Mistress Got Millions Meant for Rescue Dogs, Life Partners Trustee Saysby
Happy Endings dogs abandoned at Camp Diggy Bones, suit says
Case is among several seeking to recoup for 22,000 investors
Homeless dogs were among the victims of Life Partners Holdings Inc.’s former chief executive, who, after being accused of cheating investors out of $1.3 billion, must now fight claims he used an animal shelter to funnel money to his mistress.
Happy Endings Dog Rescue, allegedly started to help large canines in need of homes, instead left many uncared for as it helped Life Partners’ then-CEO Brian Pardo evade taxes, according to the suit, filed in Texas court as part of the company’s bankruptcy. The operation took about $16 million out of the hands of investors, who are estimated by a bankruptcy trustee to have suffered steep losses as part of Texas’s biggest fraud. Pardo is fighting the trustee’s claims.
Instead of going into the charity, millions of dollars a year went for the personal use of Pardo’s mistress, who founded the rescue in 2005, the lawsuit alleges.
“Happy Endings’ failure to pay for the dogs allegedly in its care is further evidence of its failure to serve its true, charitable purpose,” the trustee of the bankrupt estate, H. Thomas Moran II, said in the complaint. He’s seeking to get money back from the shelter, Pardo and his mistress.
The lawsuit, filed March 11, is one of several brought in recent days that seeks to claw back funds for investors. Brent Perry, a lawyer for Pardo, said the trustee’s suits have “little, if any, validity.”
“The trustee has sued almost everybody who ever got a dollar from Life Partners,” Perry said in a phone interview Monday.
The dog shelter abandoned 250 animals at another rescue operation, Camp Diggy Bones, in 2014, the trustee said, citing reports from other shelter owners suggesting even more dogs were left uncared for. Gene Mason, the owner of Diggy Bones, declined to comment in a phone interview Monday.
At one point, Happy Endings was receiving payments for more than 20 people who were no longer on its payroll, according to the complaint. Just before Life Partners’ bankruptcy, when Pardo learned he would no longer be paid, his mistress tried to provide him a salary through the charity, the trustee claims.
Waco, Texas-based Life Partners, which sold shares in life insurance policies on the elderly and terminally ill, defrauded individual investors, Moran has said in court filings as part of the company’s bankruptcy. Its current portfolio, which holds life insurance policies with a face value of $2.3 billion, includes over 22,000 investors in 100,000 fractional positions, representing $1.4 billion in invested capital at risk, Moran has said in court papers.
Other parties sued by the trustee include Donald T. Cassidy, a medical doctor hired by Pardo in 1999 who had no experience in estimating life expectancies for the life settlement market, according to the suit. Cassidy misrepresented the nature and accuracy of the life expectancies, concealing the existence of longer life expectancies and distorting the likely returns on investment, the trustee said.
With such investments -- also sometimes called viaticals or death bonds -- purchasers must pay premiums to keep the policies active until the insured dies and the death benefit is paid. The sooner death comes, the more an investor stands to profit. Likewise, investors are willing to pay more for policies on terminally ill people expected to die soon.
From 2008 to 2015, Cassidy received $1.6 million in funds from Life Partners, Moran said. Cassidy could not be reached for comment at phone numbers under his name in public databases.
Life Partners filed for bankruptcy in 2015 after a $46 million court judgment in which the company and Pardo were found by a jury to have filed false and misleading statements with the U.S. Securities and Exchange Commission.
The case is In re Life Partners Holdings Inc., 15-40289, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).