees for facilitating life settlement transactions

between sellers and purchasers. Since its incorporation in 1991, Life Partners claims to have

completed over 127,000 transactions for its client base in connection with the purchase of over 6,400

policies totaling approximately $2.8 billion in face value.

        24.    According to the Company’s most recent Form 10-K, filed with the SEC on May 12,

2010:

        For most of the policies that we broker on behalf of our clients, the insureds have a
        life expectancy of between 48 months and 60 months, although we can identify
        policies with longer life expectancies or other purchasing parameters if requested by
        our clients. As we identify and qualify policies, we distribute insurance and current
        medical status information on these policies (with the insured’s name and other
        identifying information redacted) throughout our financial planner network. . . .
        Purchasers can then, in consultation with their financial planner or other
        professionals, select one or more policies, specify the portion of the policy or
        policies to be purchased and submit a reservation electronically. To diversify their
        positions, retail purchasers generally buy fractional interests in one or more policies
        and not an entire policy[.]

                                Materially False and Misleading
                           Statements Issued During the Class Period

        25.    The Class Period begins on May 29, 2007. On this day the Company issued a press

release entitled, “LIFE PARTNERS ANNOUNCES 218% INCREASE IN NET INCOME -

Releases Earnings for 2007 Fiscal Year.” Therein, the Company, in relevant part, stated:

        Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
        Partners, Inc., today announced a 218% increase in net income for its 2007 fiscal
        year ended February 28, 2007. The Company reported net income of approximately
        $3.6 million or $0.39 per share compared to $1.14 million or $0.12 per share
        reported for its 2006 fiscal year. Life Partners also reported a 48% increase in
        revenues for the 2007 fiscal year while total business volume, as measured in policy
        face values transacted, increased by 73% over last year to $151 million.

        Income from operations for fiscal 2007 increased by almost 150% to $4.8 million or
        16% of revenues, compared to $1.9 million or 9.5% of revenues last year. Life
        Partners reported 2007 pre-tax income of $4.7 million compared to pre-tax income

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  8
       of $2 million for 2006.

       Life Partners Chief Executive officer, Brian Pardo, stated, "As we previously
       reported, we are exceptionally pleased with these results and the growth in our
       revenues and net income. These results demonstrate our ability to dramatically grow
       the company within the fastest growing sector of the financial services industry. We
       are confident we will produce equally impressive growth results for the first quarter
       of the current fiscal year and we’re expecting great things during the remainder of
       this fiscal year.”

       26.     On May 29, 2007, Life Partners filed its Annual Report on Form 10-KSB with the

SEC for the 2006 fiscal year. The Company's Form 10-KSB was signed by Defendant Pardo, and

reaffirmed the Company's financial results previously announced on May 29, 2007. The Company's

Form 10-KSB also contained Sarbanes-Oxley required certifications, signed by Defendants Pardo

and Piper, who certified:

       1.      I have reviewed this annual report on Form 10-KSB of Life Partners
               Holdings, Inc.;

       2.      Based on my knowledge, this annual report does not contain any untrue
               statement of a material fact or omit to state a material fact necessary to make
               the statements made, in light of the circumstances under which such
               statements were made, not misleading with respect to the period covered by
               this annual report; and

       3.      Based on my knowledge, the financial statements, and other financial
               information included in this annual report, fairly present in all material
               respects the financial condition, results of operations and cash flows of the
               registrant as of, and for, the periods presented in this annual report; and

       4.      The registrant’s other certifying officers and I are responsible for establishing
               and maintaining disclosure controls and procedures (as defined in Exchange
               Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

               a)      designed such disclosure controls and procedures, or caused such
                       disclosure controls and procedures to be designed under our
                       supervision, to ensure that material information relating to the
                       registrant, including its consolidated subsidiaries, is made known to
                       us by others within those entities, particularly during the period in
                       which this annual report is being prepared;

                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 9
               b)      evaluated the effectiveness of the registrant's disclosure controls and
                       procedures and presented in this report our conclusions about the
                       effectiveness of the disclosure controls and procedures, as of the end
                       of the period covered by this report based on such evaluation; and

               c)      disclosed in this report any change in the registrant’s internal control
                       over financial reporting that occurred during the registrant’s most
                       recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
                       of an annual report) that has materially affected, or is reasonably
                       likely to materially affect, the registrant’s internal control over
                       financial reporting; and

        5.     The registrant’s other certifying officers and I have disclosed, based on our
               most recent evaluation of internal control over financial reporting, to the
               registrant’s auditors and the audit committee of registrant’s board of directors
               (or persons performing the equivalent function):

               a)      All significant deficiencies and material weaknesses in the design or
                       operation of internal controls over financial reporting which are
                       reasonably likely to adversely affect the registrant's ability to record,
                       process, summarize and report financial information; and

               b)      Any fraud, whether or not material, that involves management or
                       other employees who have a significant role in the registrant's
                       internal control over financial reporting.

        27.    The Company's Form 10-KSB filed with the SEC on May 29, 2007, in relevant part,

also stated:

        . . . While in the past most insureds have had a life expectancy of 60 months or
        less, we have expanded this market to include insureds with life expectancies of up
        to 10 years or more depending on the purchasing parameters of each client. As we
        identify and qualify policies fitting generally within the purchasing parameters of
        our clients, we distribute insurance and current medical status information on
        these policies (with the insured’s name and other identifying information redacted)
        throughout our financial planner network.

                                       *       *       *

        The remainder of the market is divided among other competitors, none of which is
        believed to have more than 10% of the market. Unlike some of our competitors,
        which have more restrictive purchasing parameters or a single provider of investment

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 10
capital, we have developed markets for all types of life expectancies in order to
accommodate the investment goals of our clients as well as the individual
circumstances of the policies presented to us. We believe this diversified capital
business model makes us more competitive in the market and provides us with
greater flexibility. We also believe that this model provides a stronger platform for
our sustainable growth as a company. Markets are segmented by length of life
expectancy and policy face value. The amount of competition in these markets
varies according to the demand for such policies.

                               *       *       *

Our Purchasers Depend on Our Ability to Predict Life Expectancies and Set
Appropriate Price; If Our Investment Returns Are Not Competitive We May
Lose Purchasers; We Must Purchase In Large Numbers

A purchaser’s investment return from a life settlement depends on three factors: the
policy face amount, the settlement purchase price and the demise of the insured. We
price settlements based on the policy face amount and the anticipated life
expectancy of an insured. For viatical settlements, life expectancies are estimated
based on a medical analysis of the insured. For life settlements, life expectancies
are estimated from medical and actuarial data based on the historical experiences
of similarly situated persons. The data is necessarily based on averages involving
mortality and morbidity statistics. The outcome of a single settlement may vary
significantly from the statistical average. It is impossible to predict any one
insured’s life expectancy exactly. To mitigate the risk that an insured will outlive
his or her predicted life expectancy, we price life settlements to yield competitive
returns even if this life expectancy prediction is exceeded. In addition, life
settlement purchasers must be able to bear a non-liquid investment for an
indeterminate period of time.

If we underestimate the average life expectancies and price our transactions too high,
our purchasers will not realize the returns they seek, demand may fall, and
purchasers may invest their funds elsewhere. In addition, amounts escrowed for
premiums may be insufficient to keep the policy in force and it is the responsibility
of the purchasers to pay these additional premiums. If we overestimate the average
life expectancies, the settlement prices we offer will fall below market levels, supply
will decrease, and sellers may engage in business with our competitors or pursue
other alternatives. Our ability to accurately predict life expectancies and price
accordingly is affected by a number of factors, including:

·      the accuracy of our life expectancy estimations, which must sufficiently
account for factors including an insured’s age, medical condition, life habits (such
as smoking), and geographic location;


               COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                         11
        ·      our ability to anticipate and adjust for trends, such as advances in medical
        treatments, that affect life expectancy data; and

        ·      our ability to balance competing interests when pricing settlements, such as
        the amounts paid to life settlors, the acquisition costs paid by purchasers, and the
        compensation paid to ourselves and our referral networks.

        To foster the integrity of our pricing systems, we use both in-house and outside
        experts, including medical doctors and published actuarial data. We cannot assure
        you that, despite our experience in settlement pricing, we will not err by
        underestimating or overestimating average life expectancies or miscalculating
        reserve amounts for future premiums. If we do so, we could lose purchasers or policy
        sellers, and those losses could have a material adverse effect on our business,
        financial condition, and results of operations.

(Emphasis added).

        28.     On June 14, 2007, the Company issued a press release entitled, “LIFE PARTNERS

REPORTS EARNINGS INCREASE FOR FIRST QUARTER 2007.” Therein, the Company, in

relevant part, stated:

        Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
        Partners, Inc., today announced net income of $4.7 million, or $0.49 per share for its
        first quarter ended May 31, 2007, compared to $0.5 million, or $0.05 per share, for
        first quarter of 2006. Life Partners also announced first quarter revenues of
        approximately $17.6 million compared to revenues of $6.2 million during the first
        quarter of last year. Total business volume for the first quarter, as measured in policy
        face values transacted increased by 180% from $28.7 million last year to $80.3
        million this year.

        Earnings for the first quarter continued an exceptionally strong trend for the third
        quarter in a row. Life Partners attributed increased revenues generally to increasing
        interest in the life settlement market while the increase in net income resulted from
        the steady trend toward closing fewer policies with higher face values.

                                        *       *       *

        Brian Pardo, Chief Executive Officer, said, "As these results clearly demonstrate, we
        believe our outstanding performance this quarter is a direct result of the continuing
        growth in the life settlement market coupled with our unique ability to provide
        excellent service within a very reasonable cost structure. Our proprietary software
        and processes benefit not only our clients and shareholders, but the thousands of

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   12
       wealthy seniors that are realizing the financial option we provide by turning their
       unwanted life insurance into cash. This increasing market awareness has made the
       life settlement market one of the fastest growing segments of the financial services
       sector and our expertise and operational efficiency has made Life Partners one of the
       fastest growing companies within that sector.”

       29.     On July 16, 2007, Life Partners filed its Quarterly Report on Form 10-QSB with the

SEC for the 2007 fiscal first quarter. The Company's Form 10-QSB was signed by Defendant Pardo

and reaffirmed the Company's financial results previously announced on June 14, 2007. The

Company's 10-QSB also contained Sarbanes-Oxley required certifications, signed by Defendants

Pardo and Piper, substantially similar to the certifications contained in ¶26, supra.

