Brian Pardo LPHI Deposition

pardo brian 8-27-08.
txt
0001
1
DISTRICT COURT, CITY AND )
2 COUNTY OF DENVER, )
COLORADO )
3 )
1437 Bannock street )
4 Denver, CO 80202 )
)
5 FRED J. JOSEPH, )
Securities Commissioner )
6 for the State of )
Colorado, )
7 )
Plaintiff, )
8 )
V. )
9 )
LIFE PARTNERS, INC., a )
10 Texas Corporation, LIFE )
PARTNERS HOLDINGS, INC., )
11 a Texas Corporation, )
SCOTT PEDEN, SCOTT )
12 BEEMER, ERIC COX, LOWRY )
LYNNE DAVIS, GARY HANSON, )
13 TIM HARPER, KENNETH )
KELLER, MIKE LOWE, LARRY )
14 MICKELSON, JOHN ROTH, )
RALPH SIEBERT, AND BRIAN )
15 PARDO, )
)
16 Defendants. )
)
17 JOHN W. SUTHERS, )
Attorney General ) Case No. 2007 cV 5218
18 CHRISTINE C. STRETESKY, )
31749* )
19 RUSSELL KLEIN, ) Div.: 5
31965* )
20 Asst. Attorneys General )
1525 Sherman Street, )
21 7th Floor )
Denver, CO 80203 )
22 303-866-5278 )
303-866-5395 Facsimile )
23 *counsel of Record )
24
ORAL DEPOSITION OF BRIAN D. PARDO
25 AUGUST 27, 2008
0002
1 ORAL DEPOSITION OF BRIAN D. PARDO, produced
2 as a witness at the instance of the PLAINTIFF FRED
3 J. JOSEPH, Securities Commissioner for the State of
4 Colorado and duly sworn, was taken in the
5 above-styled and numbered cause on the 27th of
6 August, 2008, from 9:02 a.m, to 9:45 a.m., before
7 Sherry D. Current, CSR, in and for the State of
8 Texas, reported by machine shorthand, at the offices
9 of Life Partners, Inc., 204 woodhew Drive, Waco,
10 Texas, pursuant to the Texas Rules of Civil
11 Procedure and the provisions stated on the record or
12 attached hereto.
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pardo brian 8-27-08.txt
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0003
1 APPEARANCES
2
3 PLAINTIFF FRED J. JOSEPH, Securities Commissioner
for the State of Colorado:
4
JOHN W. SUTHERS, Attorney General
5 CHRISTINE C. STRETESKY, 31749
RUSSELL KLEIN, 31965
6 Asst. Attorneys General
1525 Sherman Street, 7th Floor
7 Denver, CO 80203
(303) 866-5278 Telephone
8 (303) 866-5395 Facsimile
9
10 FOR THE DEFENDANTS LIFE PARTNERS, INC., a Texas
Corporation, LIFE PARTNERS HOLDINGS, INC., a Texas
11 Corporation, SCOTT PEDEN, TIM HARPER, LARRY
MICKELSON, JOHN ROTH, AND BRIAN PARDO:
12
Mr. Otto K. Hilbert, II
13 Robinson Waters & O'Dorisio, P.C.
1099 18th Street
14 26th Floor
Denver, Colorado 80202-1926
15 (303) 297-2600 Firm
(303) 824-3120 Direct
16
17 FOR THE DEFENDANTS SCOTT BEEMER, ERIC COX, LOWRY
LYNNE DAVIS, GARY HANSON, KENNETH KELLER, MIKE LOWE
18 AND RALPH SIEBERT:
19
Mr. Thomas Tenenbaum
20 The Tenenbaum Law Firm
Park Ridge Corporate Center, suite 600
21 10475 Park Meadows Drive
Lone Tree, Colorado 80214
22 (303) 804-3800 Telephone
(303) 804-3802 Facsimile
23
24
25
0004
1 INDEX
2 PAGE VOL
3
Appearances 3 1
4
Stipulations 5 1
5
Page 2
BRIAN D. PARDO
6
Examination by Ms. Stretesky 5 1
7
8 Signature and Changes 30 1
9 Reporter's Certificate 32 1
10
11
REQUESTED DOCUMENTS/INFORMATION
12 NO. DESCRIPTION PAGE VOL
13
NONE
14
15
16 CERTIFIED QUESTIONS
No. PAGE/LINE
17
18 NONE
19
20
EXHIBITS
21 NO DESCRIPTION PAGE VOL
22
NONE
23
24
25
0005
1 THE REPORTER: Before I swear the
2 witness, are there any stipulations or agreements
3 that you would like to place on the record?
4 MS. STRETESKY: No, ma'am.
5 MR. HILBERT: None.
6 MR. TENENBAUM: Nope.
7 (Witness sworn.)
