Aug. 29--Life Partners Holdings, the embattled broker of life insurance settlements, announced Tuesday that it has hired Scott Dubs, the one-time chief financial officer of the defunct Fort Worth motorcycle maker American IronHorse, as its CFO. He replaces David M. Martin, who resigned in July.
The appointment comes two days before a U.S. district court hearing in Austin that could decide if a state-appointed receiver is put in charge of the company. Texas Attorney General Greg Abbott and the Texas State Securities Board are pushing for a receiver, alleging violations of state securities laws.
Waco-based Life Partners denies the state's claim that it deals in securities while buying unwanted life insurance policies, then selling fractions of them to investors who pay the premiums and collect death benefits when the insured parties die. The company also denied claims in a Securities & Exchange Commission lawsuit in January that its estimates of life expectancies -- done by a Nevada oncologist with no formal actuarial training -- were often inaccurately short.
In June 2011, Ernst & Young resigned as the company's outside auditor, saying that it could not stand behind its stated 2010 fiscal results. Martin, the former CFO, was named in the SEC action along with Brian Pardo, the chief executive officer, and President Scott Peden. The suit claims all three knew that the Nevada doctor's estimates were wrong 90 percent of the time and that they committed accounting fraud -- allegedly misstating net income by prematurely recognizing revenue from life settlement transactions that had not yet been completed. The company denies the charges.
Life Partners said that Dubs, who studied accounting at the University of Illinois, would receive a salary of $125,000.
Dubs served as CFO of IronHorse from 2001 to 2003 and later sat on its board until 2008, said R.B. "Buck" Hendrickson, the motorcycle maker's former CEO. IronHorse sought bankruptcy protection in 2008 and closed down a year later.
Barry Shlachter, 817-390-7718
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