       30.     On September 26, 2007, the Company issued a press release entitled, “LIFE

PARTNERS REPORTS LARGE EARNINGS INCREASE FOR SECOND QUARTER AND FIRST

HALF OF FISCAL YEAR.” Therein, the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
       Partners, Inc., today announced net income of $4.3 million, or $0.46 per share for its
       second fiscal quarter compared to $0.22 million, or $0.02 per share, for its second
       quarter last year. Net income for the first half of the current fiscal year was $9.1
       million, or $0.95 per share compared with net income of $0.7 million or $.07 per
       share for the first six months of last year.

       The Company also announced revenues of $17.6 million for the second quarter
       ended August 31, 2007 and $35.2 million for the six months ended August 31, 2007
       compared to revenues of $6.6 million during the second quarter of the prior year and
       $13 million for the first six months of the prior year.

       Life Partners attributed its increased revenues to the Company’s steady trend toward
       closing policies with higher face values and the increase in both demand for and
       supply of qualified life settlement policies, which tracks the continued growth in the
       life settlement market generally.

                                      *       *       *

       Brian Pardo, Chief Executive Officer, said, “Looking at our year-on-year
       performance to date, our financial results clearly show incredible growth in the life
       settlement market as well as our unique ability to provide excellent service within

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 13
       this market at a very reasonable cost structure.”

       “As the only publicly traded life settlement provider, our transparency is very
       attractive to institutional clients, including our recently announced relationship with
       West LB, one of Germany’s leading financial service providers with over $300
       Billion in assets, as well as to our individual accredited investor clients. The
       investment we have made in proprietary software and process development enables
       us to meet the growing demand in both our retail (accredited investor) market and
       our developing institutional market.”

       “With continuing growth in revenues and earnings from both our retail market and
       our rapidly rising institutional market, we expect a substantial increase in both
       revenues and earnings during the second half and for our current fiscal year in
       general.”

       “We are proud to bring value to thousands of wealthy seniors by turning their
       unwanted life insurance into cash they never realized was available. It is Life
       Partners’ expertise and operational efficiency that has made us very attractive for
       sophisticated investors in this rapidly evolving market.”

       31.     On October 15, 2007, Life Partners filed its Quarterly Report on Form 10-QSB with

the SEC for the 2007 fiscal second quarter. The Company's Form 10-QSB was signed by

Defendants Pardo and Piper, and reaffirmed the Company's financial results previously announced

on September 26, 2007.       The Company's 10-QSB also contained Sarbanes-Oxley required

certifications, signed by Defendants Pardo and Piper, substantially similar to the certifications

contained in ¶26, supra.

       32.     On January 14, 2008, the Company issued a press release entitled, “LIFE

PARTNERS REPORTS THIRD QUARTER AND NINE MONTHS RESULTS.” Therein, the

Company, in relevant part, stated:

       Life Partners Holdings, Inc. (Nasdaq: LPHI) today announced a 515% increase in net
       income of $5,215,695 or $0.44 per share for the three months ended November 30,
       2007, compared to $847,606 or $0.07 per share reported for the same period last
       year. Revenues increased by 164% over the same period last year while total
       business volume, as measured in policy face values transacted, increased by 257%
       over last year to just over $35 million. For the nine months ended November 30,

                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                14
       2006, the company reported an 826% increase in net income of $14,280,752 or $1.19
       per share compared to $1,542,341 or $0.13 per share during the period last year.

       Brian Pardo, Chief Executive Officer, said, “This has been our strongest quarter ever
       and we are very pleased with the continuing and substantial growth in revenues and
       net income. Because we serve investors in the alternative investment market and our
       business plan does not rely on debt, we expect Life Partners to remain insulated from
       the current credit trouble of other financial service companies and we believe that
       investors will find our company to be one of the few bright spots within the financial
       sector.”

       33.     On January 14, 2008, Life Partners filed its Quarterly Report on Form 10-QSB with

the SEC for the 2007 third fiscal quarter. The Company's Form 10-QSB was signed by Defendant

Pardo and reaffirmed the Company's financial results announced that day. The Company's 10-QSB

also contained a Sarbanes-Oxley required certification, signed by Defendant Pardo, substantially

similar to the certifications contained in ¶26, supra.

       34.     On March 26, 2008, the Company issued a press release entitled, “LIFE PARTNERS

EXPECTED TO ANNOUNCE INCREASE IN REVENUES AND NET INCOME IN

CONFERENCE CALL.” Therein, the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
       Partners, Inc., today announced it will hold a conference call to discuss its
       preliminary operating results for its fiscal year ended February 29, 2008. The
       company expects to report a 143% increase in revenues and a 431% increase in net
       income for its 2008 fiscal year over the same period of the prior year. For the fiscal
       year, Life Partners expects to report revenues of $72.5 million compared to $29.8
       million for its 2007 fiscal year. Net income for the current fiscal year was $19.1
       million, or $1.59 per share compared with net income of $3.6 million or $0.31 per
       split adjusted share during the previous year.

       35.     On March 26, 2008, Life Partners held a conference call with analysts to discuss the

Company’s preliminary financial results for the 2007 fiscal year financial results announced earlier

that same day. Therein, Defendant Pardo, in relevant part, stated:

       But the key is that life settlement as a product are not correlated to any other event,

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 15
          wither it’s geo-political, oil, or market related, interest related, whatever. It’s only
          relates to the mortality on the lives we underwrite, and as such. Two things - as such,
          we’re growing very rapidly as investors are seeing these attributes, and are not - are
          not coming out of other investment stocks, bonds whatever, that are related. And
          putting their money into the life settlement which produced a very good and
          actually high rate of return without those risks and in fact without much risk at all.

                                         *       *       *

          Well, it’s [bad economic news] good for Life Partners because we are not correlated
          to any other industry or any other product out there, and we’ve kind of been the baby
          thrown out with the bath water here, when it related to our stock price. We are not
          affected by any turn down in the market. We are not affected by the liquidity of the
          market. We are not affected by interest rates - down, up, sideways. We are not
          affected by oil. We are not affected by whether we are going to go to war with Iran,
          or any other - or anybody else for that matter. Our business is uniquely driven on
          the profitability, based upon our ability to adequately underwrite the lives of the
          policies that we buy, and I think we’ve demonstrated that we do that pretty well.
          And therefore, we, our business is growing, in terms of our primary business,
          which is supplying those policies as investments to our client base. And we expect
          that to continue, and is not affected by anything else.

(Emphasis added).

          36.     On May 15, 2008, Life Partners filed its Annual Report on Form 10-K with the SEC

for the 2007 fiscal year. The Company's Form 10-K was signed by Defendant Pardo and reaffirmed

the Company's financial results previously announced on March 26, 2008. The Company's 10-K

also contained Sarbanes-Oxley required certifications, signed by Defendants Pardo and Martin,

substantially similar to the certifications contained in ¶26, supra.

          37.     The Company's Form 10-K filed with the SEC on May 15, 2008, in relevant part, also

stated:

          . . . While in the past most insureds have had a life expectancy of 60 months or
          less, we have expanded this market to include insureds with life expectancies of up
          to 10 years or more depending on the purchasing parameters of each client. As we
          identify and qualify policies fitting generally within the purchasing parameters of
          our clients, we distribute insurance and current medical status information on
          these policies (with the insured’s name and other identifying information redacted)

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   16
throughout our financial planner network.

                               *       *       *

. . . Unlike some of our competitors, which may have more restrictive purchasing
parameters or a single provider of investment capital, we have developed markets
for all types of life expectancies in order to accommodate the investment goals of
our clients as well as the individual circumstances of the policies presented to us.
We believe this diversified capital business model makes us more competitive in the
market and provides us with greater flexibility. We also believe that this model
provides a stronger platform for our sustainable growth as a company. Markets
are segmented by length of life expectancy and policy face value. The amount of
competition in these markets varies according to the demand for such policies.

                               *       *       *

Our Purchasers Depend on Our Ability to Predict Life Expectancies and Set
Appropriate Price; If Our Investment Returns Are Not Competitive We May
Lose Purchasers; We Must Purchase In Large Numbers

A purchaser’s investment return from a life settlement depends on three factors: the
policy face amount, the settlement purchase price and the demise of the insured. We
price settlements based on the policy face amount and the anticipated life
expectancy of an insured. For viatical settlements, life expectancies are estimated
based on a medical analysis of the insured. For life settlements, life expectancies
are estimated from medical and actuarial data based on the historical experiences
of similarly situated persons. The data is necessarily based on averages involving
mortality and morbidity statistics. The outcome of a single settlement may vary
significantly from the statistical average. It is impossible to predict any one
insured’s life expectancy exactly. To mitigate the risk that an insured will outlive
his or her predicted life expectancy, we price life settlements to yield competitive
returns even if this life expectancy prediction is exceeded. In addition, life
settlement purchasers must be able to bear a non-liquid investment for an
indeterminate period of time.

If we underestimate the average life expectancies and price our transactions too high,
our purchasers will not realize the returns they seek, demand may fall, and
purchasers may invest their funds elsewhere. In addition, amounts escrowed for
premiums may be insufficient to keep the policy in force and it is the responsibility
of the purchasers to pay these additional premiums. If we overestimate the average
life expectancies, the settlement prices we offer will fall below market levels, supply
will decrease, and sellers may engage in business with our competitors or pursue
other alternatives. Our ability to accurately predict life expectancies and price
accordingly is affected by a number of factors, including:

               COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                         17
       ·      the accuracy of our life expectancy estimations, which must sufficiently
       account for factors including an insured’s age, medical condition, life habits (such
       as smoking), and geographic location;

       ·      our ability to anticipate and adjust for trends, such as advances in medical
       treatments, that affect life expectancy data; and

       ·      our ability to balance competing interests when pricing settlements, such as
       the amounts paid to life settlors, the acquisition costs paid by purchasers, and the
       compensation paid to ourselves and our referral networks.

       To foster the integrity of our pricing systems, we use both in-house and outside
       experts, including medical doctors and published actuarial data. We cannot assure
       you that, despite our experience in settlement pricing, we will not err by
       underestimating or overestimating average life expectancies or miscalculating
       reserve amounts for future premiums. If we do so, we could lose purchasers or policy
       sellers, and those losses could have a material adverse effect on our business,
       financial condition, and results of operations.

(Emphasis added).

       38.     On June 16, 2008, the Company issued a press release entitled, “LIFE PARTNERS

PREDICTS RECORD EARNINGS.” Therein, the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
       Partners, Inc., today predicted record earnings as it issued guidance for its first fiscal
       quarter ended May 31, 2008. Life Partners expects to report first quarter earnings of
       approximately $0.52 per share compared with earnings of $0.40 per share last year.
       Results for the quarter are expected to show a 33% increase in earnings over the
       same period last year and a 40% increase over the immediately preceding quarter.
       All earnings per share calculations are adjusted to account for the 5-for-4 stock split
       in September 2007.