8 BRIAN PARDO,
9 after having been first sworn, testified as follows:
10 EXAMINATION
11 BY MS. STRETESKY:
12 Q. Good morning, Mr. Pardo. we met
13 yesterday. I'm Christine Stretesky. I'm an
14 assistant attorney general with the state of
15 Colorado, representing Fred Joseph in this action
16 against Life Partners and the individual defendants.
17 Have you ever had your deposition
18 taken before?
19 A. Yes.
20 Q. Okay. This might be familiar to you, but
21 I'm just going to set up some ground rules. I would
22 ask that you speak loud enough for the court
23 reporter to hear. we want to get as good of a
24 record as we can get. And if she can't hear you,
25 then we won't get your answers down properly.
0006
1 A. okay.
2 Q. I'd also ask that you wait until I'm done
3 asking a question to give your answer so that we
4 don't talk over each other and we can get a clean
5 record.
6 A. Okay.
7 Q. And I also ask that you answer orally
8 either "yes" or "no," not "uh-huh" or "huh-uh" or a
9 nod of the head because that's difficult to discern
Page 3
10 when we're reading the transcript.
11 A. All right.
12 Q. Also, if you need to take a break, we can
13 take breaks. This isn't a test to see how long you
14 can sit in the chair and drink coffee and answer
15 questions, but I would ask and let you know that I
16 will not allow a break if a question is pending. so
17 if I ask a question, I'm going to ask that you
18 answer the question before we break for any reason,
19 regardless if it's to discuss something with your
20 counsel or go use the bathroom.
21 A. Okay.
22 Q. Also, if you don't understand a question
23 I've asked you, let me know and I will try to
24 rephrase it to where you can understand it. if you
25 answer, I'm going to assume that you understood my
0007
1 question and are answering the question that I think
2 I asked.
3 A. Okay.
4 Q. Are you on any medication that affects
5 your memory, sir?
6 A. No, I don't think so.
7 MR. HILBERT: Not that I remember.
8 (Laughter.)
9 THE WITNESS: That's what I was going
10 to say, "Not that I recall."
11 (Laughter.)
12 Q. (BY MS. STRETESKY) Have you had any
13 recent illness that would affect your memory today?
14 A. I don't think so.
15 Q. All right. could you give me a brief
16 description of your employment history?
17 A. Yes. I was in the Army -- I guess I can
18 start there?
19 Q. Sure.
20 A. -- from 1962 to 1968. I went to work for
21 a company called Dart Industries for -- until --
22 well, anyway, it was until about the early '70s, '72
23 or '73.
24 And then I started a company called
25 Solar King, which was incorporated in 1974. And I
0008
1 remained the president and chairman of Solar King
2 until 2000, roughly. NO, no, no, no. I'm sorry.
3 1990.
4 Q. Did Solar King go out of business in 1990?
5 A. Yes. It went out of the solar energy
6 business in 1986, and we tried to -- it went into
7 Chapter 11. And myself and other investors tried to
8 save the company for four years and finally we
9 couldn't so we just gave up on it, liquidated it
10 actually in '89.
11 And then I began to -- I was
12 technically, you might say, unemployed for about a
13 year. And I had incorporated Life Partners in 1991,
14 and from there -- I've been there ever since.
15 So actually I was 17 years, I think,
16 at Solar King, and 17 or 18 years now at Life
17 Partners. So both of my careers have just been two
18 companies.
19 Q. what kind of business was solar King?
20 A. Solar energy company.
Page 4
21 Q. Where was it located?
22 A. It was located in Nevada and then was
23 transferred in 1976 here to Texas.
24 Q. Waco?
25 A. Uh-huh. Yes.
0009
1 Q. Where did it file chapter 11 bankruptcy?
2 A. Here in Texas.
3 Q. And at the time that it filed bankruptcy,
4 were you president and chairman?
5 A. Yes, I was.
6 Q. Now, you said you incorporated Life
7 Partners in 1991. Which Life Partners company was
8 incorporated in 1991?
9 A. Well, Life Partners, Inc., the operating
10 company now, was incorporated in September of 1991.
11 Q. When was Life Partners Holdings
12 incorporated?
13 A. That was in connection with the reverse
14 merger when we took the entity public in 2000.
15 Q. And then had you also incorporated
16 Extended Life Services, Inc.?
17 A. I don't recall.
18 Q. Does that company name sound familiar to
19 you?
20 A. Yes, but I'm not sure I recall what the
21 function of the company is now.
22 (Telephonic interruption.)
23 Q. (BY MS. STRETESKY) Starting with Life
24 Partners, Inc., what were your titles with that
25 company?
0010
1 A. Well, I was the founder and was chairman
2 and chief executive officer. Chairman of the board
3 of directors and chief executive officer and
4 president.
