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SLAPP Lawsuits: First Amendment Threats

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A PLETHORA OF SLAPP LAWSUITS                            

       

When I became a consumer advocate and author who exposed fraud in the viatical and life settlements industry I did not have a clue it would result in being SLAPPed with a series of lawsuits. Today, most of the principals of these companies are (a) in prison, (b) defending themselves against criminal indictments, or (c) under federal investigation.

Strategic Lawsuits Against Public Participation (SLAPPs) are lawsuits brought against those who communicate with their government or speak out on issues of public interest. SLAPP filers don't go to court seeking justice. Rather, SLAPPs are intended to intimidate those who disagree with them or their activities by draining the target's financial resources. SLAPPs are effective because even a meritless lawsuit can take years and many thousands of dollars to defend. Following is a summary of the years I struggled to preserve my First Amendment rights against plaintiffs with massive war chests.  

The First SLAPP Lawsuit: Life Partners Inc .

In 1997 my first book about the viatical settlement industry was released to the public. It was intended to advise terminally ill people about the abuse and fraud that could victimize them, when they sold their life insurance. Aware that many concepts were new to most readers, and most readers were suffering serious, disabling illness, I intentionally cut compound sentences to single ideas.

One chapter was written differently--as a story. It was entitled, "Brian Pardo: Grateful for AIDS." The title referred to the founder and CEO of Life Partners, Inc. of Waco, Texas, one of the largest viatical and life settlement firms. Among the reasons for the title: Pardo's new viatical business enriched him after his previous business venture landed him in hot water and then bankruptcy.

The previous business, a solar utility company, was charged in 1989 by the SEC with financial fraud. The case settled out of court, with Pardo promising he would never again violate securities laws. Three years later Pardo's new viatical company, Life Partners Inc. (LPI) was thriving, he was living in a mansion in Texas, he employed and paid substantial salaries to his wife and daughter and, in time, his son-in-law, and he was again violating securities laws.

In 1992 Pardo and LPI were issued cease and desist orders by North Dakota Securities Commissioner Glenn Pomeroy for an investment scheme that violated state securities law and disclosure requirements.

There are thirty-nine references in the end notes to that chapter. Among the references was a 1996 article published in the magazine, POZ. "Let the Seller Beware" described Pardo as "one of the industry's blackest sheep." It also summarized the then-new SEC lawsuit against Pardo and his new company, LPI. "The Securities and Exchange Commission (SEC) has sued Pardo and his company for a raft of securities-law violations. The SEC claimed that Life Partners sold interests in policies it had viaticated as though they were unregistered securities, misled viators and investors (it claims to be the largest viatical settlement company but isn't), and didn't disclose Pardo's previous run-ins with the securities and banking laws."

The same title was used by the Washington Blade, which described and named AIDS patients who sold policies to LPI, and concluded these were "shady business dealings."

Pardo is one SLAPP-happy entrepreneur. He sued the North Dakota securities commissioner, Pomeroy, and he sued the SEC attorney, Leo Orenstein. Other lawsuits followed against regulators who tried to impede Pardo's rush to riches. Among them: the California insurance commissioner and an attorney at CDI (who notified MetLife that LPI was not licensed to transact viatical business in California); insurers (MetLife and LINA) for refusing to transfer policies to LPI because the company was not licensed in the state of the insured; the insurance commissioner of Virginia, after Virginia brought an action against LPI for violating state law--transacting business without a license and underpaying a terminally ill insured.

Although each of Pardo's SLAPP suits against regulators was dismissed--eventually--the tactic worked. It consumed substantial time and resources. It sent out a warning to others. The result: Years passed before any government entity had the courage to tackle Pardo and LPI. SLAPP lawsuits enabled Pardo and LPI to operate above the law.

Now, at long last, Pardo and LPI are, again, pestered by an SEC investigation. They are further encumbered by numerous civil lawsuits in courts around the nation, some filed as class actions. The stock price has plummeted. The Wall Street Journal enjoys chronicling these activities.

During the silent years, the years in which LPI's SLAPP suits and deep pockets earned them immunity, I continued to warn the public--terminally ill people and investors. I have several file boxes of documents from victims of Life Partners. My first book did not merit retaliation but when my second book, "Viatical Settlements: An Investor's Guide," was published in 1998, I became a target of Life Partners. Once that ended, their cohorts resumed the battle to silence me.

The warnings in "Viatical Settlements: An Investor's Guide" were directed to investors who were solicited to buy what Pardo called "fractionalized shares" of viaticated life insurance. The book detailed the various types of fraud that, over time, were named "clean-sheeting," "dirty-sheeting," "wet ink," "warehousing," "stacking," and Stranger Owned Life Insurance (STOLI).

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http://www.AccidentalFelon.net

Wolk's current interest is wrongful convictions, which happen over and over again when the victim of police and/or prosecutorial misconduct is a teen. Her efforts to right these wrongs include her legal novel, "Accidental Felon," offering legal (more...)
 

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Protect your right to speak out without being sued... by Gloria Grening Wolk on Monday, Dec 26, 2011 at 10:45:39 AM