       For its first quarter ended May 31, 2008, Life Partners expects to report over $24
       million in revenues, a 39% increase over the $17.6 million it reported for the first
       quarter of last year.

       39.     On July 9, 2008, Life Partners filed its Quarterly Report on Form 10-Q with the SEC

for the 2008 fiscal first quarter. The Company's Form 10-Q was signed by Defendants Pardo and

Martin, and reaffirmed the Company's financial results previously announced on June 16, 2008. The

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 18
Company's Form 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants

Pardo and Martin, substantially similar to the certifications contained in ¶26, supra.

        40.     On July 14, 2008, Life Partners held a conference call with analysts to discuss the

Company’s 2008 fiscal first quarter results announced on June 16, 2008. Therein, Defendant Pardo,

in relevant part, stated:

        Well, Life Partners, first of all designed and is marketing a product that is non-
        correlated. And so it’s an alternative investment. It’s safe and throws off a better
        than average return. So, we have value and service to a large client base, and more
        and more and especially now, they’re recognizing that there is extreme safety in the
        investments that are acquired by us for our client base, and which are life
        settlements. But let me hasten to say life settlements which are properly and
        carefully underwritten and meet a very carefully thought out, and long, long-term
        period of underwriting standards that allows us to keep the purity of the product
        as, I guess, I should say as it is. As for the numbers themselves, I think that we
        should probably go there.

(Emphasis added).

        41.     On September 18, 2008, the Company issued a press release entitled, “LIFE

PARTNERS TO POST RECORD EARNINGS.” Therein, the Company, in relevant part, stated:

        Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
        Partners, Inc., today announced another quarter of record earnings as it issued
        guidance for its second fiscal quarter and first half ended August 31, 2008. For the
        quarter, Life Partners expects to report a 56% increase in net earnings, which were
        $6.6 million or $0.56 per share compared with earnings of $4.3 million or $0.36 per
        share for the same period of last year. For the six months ended August 31, 2008, the
        company expects to report earnings of $12.9 million or $1.08 per share compared
        with $9.1 million or $0.76 per share for the same period last year.

        For the quarter ended August 31, 2008, Life Partners expects to report $25.9 million
        in revenues, a 47% increase over the $17.6 million it reported for the same period
        last year. For the first half of the year ended August 31, 2008, the company expects
        to report revenues of $50.4 million, which is a 43% increase compared to $35.2
        million for the same period last year.

        42.     On October 10, 2008, Life Partners filed its Quarterly Report on Form 10-Q with the


                        COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  19
SEC for the 2008 fiscal second quarter. The Company's Form 10-Q was signed by Defendants

Pardo and Martin, and reaffirmed the Company's financial results previously announced on

September 18, 2008.        The Company's Form 10-Q also contained Sarbanes-Oxley required

certifications, signed by Defendants Pardo and Martin, substantially similar to the certifications

contained in ¶26, supra.

       43.     On October 17, 2008, Life Partners held a conference call with analysts to discuss

the Company’s 2008 fiscal second quarter results announced on September 18, 2008. Therein,

Defendant Pardo, in relevant part, stated:

       Well, right now, I can only say that the future looks very positive. More and more
       people, of course now, particularly in view of the difficulties in the marketplace, are
       realizing that life settlements are - properly underwritten and properly analyzed, are
       in fact a very powerful instrument to not only make an above-average return on your
       investment, but also an above-average return with a very high level of confidence
       and safety on the capital invested.

                                       *       *        *
       [John Nobile - Analyst]

       Hi, good morning, and once again, congratulations on pretty impressive results. I
       wanted to get to the topic of, I guess you’re aware, the 21st Services had lengthened
       life expectancies. I’m curious to see your opinion on how this would affect Life
       partners? I know that national Financial Partners recently said it would negatively
       impact the pricing of Life Settlements.

       [Defendant Pardo]

       Well, let me ask Scott to address that, but first, let me say that we do not agree with
       that statement at all. If you’re - unless you’ve locked your funding, you’re
       underwriting into that one company, but I don’t know anybody that would be that
       foolish. But if they would, then, of course, it could be detrimental. What do you think
       scott?

       [R. Scott Peden - General Counsel of Life Partners]

       Yes, I think the issue the 21st has had more to do with other companies. I don’t see
       it effecting Life Partners at all. In fact, I think that it probably will help us, because
       in instances where there were other companies that were locked in, sometimes it
                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 20
could sort of skew the market. And so I think that it is overall good for the general
market and allows us to be even more competitive as far as that goes, because you
want to make sure that every life expectancy underwriter has their own methodology
and that sort of thing. And ultimately, what we use more than the life expectancy is
the discount. That’s how we’re able to return the kinds of returns to our clients that
they expect. It’s not so much the precision of the life expectancy as it is the discount
at which we purchase.

                                *       *         *

[Davd Foster - Analyst]

Hello. Nice job on the quarter. I just had another sort of accounting question. I was
looking at your premium advances for the quarter which were up a bit, and I read that
in the Q that said that the settlements -- most of which were made before 1990 --
allegedly lacked sufficient disclosure about the purchasers’ obligation to pay
premiums in order to maintain the acquired policy. So these are older policies that
you guys are having to make the advances on? And I was just curious. If a policy has
been outstanding for more than 10 years, what kind of return does that suggest to the
investor?

[R. Scott Peden - General Counsel of Life Partners]

Obviously, now, the kinds of policies we are talking about in that time frame are
completely different from the kind of policies that we are doing right now. Life
settlements typically are on an individual who -- as Mr. Pardo said earlier -- is
between 78 and 80 to years old. The average face value right now is about $3.8
million or so.

[Defendant Pardo]

Yes. But it would still be -- excuse me for interrupting, Scott. It would still be -- the
way those are underwritten -- would be 4 or 5% return. And so that’s about what
we’re looking at, and we will -- with regard to that, you know, as we carry it on our
balance sheet under other items, we don’t actually put it on our balance sheet.

[Davd Foster - Analyst]

Right. It’s fully reserved against. I see that.

                                *       *         *

[Defendant Pardo]

That’s right but we do get that money back. And so it’s kind of like Christmas, when
                COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                          21
we get it paid back. It is merely an issue that had to do with the policies that were --
did have longer life expectancies.

And we thought like there was -- a disclosure was adequate, but the Attorney
General felt like it wasn’t. And so rather than argue about it because we are going
to get the money back anyway, we said, “Okay, we will advance it.” And it’s paid
and we will get the money paid back. Basically it’s not really at this point a material
issue anymore for the Company.

[R. Scott Peden - General Counsel of Life Partners]

 So because of the discount on there, certainly the returns are still positive even with
(multiple speakers). Very positive, yes.

[Davd Foster - Analyst]

You are saying 4 to 5%. What is a kind of -- what kind of return are you suggesting
or indicating to potential investors these days? What should they expect?

[Defendant Pardo]

We like to tell our clients to be looking for a low double-digit return.

[Davd Foster - Analyst]

Okay. 11, 12%? That kind of return?

[Defendant Pardo]

Yes. And I think if they are expecting that, they will not be disappointed.

[R. Scott Peden - General Counsel of Life Partners]

The other aspect of it is it is completely not correlated and especially in today’s
market. That’s almost more valuable than the return.

[Davd Foster - Analyst]

Right.

[Defendant Pardo]

Yes. And -- but, anyway, we want our marketing people to be very conservative in
how they state returns. And we have not had any since 19 -- since 2000, especially
just to give -- just to pick a date out of the (inaudible). We got little or no complaints

                COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                          22
      concerning returns.

                                     *       *      *

      [Unidentified Analyst]

      Okay. And just the question I asked earlier, I just wanted to get back to that.
      Obviously you didn’t agree with, I guess it was National Financial’s statement about
      the lengthening of life expectancies. I know, I looked in the K, it says you used both
      in-house and outside experts. I was just curious, the outside experts, because I think
      there’s only a handful, which ones in particular if you could disclose that, you might
      actually use and what percentage that is?

      [Defendant Pardo]

      No. We can’t get into that level of detail with how we do business, because it’s
      proprietary. But all we’re saying, if it was misunderstood possibly, is that the
      changes that were implemented by 21st Services had no affect at all on anything
      involving LPHI.

(Emphasis added).

      44.    On December 15, 2008, the Company issued a press release entitled, “LIFE

PARTNERS TO POST RECORD EARNINGS.” Therein, the Company, in relevant part, stated:

      Life Partners Holdings, Inc. (NASDAQ GM: LPHI), parent company of Life
      Partners, Inc., today announced another quarter of record earnings as it issued
      guidance for its third fiscal quarter and nine months ended November 30, 2008. For
      the quarter, Life Partners expects to report a 38% increase in net earnings which
      were $7.3 million or $0.61 per share compared with earnings of $5.2 million or $0.44
      per share for the same period of last year. For the nine months ended November 30,
      2008, the company expects to report earnings of $20.1 million or $1.69 per share
      compared with $14.3 million or $1.19 per share for the same period last year.

      For the quarter ended November 30, 2008, Life Partners expects to report $28.1
      million in revenues, a 46% increase over the $19.3 million it reported for the same
      period last year. For the nine months ended November 30, 2008, the company
      expects to report revenues of $77.3 million, which is a 42% increase compared to
      $54.5 million for the same period last year.

      45.    Therein, Defendant Pardo, in relevant part, stated:

      There is no question that investors are more wary now than they have been in a
      generation. That’s why the demand for our services continues to grow. Investors are
                     COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                               23
       looking for asset-based investments which are not correlated to the financial markets.
       Life Partners deals exclusively with assets that have an inherent value and do not rely
       on future market performance to realize gains. During this time of extreme market
       volatility, our clients’ investments in life settlements have remained completely
       unaffected and that is the kind of diversification that investors want in today’s
       market.

       46.     On January 9, 2009, Life Partners filed its Quarterly Report on Form 10-Q with the

SEC for the 2008 fiscal third quarter. The Company's Form 10-Q was signed by Defendants Pardo

and Martin, and reaffirmed the Company's financial results previously announced on December 15,

2008. The Company's Form 10-Q also contained Sarbanes-Oxley required certifications, signed by

Defendants Pardo and Martin, substantially similar to the certifications contained in ¶26, supra.