5 Q. And president, as well?
6 A. Yes.
7 Q. What titles do you currently hold with
8 regard to Life Partners, Inc.?
9 (Telephonic interruption.)
10 (Brief discussion off the record.)
11 Q. (BY MS. STRETESKY) I'm sorry for the
12 interruption.
13 What are your current titles with
14 Life Partners, Inc.?
15 A. I believe that I'm just chairman of the
16 board of directors.
17 Q. Is that a compensated position?
18 A. No, I don't think it is.
19 Q. When did you cease acting as CEO of Life
20 Partners, Inc.?
21 A. When we organized or incorporated Life
22 Partners Holdings, Inc.
23 Q. That would have been sometime in 2000?
24 A. Yes.
25 Q. When did you cease acting as president for
0011
1 Life Partners, Inc.?
2 A. That's when.
3 Q. The same time?
4 A. Yeah.
5 Q. Some time in 2000.
Page 5
6 Were you compensated as CEO or
7 president of Life Partners, Inc.?
8 A. Yes.
9 Q. You drew an annual salary?
10 MR. HILBERT: Object to the form.
11 A. Yes.
12 Q. (BY MS. STRETESKY) what were your duties
13 as CEO and president of Life Partners, Inc.?
14 A. To oversee the operations of the company.
15 Q. what -- what are your current titles with
16 Life Partners Holdings, Inc.?
17 A. I'm chairman and chief executive officer
18 and president of Life Partners Holdings, Inc.
19 Q. Are you compensated as chairman of the
20 board of Life Partners Holdings, Inc.?
21 MR. HILBERT: Object to form.
22 A. I'm compensated as president. I'm not
23 compensated as a board member.
24 Q. (BY MS. STRETESKY) What are your duties
25 with regards to being president of Life Partners
0012
1 Holdings, Inc.?
2 A. Oversee the operations of the company.
3 Q. what does that entail on a daily basis?
4 A. Pardon me?
5 Q. what does that entail?
6 A. Well, it entails making sure that all of
7 the management positions are filled and operating
8 properly and that the company is basically staying
9 on course as set by the board of directors.
10 Q. How many board members are on the board of
11 directors for LPHI?
12 A. Five, I believe.
13 Q. And LPHI is a publicly-traded company;
14 correct?
15 A. Yes, it is.
16 Q. And what percentage of the stock do you
17 own?
18 A. Well, I personally only own about 2,000
19 shares.
20 Q. HOW many outstanding stock total is there
21 in LPHI?
22 A. Outstanding?
23 Q. Uh-huh.
24 A. About 12 million.
25 Q. Do you have a trust that owns stock in
0013
1 LPHI?
2 MR. HILBERT: Object to the form.
3 A. There is a trust, a family trust -- yes, I
4 do. It's a family trust.
5 Q. (BY MS. STRETESKY) And how many shares
6 does the family trust own?
7 A. Approximately 6 million.
8 Q. Is the family trust the largest
9 shareholder?
10 A. Yes.
11 Q. Who has the right to vote on behalf of the
12 trust?
14 A. Well, normally I vote by proxy; but the
15 right is -- the trustee has the right to vote.
16 Q. (BY MS. STRETESKY) Who is the trustee?
Page 6
17 A. Tom Phillips.
18 Q. Has there ever been a time where the trust
19 hasn't given you its proxy?
21 A. Yes. whenever they come to the annual
22 meetings.
23 Q. (BY MS. STRETESKY) whenever Mr. Phillips
24 comes to the meetings?
25 A. Yes. If he comes to the annual meetings,
0014
1 he votes.
2 Q. who directs mr. Phillips how to vote?
4 A. Mr. Phillips does. He's the trustee.
5 Q. (BY MS. STRETESKY) what's the day-to-day
6 business of Life Partners Holdings, Inc.?
7 A. Life Partners Holdings, Inc. is the
8 holding company of the operating subsidiary Life
9 Partners.
10 Q. How many employees does Life Partners
11 Holdings, Inc. have?
12 A. I'm really not sure.
13 Q. who would know that?
14 A. Scott Peden would know that.
15 Q. what's Scott Peden's position with LPHI?
16 A. With LPHI he is general counsel.
17 Q. And you understand the question I was
18 asking was how many employees the holdings company
19 has?
20 A. Yes.
21 Q. okay. what was the purpose of creating a
22 holdings company for LPI?
24 A. well, there was no particular purpose. It
25 just resulted from the fact that we took the company
0015
1 public in 2000, not to raise money but to -- to
2 provide transparency, which we felt was going to be
3 important in the growth of the industry. And as a
4 result of that, it was done through a reverse
5 merger. And that company was the public company and
6 so that company became Life Partners Holdings, Inc.,
7 and its asset was Life Partners, Inc.
