CURRAN SETTLES ACTION VS. VIATICAL SETTLEMENT
PROVIDER PROMOTERS AGREE TO REPAY $750,000 TO INVESTORS
Attorney General J. Joseph Curran, Jr. announced today that a settlement has been reached with the former owners and operators of viatical settlement company, Answer Care, Inc. In related settlements with a court appointed receiver, David Hoover, Robert Hoover, Mark Massoni, and Steven Warren agreed to turn over assets valued at more than $750,000 for the benefit of investors. Baltimore City Circuit Court Judge Evelyn Omega Cannon approved the settlement agreements in this case and entered an order for a permanent injunction against Donald Forney, David Hoover, Robert Hoover, Mark Massoni, M&D Corporation, Sierra Consulting, Inc., Millenium Corporate Consulting, Inc., Sierra Marketing, and Steven Warren.
Viatical settlement companies sell interests in life insurance policies of the terminally ill. Investors pay less than the face value of the policy, in order to recover the face value when the insured dies. Curran's Securities Division sued Answer Care, its owners and several promoters alleging violations of the Maryland Securities Act.
Judge Cannon found that the viatical settlement contracts sold by Answer Care were securities and that Answer Care was selling unregistered securities, employing unregistered securities brokers or investment advisers and employing a scheme or device to defraud another person. The court-appointed receiver will continue to seek recovery of assets of Answer Care under the supervision of the court. Judge Cannons order specifically rejects an interpretation by the United States Court of Appeals for the D.C. Circuit in SEC v. Life Partners, Inc. that viatical settlements are not securities and, therefore, outside of the jurisdiction of state securities divisions.
"This case is a victory for Maryland investors," Attorney General Curran said. "Many of us in law enforcement around the country are concerned that viatical investments like those offered by Answer Care have been largely unregulated, leaving investors open to fraudulent practices. This case sends a clear message to viatical settlement companies and their agents that the sale of unregistered viaticals will not be tolerated in Maryland."
Currans Securities Division also has taken action against several agents selling viatical settlement contracts for Answer Care and other viatical settlement companies. Curran reminded investors to call the Securities Division at 410-576-6360 before they invest to find out whether their investment adviser, broker and securities are registered. Even when an investment program looks reasonable, and friends and family trust the promoter, it's better to take a few minutes to verify the status of the promoters.