       47.     On January 13, 2009, Life Partners held a conference call with analysts to discuss the

Company’s 2008 fiscal third quarter results announced on January 9, 2009. Therein, Defendant

Pardo, in relevant part, stated:

       So first of all, when somebody decides they are going to invest money with us. In
       other words, to buy a policy. They do not write a check to Life Partners. They write
       a check to an independent escrow agent and an account is set up there. We act as an
       instruction-driven agent to pick out. We are kind of the Coldwell Banker of the
       insurance world.

       And so our job is to find policies, source policies that are qualified, underwrite
       them, make sure that they meet the underwriting and the investment criteria that
       the clients are looking for and that we know they are looking for to produce the
       kinds of returns that we are wanting, double-digit returns, and in a reasonable
       timeframe -- four, five, six years. And so we don’t collect a dime of money. It stays
       in the escrow account until a policy or a piece of a policy has been selected and
       chosen by the client and the client authorizes us through a written document to make
       that buy on their behalf. Then it’s actually the escrow company that ends up taking
       the money, paying the owner of the policy, paying the fees -- now that is when we
       get paid only on the event of the occurrence of the transaction
       .
       We don’t get paid beforehand and we don’t get paid afterwards. We don’t get paid
       success fees. We don’t get paid percentages of -- if we run over certain boundaries.
       We don’t get paid anything except what we are paid to do the transaction.

(Emphasis added).
                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 24
        48.     The statements contained in ¶¶25-47 were materially false and/or misleading when

made because defendants failed to disclose or indicate the following: (1) that the Company had

routinely used unrealistic life expectancy data that produced inaccurately short life expectancy

reports, which were subsequently used to sell life settlement policies to investors; (2) that the

Company had purposely concealed the historical rate in which individuals insured by life settlement

policies sold by Life Partners had lived past the life expectancy rates previously provided to

investors, such that the Company’s investors were unable to assess the accuracy or reliability of such

data; (3) that by underestimating the life expectancy data to investors, the Company was able to

charge substantially larger fees when brokering life settlement policies; (4) that the Company’s

revenues had been significantly increased through the employment of such business practices; (5)

that, as a result, the Company’s financial statements were false and misleading at all relevant times;

(6) that such business practices, when they were discovered, would initiate an investigation by the

federal authorities into the Company’s business practices; (7) that the Company lacked adequate

internal and financial controls; and (8) that, as a result of the foregoing, the Company’s statements

about its financial well-being and future business prospects were lacking in any reasonable basis

when made.

        49.     On February 11, 2009, a research firm published an article that called into question

Life Partners business practices, specifically those relating to the determination of life expectancies

and the Company’s practice of charging egregious fees on their transactions. The article, in relevant

part, stated:

         Red Flag # 2. Are those fees sustainable?

        Is this high fee level sustainable? Or in other words, how does LPHI get away with
        their egregious fees and still provide higher than market IRR’s to their investors?


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 25
In our opinion, they are not. They can only be carving out such huge fees by
concealment:

1. Failing to disclose their fees transparently to the investors and settlors
2. Preventing the transaction from being priced competitively by any sort of bidding
process
3. … and worst, not disclosing the true actuarial life expectancy of the insured (the
largest single factor impacting the ultimate percentage IRR on the investment )

(http://www.dora.state.co.us/dora_pages/newsreleases/LifePartnersSummaryJudg
ement.pdf)

While Life Partners may be better than other providers at finding attractive policies,
with 90% of volume (according to their 10-K) coming from brokers, it appears that
they are partnering with brokers and insurance agents to thwart a competitive bidding
process.

In the above example, assuming the transaction is completed at 35% of face value
($1.2mm), LPHI’s clients are paying $500k of upfront transaction fees, or over 40%
of the gross sale price. Note that LPHI takes its entire fee upfront, while the investor
will not find out how the true investment performance for years down the road.

According to the May 2007 complaint filed by the Colorado Securities
Commissioner against Life Partners alleging violations of the Colorado Securities
Act, Insurance Commissioner alleges that LPHI:

  “failed to disclose to investors the method by which life expectancy was
determined; the high frequency rate in which viators outlived the life expectancies
predicted by Life Partners.”

  “It is further alleged that Life Partners failed to disclose the original purchase price
of the policy and commissions paid to the sales agents, making it impossible for an
investor to determine the true market value of the policy.”

Therefore. investors do not know their cost basis or how much of their “investment”
is being pocketed by LPHI.

The need to conceal the fee structure is so central to LPHI’s operation that even last
week LPHI’s CEO would not give any information on his fee structure to a Wall
Street Journal writer who was doing a puff piece on the company.

’Life Partners Chief Executive Brian Pardo declined to give specifics of the fee
structure or the size of lump-sum payments, which vary according to “underwriting
factors”. ‘


                COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                          26
       http://online.wsj.com/article/SB123377502090848763.html?mod=googlenews_wsj

(Emphasis added).

       50.     On this news, the Company’s shares declined $2.82 per share, or 13.67 percent, to

close on February 11, 2009 at $17.82 per share, on unusually heavy trading volume.

       51.      On February 11, 2009, the Company issued a response to the research report

published that same day entitled, “LIFE PARTNERS CHAIRMAN RESPONDS TO

EXTRAORDINARY SHARE ACTIVITY.” Therein, Defendant Pardo, in relevant part, stated:


       Earlier today, a negative report was issued about Life Partners which contained
       inaccurate assumptions, misinformation and erroneous facts about our company. As
       a result of the information in this report, our stock experienced unusual volatility and
       trading volume.

       We are confident that our business growth will remain strong throughout the
       remainder of this fiscal year and beyond. We vehemently disagree with the
       conclusions reached by the author of the report and believe strongly that our business
       model will continue to demonstrate the sustainable growth we have exhibited over
       the last 18 years.

       We urge all shareholders to focus on our exceptionally strong business fundamentals
       and welcome the opportunity to address any issues or legitimate concerns our
       shareholders may have.

       52.     On May 29, 2009, the Company issued a press release entitled, “LIFE PARTNERS

TO POST RECORD YEAR EARNINGS.” Therein, the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (NasdaqGS: LPHI), parent company of Life Partners,
       Inc., today released its preliminary earnings for its fiscal year and fourth quarter
       ended February 28, 2009. For the year, Life Partners expects to report a 46%
       increase in net earnings of $27.4 million or $1.84 per split-adjusted share compared
       to $18.8 million or $1.25 per split-adjusted share for the previous year. Revenues
       for the year are expected to be $103.6 million, a 43% increase over the $72.6 million
       reported for last year. All figures are adjusted for the 5-for-4 forward stock split
       which occurred on February 16, 2009.

       For the quarter ended February 28, 2009, the company expects to report earnings of
       $7.2 million on revenues of $26.3 million or $.49 per split-adjusted share compared
                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                27
        with $4.5 million on $18.1 million or $.30 per split-adjusted share for the same
        period last year.

        53.    On May 29, 2009, Life Partners filed its Annual Report on Form 10-K with the SEC

for the 2008 fiscal year. The Company's Form 10-K was signed by Defendant Pardo and reaffirmed

the Company's financial results announced that day. The Company's Form 10-K also contained

Sarbanes-Oxley required certifications, signed by Defendants Pardo and Martin, substantially similar

to the certifications contained in ¶26, supra.

        54.    The Company's Form 10-K filed with the SEC on May 29, 2009, in relevant part,

also stated:

        . . . While in the past most insureds have had a life expectancy of 60 months or
        less, we have expanded this market to include insureds with life expectancies of up
        to 10 years or more depending on the purchasing parameters of each client. As we
        identify and qualify policies fitting generally within the purchasing parameters of
        our clients, we distribute insurance and current medical status information on
        these policies (with the insured’s name and other identifying information redacted)
        throughout our financial planner network.

                                       *         *    *

        . . . Unlike some of our competitors, which may have more restrictive purchasing
        parameters or a single provider of investment capital, we have developed markets
        for all types of life expectancies in order to accommodate the investment goals of
        our clients as well as the individual circumstances of the policies presented to us.
        We believe this diversified capital business model makes us more competitive in the
        market and provides us with greater flexibility. We also believe that this model
        provides a stronger platform for our sustainable growth as a company. Markets
        are segmented by length of life expectancy and policy face value. The amount of
        competition in these markets varies according to the demand for such policies.

                                       *         *    *

        Our Purchasers Depend on Our Ability to Predict Life Expectancies and Set
        Appropriate Prices; If Our Investment Returns Are Not Competitive, We May
        Lose Purchasers

        A purchaser’s investment return from a life settlement depends on three factors: the
        difference between the policy face amount and purchaser’s cost basis (consisting of
                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 28
      the acquisition cost and premiums paid to maintain the policy), the length of the
      holding period, and the demise of the insured. We price settlements based on the
      policy face amount, the anticipated life expectancy of an insured and policy
      maintenance costs. Life expectancies are generally estimated from standard
      medical and actuarial data based on the historical experiences of similarly situated
      persons. The data is necessarily based on averages involving mortality and
      morbidity statistics. The outcome of a single settlement may vary significantly
      from the statistical average. It is impossible to predict any one insured’s life
      expectancy exactly. To mitigate the risk that an insured will outlive his or her
      predicted life expectancy, we price life settlements to yield competitive returns even
      if this life expectancy prediction is exceeded by several years. In addition, life
      settlement purchasers must be able to bear a non-liquid investment for an
      indeterminate period.

      If we underestimate the average life expectancies and price our transactions too high,
      our purchasers will realize smaller returns, demand may fall, and purchasers may
      invest their funds elsewhere. In addition, amounts escrowed for premiums may be
      insufficient to keep the policy in force, requiring purchasers to invest further
      proceeds to pay these additional premiums. If we overestimate the average life
      expectancies, the settlement prices we offer will fall below market levels, supply will
      decrease, and sellers may engage in business with our competitors or pursue other
      alternatives. Our ability to accurately predict life expectancies and price accordingly
      is affected by a number of factors, including:

      ·      The accuracy of our life expectancy estimations, which must sufficiently
             account for factors including an insured’s age, medical condition, life habits
             (such as smoking), and geographic location;

      ·      Our ability to anticipate and adjust for trends, such as advances in medical
             treatments, that affect life expectancy data; and

      ·      Our ability to balance competing interests when pricing settlements, such as
             the amounts paid to policy sellers, the acquisition costs paid by purchasers,
             and the compensation paid to ourselves and our referral networks.

      To foster the integrity of our pricing systems, we use both in-house and outside
      experts, including medical doctors and published actuarial data. We cannot assure
      you that, despite our experience in settlement pricing, we will not err by
      underestimating or overestimating average life expectancies or miscalculating
      reserve amounts for future premiums. If we do so, we could lose purchasers or
      policy sellers, and those losses could have a material adverse effect on our business,
      financial condition, and results of operations.

(Emphasis added).


                     COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                               29
          55.    On June 16, 2009, the Company issued a press release entitled, “LIFE PARTNERS

PREDICTS RECORD EARNINGS.” Therein, the Company, in relevant part, stated:

          Life Partners Holdings, Inc. (NasdaqGS: LPHI), parent company of Life Partners,
          Inc., predicted another quarter of record earnings as it announced its preliminary
          financial results for its first fiscal quarter ended May 31, 2009. Life Partners expects
          to report first quarter earnings of approximately $0.53 per share compared with
          earnings of $0.42 per share last year. Results for the quarter are expected to show
          a 26% increase in earnings over the same period last year. All earnings per share
          calculations are adjusted to account for the 5-for-4 stock split in February 2009.

          For its first quarter ended May 31, 2009, Life Partners expects to report $27.4
          million in revenues, a 12% increase over the $24.4 million it reported for the first
          quarter of last year.

          56.    On July 10, 2009, Life Partners filed its Quarterly Report on Form 10-Q with the SEC

for the 2009 fiscal first quarter. The Company's Form 10-Q was signed by Defendants Pardo and

Martin, and reaffirmed the Company's financial results previously announced on June 16, 2009. The

Company's Form 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants

Pardo and Martin, substantially similar to the certifications contained in ¶26, supra.

          57.     On September 16, 2009, the Company issued a press release entitled, “LIFE

PARTNERS ISSUES PRELIMINARY Q2 EARNINGS.” Therein, the Company, in relevant part,

stated:

          Life Partners Holdings, Inc. (Nasdaq GS: LPHI), parent company of Life Partners,
          Inc., today announced its preliminary financial results for its second fiscal quarter
          and first half ended August 31, 2009. Life Partners expects to report second quarter
          earnings of $0.51 per share, a 16% increase compared with earnings of $0.44 per
          share last year. For the six months ended August 31, 2009, the company expects to
          report earnings of $1.01 per share, a 17% increased compared with $0.86 per share
          for the same period last year.

          For the quarter ended August 31, 2009, Life Partners expects to report $29.1 million
          in revenues, a 17% increase over the $24.8 million reported for the same period last
          year. For the six months ended August 31, 2009, the company expects to report
          revenues of $56.5 million, a 15% increase over the $49.2 million reported for the

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   30
          same period last year.

          58.    On October 9, 2009, Life Partners filed its Quarterly Report on Form 10-Q with the

SEC for the 2009 fiscal second quarter. The Company's Form 10-Q was signed by Defendants

Pardo and Martin, and reaffirmed the Company's financial results previously announced on

September 16, 2009.        The Company's Form 10-Q also contained Sarbanes-Oxley required

certifications, signed by Defendants Pardo and Martin, substantially similar to the certifications

contained in ¶26, supra.

          59.    On January 11, 2010, the Company issued a press release entitled “Life Partners

Reports Third Fiscal Quarter and Nine Months Results.” Therein, the Company, in relevant part,

stated:

          Life Partners Holdings, Inc. (NASDAQ GS: LPHI), parent company of Life Partners,
          Inc., predicted another quarter of record earnings as it announced its preliminary
          financial results for its third fiscal quarter ended November 30, 2009. Life Partners
          expects to report third quarter earnings of approximately $0.57 per share compared
          with earnings of $0.49 per share last year. Results for the quarter are expected to
          show a 16% increase in earnings over the same period last year. All earnings per
          share calculations are adjusted to account for the 5-for-4 stock split in February
          2009.
          For its third quarter ended November 30, 2009, Life Partners expects to report $31.0
          million in revenues, a 10% increase over the $28.1 million it reported for the third
          quarter of last year.

          For the nine months ended November 30, 2009, Life Partners expects to report
          earnings per share of $1.58 compared to $1.35 per share last year, a 17% increase.
          Total revenue for the nine months is expected to show an increase of 13%, from
          $77.3 million last year to $87.5 million this year.

          60.    On January 11, 2010, Life Partners filed its Quarterly Report on Form 10-Q with the

SEC for the 2009 third fiscal quarter. The Company's Form 10-Q was signed by Defendants Pardo

and Martin, and reaffirmed the Company's financial results announced that day. The Company's

Form 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants Pardo and

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   31
Martin, substantially similar to the certifications contained in ¶26, supra.

          61.    On May 12, 2010, Life Partners filed its Annual Report on Form 10-K with the SEC

for the 2009 fiscal year. The Company's Form 10-K was signed by Defendant Pardo and included

the Company's financial results for the 2009 fiscal year. The Company's Form 10-K also contained

Sarbanes-Oxley required certifications, signed by Defendants Pardo and Martin, substantially similar

to the certifications contained in ¶26, supra.

          62.    The Company's Form 10-K filed with the SEC on May12, 2010, in relevant part, also

stated:

          . . . While in the past most insureds have had a life expectancy of 60 months or
          less, we have expanded this market to include insureds with life expectancies of up
          to 10 years or more depending on the purchasing parameters of each client. As we
          identify and qualify policies fitting generally within the purchasing parameters of
          our clients, we distribute insurance and current medical status information on
          these policies (with the insured’s name and other identifying information redacted)
          throughout our financial planner network.

                                        *        *      *

          . . . Unlike some of our competitors, which rely on the credit markets and may have
          more restrictive purchasing parameters or a single provider of investment capital,
          our retail oriented model has a broad base of over 25,000 clients. We believe this
          diversified model makes us more competitive in the market and provides us with
          greater funding flexibility. We also believe that this model provides a stronger
          platform for our sustainable growth as a company. Markets are segmented by
          length of life expectancy and policy face value. The amount of competition in
          these markets varies according to the demand for such policies.

                                        *        *      *

          Our Purchasers Depend on Our Ability to Predict Life Expectancies and Set
          Appropriate Prices; If Our Investment Returns Are Not Competitive, We May
          Lose Purchasers

          A purchaser’s investment return from a life settlement depends on three factors: the
          difference between the policy face amount and purchaser’s cost basis (consisting of
          the acquisition cost and premiums paid to maintain the policy), the length of the

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   32
      holding period, and the demise of the insured. We price settlements based on the
      policy face amount, the anticipated life expectancy of an insured and policy
      maintenance costs. Life expectancies are estimated generally from standard
      medical and actuarial data based on the historical experiences of similarly situated
      persons. The data is based necessarily on averages involving mortality and
      morbidity statistics. The outcome of a single settlement may vary significantly
      from the statistical average. It is impossible to predict any one insured’s life
      expectancy exactly. To mitigate the risk that an insured will outlive his or her
      predicted life expectancy, we price life settlements to yield competitive returns even
      if this life expectancy prediction is exceeded by several years. In addition, life
      settlement purchasers must be able to bear a non-liquid investment for an
      indeterminate period.

      If we underestimate the average life expectancies and price our transactions too high,
      our purchasers will realize smaller returns, demand may fall, and purchasers may
      invest their funds elsewhere. In addition, amounts escrowed for premiums may be
      insufficient to keep the policy in force, requiring purchasers to invest further
      proceeds to pay these additional premiums. If we overestimate the average life
      expectancies, the settlement prices we offer will fall below market levels, supply will
      decrease, and sellers may engage in business with our competitors or pursue other
      alternatives. Our ability to accurately predict life expectancies and price accordingly
      is affected by a number of factors, including:

      ·      The accuracy of our life expectancy estimations, which must sufficiently
             account for factors including an insured’s age, medical condition, life habits
             (such as smoking), and geographic location;

      ·      Our ability to anticipate and adjust for trends, such as advances in medical
             treatments, that affect life expectancy data; and

      ·      Our ability to balance competing interests when pricing settlements, such as
             the amounts paid to policy sellers, the acquisition costs paid by purchasers,
             and the compensation paid to ourselves and our referral networks.

      To support our pricing systems, we use both in-house and outside specialists,
      including medical doctors and published actuarial data. We cannot assure
      purchasers that, despite our experience in settlement pricing, we will not err by
      underestimating or overestimating average life expectancies or miscalculating
      reserve amounts for future premiums. If we do so, we could lose purchasers or
      policy sellers, and those losses could have a material adverse effect on our business,
      financial condition, and results of operations.

(Emphasis added).


                     COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                               33
       63.     On May 13, 2010, the Company issued a press release entitled, “LIFE PARTNERS

HOLDINGS POSTS RECORD EARNINGS - Company Exceeds Earnings Guidance -.” Therein,

the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (NASDAQ GS: LPHI), parent company of Life Partners,
       Inc., posted higher than expected earnings for its fiscal year ended February 28,
       2010. The company reported a 9% increase in revenues and a 7% increase in net
       income for its 2010 fiscal year over the same period of the prior year. For the fiscal
       year, Life Partners reported revenues of $113 million compared to $104 million for
       its prior fiscal year. Net income for the current fiscal year was $29 million, or $1.98
       per share compared with net income of $27.2 million or $1.83 per split adjusted
       share during the previous fiscal year.

                                      *       *       *

       LPHI Chairman Brian Pardo commented, “We received an unqualified opinion on
       Life Partners’ fiscal 2010 financial results, as well on the effectiveness of Life
       Partners’ internal control over financial reporting from Ernst & Young LLP, our
       independent registered public accountants. In a year in which our industry
       contracted, we continued to grow and capture greater market share. There is no doubt
       that we are well positioned to focus on moving forward into a new era of growth for
       the company.”

       64.     On June 24, 2010, the Company issued a press release entitled, “LIFE PARTNERS

TO REPORT QUARTERLY RESULTS.” Therein, the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (Nasdaq GS: LPHI) today announced that it expects to
       report a 5% increase in net income to $7.8 million or $0.52 per share for the three
       months ended May 31, 2010, including a one-time charge of $750,445 in deferred
       revenue. This one time adjustment had a $0.033 negative impact on net income,
       after taxes, on the period. Net income for the period compares to $7.4 million or
       $0.50 per share reported for the same period last year.

       The financial results were in line with the company’s expectations for growth during
       the year. The company also expects to report a 50% return on equity and a 75%
       return on capital for the period.

       Brian Pardo, Chief Executive Officer, said, “In the midst of continued turmoil in the
       financial markets, we are proud to post another outstanding quarter and expect to
       continue to grow our revenues and net income. Individual and institutional investors
       all over the world are realizing the value of life settlements and are turning to us

                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                34
          because of our experience, our infrastructure, and our leadership in the life settlement
          industry.”

          65.     On July 9, 2010, Life Partners filed its Quarterly Report on Form 10-Q with the SEC

for the 2010 fiscal first quarter. The Company's Form 10-Q was signed by Defendants Pardo and

Martin, and reaffirmed the Company's financial results previously announced on June 24, 2010. The

Company's Form 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants

Pardo and Martin, substantially similar to the certifications contained in ¶26, supra.

          66.     On September 22, 2010, the Company issued a press release entitled, “LIFE

PARTNERS ISSUES PRELIMINARY 2Q EARNINGS.” Therein, the Company, in relevant part,

stated:

          Life Partners Holdings, Inc. (NASDAQ GS: LPHI), parent company of Life Partners,
          Inc., today announced its preliminary financial results for its second fiscal quarter
          and first half ended August 31, 2010. Life Partners expects to report second quarter
          earnings of $0.54 per share, a 5.9% increase compared with earnings of $0.51 per
          share last year. Income from operations is expected to increase 13% to $12.7
          million, up from $11.2 million for the same period last year. For the six months
          ended August 31, 2010, the company expects to report earnings of $1.05 per share,
          a 4.0% increase compared with $1.01 per share for the six months ended August 31,
          2009.

          For the quarter ended August 31, 2010, Life Partners expects to report $30.3 million
          in revenues, a 4.1% increase over the $29.1 million reported for the same period last
          year. For the six months ended August 31, 2010, the company expects to report
          revenues of $57.0 million, a 0.8% increase over the $56.5 million reported for the
          same period last year.

          67.     On October 10, 2010, Life Partners filed its Quarterly Report on Form 10-Q with the

SEC for the 2010 fiscal second quarter. The Company's Form 10-Q was signed by Defendants

Pardo and Martin, and reaffirmed the Company's financial results previously announced on

September 22, 2010.         The Company's Form 10-Q also contained Sarbanes-Oxley required

certifications, signed by Defendants Pardo and Martin, substantially similar to the certifications

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   35
contained in ¶26, supra.

        68.     The statements contained in ¶¶ 51-67 were materially false and/or misleading when

made because defendants failed to disclose or indicate the following: (1) that the Company had

routinely used unrealistic life expectancy data that produced inaccurately short life expectancy

reports, which were subsequently used to sell life settlement policies to investors; (2) that the

Company had purposely concealed the historical rate in which individuals insured by life settlement

policies sold by Life Partners had lived past the life expectancy rates previously provided to

investors, such that the Company’s investors were unable to assess the accuracy or reliability of such

data; (3) that by underestimating the life expectancy data to investors, the Company was able to

charge substantially larger fees when brokering life settlement policies; (4) that the Company’s

revenues had been significantly increased through the employment of such business practices; (5)

that, as a result, the Company’s financial statements were false and misleading at all relevant times;

(6) that such business practices, when they were discovered, would initiate an investigation by the

federal authorities into the Company’s business practices; (7) that the Company lacked adequate

internal and financial controls; and (8) that, as a result of the foregoing, the Company’s statements

about its financial well-being and future business prospects were lacking in any reasonable basis

when made.

        69.     On December 21, 2010, the Wall Street Journal published an article about Life

Partners and its practices entitled, “Odds Skew Against Investors in Bets on Strangers' Lives.”

Therein, the article, in relevant part, stated:

        Life expectancies are a key factor in the business of investing in strangers' life
        insurance. If estimates are too low, investors face a double whammy: Their policy
        payout is delayed, and they must keep paying premiums as the person lives on. At
        Life Partners, according to the Journal investigation, the result is that 10% or 15%

                        COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  36
       yearly returns promoted to investors may prove elusive for many.

       Attractive projected returns for clients are part of the company's formula for success.
       Life Partners topped Fortune magazine's 2009 list of fastest-growing small
       companies in the U.S. In its fiscal year ended Feb. 28, it earned $29.4 million on
       $113 million of revenue, for a rich profit margin.

       Life Partners' filings with the Texas Department of Insurance, obtained by the
       Journal under an open-records request, show that in policies old enough to provide
       a measure, the insured people usually haven't died within the life expectancy Life
       Partners gave its clients, and often were still living beyond double or triple their
       projected span.

       In 2002, for instance, Life Partners brokered investments in 297 life policies.
       Actuaries say if life-expectancy calculations on a group of people are well done, half
       should die by their projected dates. But in 95% of these policies, the insured was still
       alive at the end of the life expectancy the company supplied to investors. Policies
       brokered in 2003 and 2004 show similar patterns.

       Brian Pardo, Life Partners' founder and chief executive, acknowledged that many
       of Life Partners' life-expectancy estimates "are probably wrong." It gets them
       from a doctor in Reno, Nev., who has testified for a court case that he never checks
       the accuracy of his prior predictions.

(Emphasis added).

       70.     Also on December 21, 2010, the Company issued a press release entitled, “Letter

from Life Partners Holdings, Inc.’s CEO Regarding Wall Street Journal Article.” Therein,

Defendant Pardo, in relevant part, stated:

       This morning, the Wall Street Journal ran an article that, in our view, provided a
       misleading depiction of some of our business practices and appeared to be based on
       anecdotal or incomplete information and the self-serving criticisms of some of our
       competitors. We would like to set the record straight.

       One of the focal points of this article was the system utilized by Life Partners to
       obtain estimates of life expectancies (“LE”). According to the article, a
       higher-than-expected number of insureds are exceeding the LEs on policies
       purchased through Life Partners Holdings, Inc.’s operating subsidiary, Life Partners,
       Inc. (“LPI”). However, as trade publications have reported, this phenomenon has
       been experienced throughout the life settlement industry and is not exclusive to LPI.
       The one factor in a life settlement transaction that can be controlled and adjusted is

                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                37
the discount at which the policy is acquired. Unlike other companies, LPI calculates
sensitivity of return utilizing LE to set a reasonable premium escrow amount, and
does not rely exclusively upon LE as the primary factor for profitability. LPI only
purchases policies that are economically feasible, under both predicted circumstances
as well as in the event the insured outlives their LE by a number of years.

LPI also provides its clients with analytical tools that can be applied to any policy
being considered for purchase, so that the breakeven point can be determined. This
refocuses the key element of profitability from LE accuracy to the discount to face
amount. Few if any LPI clients are able to acquire interests in a large enough
universe of policies to recreate statistical mortality tables. Therefore, statistical
probabilities should not be considered to be the principal predictive factor with
respect to potential returns. Instead, each life settlement transaction is structured
with the goal of achieving the purchaser’s target return and at a minimum, a positive
return even if the insured outlives their LE prediction. In that way, the purchaser has
the potential for superior returns, but also has a safety margin in the event that the
LE for any or all policies is exceeded.

Further, as the article fails to note, the vast majority of purchasers acquire fractional
interests in a number of policies, which provides them with risk diversification.
While the LE for some of those policies may be exceeded, the purchaser may receive
the proceeds on others significantly prior to their LE timeframe. It is the overall
return on the funds that each purchaser dedicates to the purchase of policies that
matters, not just the selected policies on which LE may have been exceeded.

The Wall Street Journal article also raises unwarranted issues regarding LPI’s fee
structure. During the past fiscal year, LPI’s net income as a percentage of the face
amount of policies that were the subject of life settlements arranged by LPI was
approximately 11%. This amount is borne by the sellers of the policies as a discount
to the price that they would otherwise receive if they were able to negotiate with a
willing purchaser or group of purchasers directly. The discount at which LPI prices
most policies allows for investors to achieve positive returns even when a policy is
held for 12 years, including premium payments.

By purchasing policies at a significant discount to face value, LPI provides an
opportunity for purchasers to both preserve principal and achieve a modest return,
even if the LE is exceeded by five to seven years.

As always, we are continually reviewing our processes and operations with an eye
toward providing even greater value to our investors and purchaser clients. We
believe investors who are looking for long-term growth in an alternative asset class
will continue to recognize the value that life settlement transactions bring to both the
purchasers and the sellers of these policies.


                COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                          38
       71.     On January 10, 2011, the Company issued a press release entitled, “LIFE

PARTNERS REPORTS THIRD FISCAL QUARTER AND NINE MONTHS RESULTS.” Therein,

the Company, in relevant part, stated:

       Life Partners Holdings, Inc. (Nasdaq GS: LPHI) today announced a 15% decrease
       in net income, from $8.4 million or $0.57 per share for the three months ended
       November 30, 2009, to $7.1 million or $0.47 per share for the three months ended
       November 30, 2010. Third quarter revenues decreased in the current period by 16%,
       from $31.0 million to $26.2 million.

       For the nine months ended November 30, 2010, the company reported a 3% decrease
       in net income; $22.8 million or $1.53 per share compared to $23.5 million or $1.58
       per share during the same period last year.

       The company’s balance sheet remained strong with $28.6 million in cash on hand,
       a current ratio of 4 to 1 and a 15% increase in shareholders’ equity.

       Brian Pardo, Chief Executive Officer, said, “While revenues for this quarter were
       somewhat lower than expected, our balance sheet grew stronger and investor interest
       in life settlements remains consistent. We believe that the volatility of the financial
       markets over the past few years underscores the importance of having a portion of
       investment capital in long-term, non-correlated assets like life settlements.”

       72.     On January 10, 2010, Life Partners filed its Quarterly Report on Form 10-Q with the

SEC for the 2010 fiscal third quarter. The Company's Form 10-Q was signed by Defendants Pardo

and Martin, and reaffirmed the Company's financial results announced that day. The Company's

Form 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants Pardo and

Martin, substantially similar to the certifications contained in ¶26, supra.

       73.     The statements contained in ¶¶ 70-72 were materially false and/or misleading when

made because defendants failed to disclose or indicate the following: (1) that the Company had

routinely used unrealistic life expectancy data that produced inaccurately short life expectancy

reports, which were subsequently used to sell life settlement policies to investors; (2) that the

Company had purposely concealed the historical rate in which individuals insured by life settlement

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 39
policies sold by Life Partners had lived past the life expectancy rates previously provided to

investors, such that the Company’s investors were unable to assess the accuracy or reliability of such

data; (3) that by underestimating the life expectancy data to investors, the Company was able to

charge substantially larger fees when brokering life settlement policies; (4) that the Company’s

revenues had been significantly increased through the employment of such business practices; (5)

that, as a result, the Company’s financial statements were false and misleading at all relevant times;

(6) that such business practices, when they were discovered, would initiate an investigation by the

federal authorities into the Company’s business practices; (7) that the Company lacked adequate

internal and financial controls; and (8) that, as a result of the foregoing, the Company’s statements

about its financial well-being and future business prospects were lacking in any reasonable basis

when made.

       74.     On January 20, 2011, the Wall Street Journal published an article entitled, “SEC

Probes Company Over Life-Span Data.” Therein, the article, in relevant part, stated:

       The Securities and Exchange Commission is investigating Life Partners Holdings
       Inc., a Waco, Texas, company that has arranged for investors to buy several billion
       dollars of life-insurance policies from their original owners, according to four people
       who have been contacted recently by the agency.

       As part of its probe, the SEC's enforcement division has been seeking experts to
       analyze the way Life Partners has estimated the life expectancies of the insured
       individuals, these people say. The estimates—projections of how long the people
       might have to live—are a crucial part of the investment equation.

       The shorter an insured person's expected life span, the more Life Partners generally
       can charge for that policy, because investors expect a faster payout. If the death
       comes later than anticipated, not only is the policy payout delayed, but investors who
       buy policies or parts of them must continue to pay premium bills while they wait to
       collect on a death benefit.

       Life Partners executives on Wednesday didn't respond to requests for comment.


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 40
Questions about the accuracy of Life Partners' life-expectancy estimates were the
focus of a December Page One article in The Wall Street Journal. The article
reported that many of the insured people are living well beyond the company's
estimates, suggesting that the 10% or 15% yearly returns promoted to Life Partners'
investor clients may prove elusive for many.

The company has said it remains confident in its methodology, and that even if many
insured people outlive their projected life spans, investors likely will still make
respectable single-digit annual returns.

Attractive projected returns for clients are a key part of Life Partners' formula for
success. One of the fastest-growing small companies in the U.S. in recent years, Life
Partners reported earnings of $29.4 million on $113 million of revenue for its fiscal
year ended Feb. 28, 2010.

Life Partners says it has sold 6,400 policies with a face value of $2.8 billion to
27,000 clients since its 1991 founding. Life Partners extracts often-hefty fees in the
deals, averaging $308,000 apiece for the 201 policies sold in its most recent fiscal
year. Investors often buy pieces of multiple policies.

The company uses a Reno, Nev., physician, Donald T. Cassidy, to provide its
life-expectancy estimates. Wednesday, Dr. Cassidy didn't respond to requests to his
office for comment. He declined to be interviewed for the Journal's earlier story.

Rick Bergstrom, an actuary in Bellevue, Wash., who has worked in the
life-settlements field since 1997, said an attorney from the SEC's Fort Worth, Texas,
office called him last week, to ask whether he could help analyze Life Partners'
life-expectancy projections.

Mr. Bergstrom said he and a partner five years ago examined Dr. Cassidy's work for
an institutional investor that was thinking of hiring the physician. They concluded
Dr. Cassidy was using an "unrealistic" approach that tended to produce inaccurately
short life expectancies, Mr. Bergstrom said.

Scott Gibson, an actuary at Lewis & Ellis Inc. in Richardson, Texas, said he recently
received a similar call from an SEC attorney, adding that "nothing has come of it at
this point."

An SEC spokesman said he couldn't confirm or deny the existence of any
investigation into Life Partners.

In an interview with the Journal last week, an investor from St. Augustine, Fla., said
he was personally assured in 2007 by Life Partners' chief executive, Brian Pardo, that
the company's accuracy record on life-expectancy projections was "extremely high."

               COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                         41
                                         *       *      *

          Based on data Life Partners filed with the Texas Department of Insurance, the
          Journal found that, for policies sold from 2002 through 2005, insured people outlived
          Life Partners' projections about 90% of the time. Many of those policies were on
          HIV-positive people; Life Partners since 2004 mostly has sold policies on older
          people.

          75.    Also on January 20, 2011, the Company issued a press release entitled, “LIFE

PARTNERS CONFIRMS SEC INVESTIGATION.”                        Therein, the Company, in relevant part,

stated:

          January 20, 2011 — Life Partners Holdings, Inc. (NASDAQ GS: LPHI) confirmed
          today that the SEC is conducting an investigation into the business of its operating
          subsidiary, Life Partners, Inc. The Company’s confirmation follows press reports
          of the previously non-public investigation. The Company said that it is cooperating
          fully. The Company said in addition that it does not know how long the
          investigation will go on, nor does it know how it will ultimately be resolved.

          76.    On this news, shares of Life Partners declined by $2.58 per share, more than 17%,

to close on January 20, 2011, at $12.46 per share, on unusually high volume, and further declined

another $0.64 per share, more than 5%, to close on January 21, 2010, at $11.82 per share, also on

unusually high volume.

                             Disclosures at the End of the Class Period

          77.    On January 27, 2011, the Wall Street Journal published an article that disclosed that

Life Partners had drastically changed how it would market its products to investors entitled, “Life

Partners Will Change Sales Pitch.” Therein, the article, in relevant part, stated:

          In an announcement emailed to its outside sales agents that was reviewed by The
          Wall Street Journal, Life Partners said the new approach would target annual returns
          for its clients of 7% over seven years, instead of the targeted 12% to 14% annual
          returns over shorter periods, typically four to six years, it had promoted as recently
          as last year.

          In the announcement, the company told the agents it had conducted a review "in light

                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   42
       of the issues raised by the Wall Street Journal," which published a Page One article
       in December focusing on Life Partners. The article reported that many of the insured
       people are living well beyond the estimates provided by Life Partners, requiring the
       investors to pony up more money for annual premiums and cutting their eventual
       returns.

       The company confirmed earlier this month that it is the subject of an investigation
       by the Securities and Exchange Commission and said it is "cooperating fully" with
       the agency. The full scope of that investigation isn't clear.

       In a written statement, a lawyer for Life Partners, Ida Draim, said the target rate of
       a 7% compounded annual return over seven years was "derived through feedback
       from our clients" about the level of return they generally seek for life-settlement
       investments.

       Life Partners said in the email to agents it would alter the way in which premiums
       are paid to insurance companies. It will begin to pay insurers the least possible
       amount each year to keep policies in force, rather than the annual amount
       recommended by insurers. The switch means that the upfront payments that investors
       make to purchase policies and cover premiums would be stretched further than under
       current practice, to seven years, the company said. In general, life insurers don't like
       being paid the minimum in premiums because it makes it tougher for them to turn
       a profit.

       The Life Partners attorney said executives "do not anticipate making any change" to
       the way the company estimates life expectancies. That issue is a critical part of the
       investment equation and one focus of the SEC investigation, according to people
       contacted by the agency.

       As previously reported, the life expectancies are calculated by a Reno, Nev.,
       physician who in 2008 testified he sometimes did dozens a day and didn't review his
       prior predictions for accuracy. Life Partners has said it stands by the doctor's
       methods.

       78.     On this news, shares of Life Partners declined by $1.16 per share, 9.60%, to close on

January 28, 2011, at $10.92 per share, on unusually high volume.

                              CLASS ACTION ALLEGATIONS

       79.     Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons or entities who purchased


                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                43
Life Partners securities between May 29, 2007 and January 20, 2011, inclusive (the “Class Period”),

and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers

and directors of the Company, at all relevant times, members of their immediate families and their

legal representatives, heirs, successors or assigns and any entity in which Defendants have or had

a controlling interest.

        80.     The members of the Class are so numerous that joinder of all members                 is

impracticable. During the Class Period, Life Partners securities were actively traded on the National

Association of Securities Dealers Automated Quotations Market ("NASDAQ"). While the exact

number of Class members is unknown to Plaintiff at this time and can only be ascertained through

appropriate discovery, Plaintiff believes that there are hundreds or thousands of members in the

proposed Class. Millions of Life Partners shares were traded publicly during the Class Period on

the NASDAQ and as of November 30, 2010, the Company had 14,915,246 shares of common stock

outstanding. Record owners and other members of the Class may be identified from records

maintained by Life Partners or its transfer agent and may be notified of the pendency of this action

by mail, using the form of notice similar to that customarily used in securities class actions.

        81.     Plaintiff's claims are typical of the claims of the members of the Class as all members

of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that

is complained of herein.

        82.     Plaintiff will fairly and adequately protect the interests of the members of the Class

and has retained counsel competent and experienced in class and securities litigation.

        83.     Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the


                          COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                    44
questions of law and fact common to the Class are:

                  (a)    Whether the federal securities laws were violated by Defendants’ acts as

alleged herein;

                  (b)    Whether statements made by Defendants to the investing public during the

Class Period omitted and/or misrepresented material facts about the operations, financial

performance and prospects of Life Partners; and

                  (c)    To what extent the members of the Class have sustained damages and the

proper measure of damages.

       84.        A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden of

individual litigation makes it impossible for members of the Class to individually redress the wrongs

done to them. There will be no difficulty in the management of this action as a class action.

                                UNDISCLOSED ADVERSE FACTS

       85.        The market for Life Partners securities was open, well-developed and efficient at all

relevant times. As a result of these materially false and/or misleading statements, and/or failures

to disclose, Life Partners securities traded at artificially inflated prices during the Class Period.

Plaintiff and other members of the Class purchased or otherwise acquired Life Partners securities

relying upon the integrity of the market price of the Company’s securities and market information

relating to Life Partners, and have been damaged thereby.

       86.        During the Class Period, Defendants materially misled the investing public, thereby

inflating the price of Life Partners securities, by publicly issuing false and/or misleading statements


                         COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                   45
and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth

herein, not false and/or misleading. Said statements and omissions were materially false and/or

misleading in that they failed to disclose material adverse information and/or misrepresented the

truth about Life Partners’ business, operations, and prospects as alleged herein.

        87.     At all relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false and/or misleading

statements about Life Partners’ financial performance and prospects. These material misstatements

and/or omissions had the cause and effect of creating in the market an unrealistically positive

assessment of the Company and its financial well-being and prospects, thus causing the Company's

securities to be overvalued and artificially inflated at all relevant times. Defendants’ materially false

and/or misleading statements during the Class Period resulted in Plaintiff and other members of the

Class purchasing the Company's securities at artificially inflated prices, thus causing the damages

complained of herein.

                                        LOSS CAUSATION

        88.     Defendants' wrongful conduct, as alleged herein, directly and proximately caused

the economic loss suffered by Plaintiff and the Class.

        89.     During the Class Period, Plaintiff and the Class purchased Life Partners securities

at artificially inflated prices and were damaged thereby. The price of the Company's securities

significantly declined when the misrepresentations made to the market, and/or the information

alleged herein to have been concealed from the market, and/or the effects thereof, were revealed,


                        COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  46
causing investors’s losses.

                                  SCIENTER ALLEGATIONS

       90.     As alleged herein, Defendants acted with scienter in that Defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

materially false and/or misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced in

the issuance or dissemination of such statements or documents as primary violations of the federal

securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their receipt of

information reflecting the true facts regarding Life Partners, his/her control over, and/or receipt

and/or modification of Life Partners’ allegedly materially misleading misstatements and/or their

associations with the Company which made them privy to confidential proprietary information

concerning Life Partners, participated in the fraudulent scheme alleged herein.

                  APPLICABILITY OF PRESUMPTION OF RELIANCE
                      (FRAUD-ON-THE-MARKET DOCTRINE)

       91.     The market for Life Partners securities was open, well-developed and efficient at all

relevant times. As a result of the materially false and/or misleading statements and/or failures to

disclose, Life Partners securities traded at artificially inflated prices during the Class Period. On

January 2, 2009, the Company’s stock closed at a Class Period high of $28.09 per share. Plaintiff

and other members of the Class purchased or otherwise acquired the Company’s securities relying

upon the integrity of the market price of Life Partners securities and market information relating to

Life Partners, and have been damaged thereby.

       92.     During the Class Period, the artificial inflation of Life Partners stock was caused by

the material misrepresentations and/or omissions particularized in this Complaint causing the

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 47
damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false and/or misleading

statements about Life Partners’ financial performance and prospects. These material misstatements

and/or omissions created an unrealistically positive assessment of Life Partners and its business,

operations, and financial performance, thus causing the price of the Company's securities to be

artificially inflated at all relevant times, and when disclosed, negatively affected the value of the

Company stock. Defendants’ materially false and/or misleading statements during the Class Period

resulted in Plaintiff and other members of the Class purchasing the Company's securities at such

artificially inflated prices, and each of them has been damaged as a result.

       93.     At all relevant times, the market for Life Partners securities was an efficient market

for the following reasons, among others:

               (a)     Life Partners stock met the requirements for listing, and was listed and

actively traded on the NASDAQ, a highly efficient and automated market;

               (b)     As a regulated issuer, Life Partners filed periodic public reports with the SEC

and the NASDAQ;

               (c)     Life Partners regularly communicated with public investors via established

market communication mechanisms, including through regular dissemination of press releases on

the national circuits of major newswire services and through other wide-ranging public disclosures,

such as communications with the financial press and other similar reporting services; and

               (d)     Life Partners was followed by securities analysts employed by major

brokerage firms who wrote reports about the Company, and these reports were distributed to the

sales force and certain customers of their respective brokerage firms. Each of these reports was


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 48
publicly available and entered the public marketplace.

       94.     As a result of the foregoing, the market for Life Partners securities promptly digested

current information regarding Life Partners from all publicly available sources and reflected such

information in Life Partners’ stock price. Under these circumstances, all purchasers of Life Partners

securities during the Class Period suffered similar injury through their purchase of Life Partners

securities at artificially inflated prices and a presumption of reliance applies.

                                       NO SAFE HARBOR

       95.     The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. The

statements alleged to be false and misleading herein all relate to then-existing facts and conditions.

In addition, to the extent certain of the statements alleged to be false may be characterized as

forward looking, they were not identified as “forward-looking statements” when made and there

were no meaningful cautionary statements identifying important factors that could cause actual

results to differ materially from those in the purportedly forward-looking statements. In the

alternative, to the extent that the statutory safe harbor is determined to apply to any forward-looking

statements pleaded herein, Defendants are liable for those false forward-looking statements because

at the time each of those forward-looking statements was made, the speaker had actual knowledge

that the forward-looking statement was materially false or misleading, and/or the forward-looking

statement was authorized or approved by an executive officer of Life Partners who knew that the

statement was false when made.




                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 49
                                        FIRST CLAIM
                        Violation of Section 10(b) of The Exchange Act
                          and Rule 10b-5 Promulgated Thereunder
                                     Against All Defendants

        96.     Plaintiff repeats and realleges each and every allegation contained above as if fully

set forth herein.

        97.     During the Class Period, Defendants carried out a plan, scheme and course of conduct

which was intended to and, throughout the Class Period, did: (i) deceive the investing public,

including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other

members of the Class to purchase Life Partners’ securities at artificially inflated prices. In

furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them, took

the actions set forth herein.

        98.     Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue

statements of material fact and/or omitted to state material facts necessary to make the statements

not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a

fraud and deceit upon the purchasers of the Company's securities in an effort to maintain artificially

high market prices for Life Partners’ securities in violation of Section 10(b) of the Exchange Act and

Rule 10b-5. All Defendants are sued either as primary participants in the wrongful and illegal

conduct charged herein or as controlling persons as alleged below.

        99.     Defendants, individually and in concert, directly and indirectly, by the use, means

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about Life Partners’ financial

well-being and prospects, as specified herein.

        100.    These defendants employed devices, schemes and artifices to defraud, while in

                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 50
possession of material adverse non-public information and engaged in acts, practices, and a course

of conduct as alleged herein in an effort to assure investors of Life Partners’ value and performance

and continued substantial growth, which included the making of, or the participation in the making

of, untrue statements of material facts and/or omitting to state material facts necessary in order to

make the statements made about Life Partners and its business operations and future prospects in

light of the circumstances under which they were made, not misleading, as set forth more

particularly herein, and engaged in transactions, practices and a course of business which operated

as a fraud and deceit upon the purchasers of the Company’s securities during the Class Period.

        101.    Each of the Individual Defendants' primary liability, and controlling person liability,

arises from the following facts: (i) the Individual Defendants were high-level executives and/or

directors at the Company during the Class Period and members of the Company's management team

or had control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities

as a senior officer and/or director of the Company, was privy to and participated in the creation,

development and reporting of the Company's internal budgets, plans, projections and/or reports; (iii)

each of these defendants enjoyed significant personal contact and familiarity with the other

defendants and was advised of, and had access to, other members of the Company's management

team, internal reports and other data and information about the Company's finances, operations, and

sales at all relevant times; and (iv) each of these defendants was aware of the Company's

dissemination of information to the investing public which they knew and/or recklessly disregarded

was materially false and misleading.

        102.    The Defendants had actual knowledge of the misrepresentations and/or omissions of

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to


                        COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                  51
ascertain and to disclose such facts, even though such facts were available to them. Such

Defendants' material misrepresentations and/or omissions were done knowingly or recklessly and

for the purpose and effect of concealing Life Partners’ financial well-being and prospects from the

investing public and supporting the artificially inflated price of its securities. As demonstrated by

Defendants’ overstatements and/or misstatements of the Company's business, operations, financial

well-being, and prospects throughout the Class Period, Defendants, if they did not have actual

knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to obtain

such knowledge by deliberately refraining from taking those steps necessary to discover whether

those statements were false or misleading.

       103.     As a result of the dissemination of the materially false and/or misleading information

and/or failure to disclose material facts, as set forth above, the market price of Life Partners

securities was artificially inflated during the Class Period. In ignorance of the fact that market

prices of the Company’s securities were artificially inflated, and relying directly or indirectly on the

false and misleading statements made by Defendants, or upon the integrity of the market in which

the securities trades, and/or in the absence of material adverse information that was known to or

recklessly disregarded by Defendants, but not disclosed in public statements by Defendants during

the Class Period, Plaintiff and the other members of the Class acquired Life Partners securities

during the Class Period at artificially high prices and were damaged thereby.

       104.     At the time of said misrepresentations and/or omissions, Plaintiff and other members

of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other

members of the Class and the marketplace known the truth regarding the Company’s improper

accounting practices, which were not disclosed by Defendants, Plaintiff and other members of the


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 52
Class would not have purchased or otherwise acquired their Life Partners securities, or, if they had

acquired such securities during the Class Period, they would not have done so at the artificially

inflated prices which they paid.

        105.    By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchange

Act and Rule 10b-5 promulgated thereunder.

        106.    As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and the

other members of the Class suffered damages in connection with their respective purchases and sales

of the Company's securities during the Class Period.

                                       SECOND CLAIM
                        Violation of Section 20(a) of The Exchange Act
                               Against the Individual Defendants

        107.    Plaintiff repeats and realleges each and every allegation contained above as if fully

set forth herein.

        108.    The Individual Defendants acted as controlling persons of Life Partners within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company's operations and/or intimate knowledge of the false financial statements filed by the

Company with the SEC and disseminated to the investing public, the Individual Defendants had the

power to influence and control and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various statements

which Plaintiff contends are false and misleading. The Individual Defendants were provided with

or had unlimited access to copies of the Company's reports, press releases, public filings and other

statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were


                       COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                 53
issued and had the ability to prevent the issuance of the statements or cause the statements to be

corrected.

       109.    In particular, each of these Defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.

       110.    As set forth above, Life Partners and the Individual Defendants each violated either

Section 10(b) and Rule 10b-5, by their acts and/or omissions as alleged in this Complaint. By virtue

of their positions as controlling persons, the Individual Defendants are liable pursuant to Section

20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct,

Plaintiff and other members of the Class suffered damages in connection with their purchases of the

Company's securities during the Class Period.

                                    PRAYER FOR RELIEF

       WHEREFORE, Plaintiff prays for relief and judgment, as follows:

       (a)     Determining that this action is a proper class action under Rule 23 of the Federal

Rules of Civil Procedure;

       (b)     Awarding compensatory damages in favor of Plaintiff and the other Class members

against all defendants, jointly and severally, for all damages sustained as a result of Defendants'

wrongdoing, in an amount to be proven at trial, including interest thereon;

       (c)     Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this

action, including counsel fees and expert fees; and

       (d)     Such other and further relief as the Court may deem just and proper.


                      COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                                54
                                JURY TRIAL DEMANDED

      Plaintiff hereby demands a trial by jury.

DATED: February 4, 2011                     THE BRISCOE LAW FIRM, PLLC

                                            __________________________________
                                               Willie C. Briscoe (#24001788)
                                            The Preston Commons
                                            8117 Preston Road, Suite 300
                                            Dallas, Texas 75255
                                            Telephone: (214) 706-9314
                                            Facsimile: (214) 706-9315

                                            GLANCY BINKOW & GOLDBERG LLP
                                            Lionel Z. Glancy
                                            Ex Kano S. Sams II
                                            1801 Avenue of the Stars, Suite 311
                                            Los Angeles, California 90067
                                            Telephone: (310) 201-9150
                                            Facsimile: (310) 201-9160

                                            LAW OFFICES OF HOWARD G. SMITH
                                            Howard G. Smith
                                            3070 Bristol Pike, Suite 112
                                            Bensalem, PA 19020
                                            Telephone: (215) 638-4847
                                            Facsimile: (215) 638-4867

                                            Attorneys for Plaintiff Jeremy Goad




                     COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
                                               55

				
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