8 Q. (BY MS. STRETESKY) And it's Life Partners
9 Holdings, Inc. that is publicly traded; correct?
11 A. Yes.
12 MR. HILBERT: You're fine. Just so
13 you know, periodically I will make an objection for
14 the record. And unless I instruct you not to
15 answer,go ahead and answer. I will try to squeeze
16 it in before your answer. If I don't, she will get
17 it.
18 THE WITNESS: All right.
19 Q. (BY MS. STRETESKY) You mentioned that it
20 was -- you did a reverse merger to have a
21 publicly-traded company for the purpose of
22 transparency because you felt the industry needed to
23 have -- or the direction that the industry was going
24 was that it was better for the company to be
25 transparent.
0016
1 what about the company needed to be
Page 7
pardo brian 8-27-08.tXt
2 transparent?
3 A, I'm sorry?
4 Q. I don't know how to -- you said one of the
5 purposes of creating a publicly-traded company was
6 to allow for transparency; correct?
7 A. Yes.
8 Q. what was it that the creation of a public
9 company was allowing you to be transparent?
11 A. well, if you're public then you're filing
12 under -- you're regulated by the FCC and you're
13 filing periodic reports, 10-Ks and 10-Qs, and also
14 complying now with Sarbanes-Oxley, as an example.
15 But people that are interested in
16 learning about the company have a much greater view
17 from an independent third party; namely, the
18 auditors, as to the condition and health and welfare
19 and so on of the company than you would of a private
20 company where you would just simply be taking the
21 word of the owners that the company is in a certain
22 condition.
23 Q. (BY MS. STRETESKY) So you created the
24 publicly-funded company or the publicly-traded
25 company so that potential clients of LPI would have
0017
1 an independent third-party view or opinion of how
2 stable LPI was?
3 MR. HILBERT: object to form.
4 MR. TENENBAUM: Join.
5 A. well, they could derive to their
6 satisfaction any question about the company that was
7 material to the operations of the company, whatever
8 that might be.
9 Q. (BY MS. STRETESKY) Are you familiar with
10 what kind of information needs to be disclosed in
11 your, for example, 10-Q SB to the FCC?
13 A. Generally, yes.
14 Q. (BY MS. STRETESKY) Who prepares those
15 annual reports for the FCC, or for submittal to the
16 FCC?
17 A. well, they are prepared by the company,
18 but they are audited by outside auditors.
19 Q. who within the company prepares them?
20 A. well, there's -- generally speaking, it's
21 the accounting and legal departments that do the
22 bulk of the work.
23 Q. The commissioner has taken this action not
24 only against Life Partners and Life Partners
25 Holdings and yourself but a group of people who it's
0018
1 been established have entered into licensee
2 agreements with Life Partners.
3 what I'd like to explore right now is
4your communications with those what we've called
5 licensees, what your company calls licensees.
6 Do you know who Scott Beemer is?
7 A. No, I do not.
8 Q. Do you know who Eric Cox is?
9 A. No, I don't.
10 Q. Do you know who Lynne Davis is?
11 A. No.
12 Q. Do you know who Gary Hanson is?
Page 8
13 A. No.
14 . Do you know who Mike Lowe is?
15 A
Q. No.
16 Q. Do you know who Ken Keller is?
17 A. No.
18 Q. Do you know who John Roth is?
19 A. No.
20 Q. Do you know who Ralph Siebert is?
21 A. No.
22 . Do you know who Tim Harper is?
23 A. Yes.
24 Q. How do you know Mr. Harper?
25 A. Tim Harper is here in Texas, and he is
0019
1 what we call a master licensee.
2 Q. How were you first introduced to
3 Mr. Harper?
4 A. Mr. Harper visited us here in Waco and
5 introduced himself to us about five years ago or so.
6 Q. And did he come down to Waco to introduce
7 himself in the hopes of getting a job with Life
8 Partners?
10 A. Not -- not -- getting a job?
11 Q. (BY MS. STRETESKY) uh-huh.
12 A. I don't think so.
13 Q. Did he come to Life Partners seeking to
14 learn more about the opportunities in investing in
15 viatical settlement investments?
17 A. I don't think so, but I think you would be
18 better off to ask him those questions.
19 Q. (BY MS. STRETESKY) Did Mr. Harper come
20 and speak to you about becoming a licensee with Life
21 Partners?
23 A. Not initially. I don t recall that, no.
24 Q. (BY MS. STRETESKY) when did he, if not
25 initially, did he start engaging in discussions with
0020
1 Life Partners about becoming a licensee?
2 A. I don't recall.
3 Q. Had you had a prior relationship with
4 Mr. Harper before he came down to Waco?
5 A. No.
7 Q. (BY MS. STRETESKY) Thee sales agent
8 defendants have described in their depositions
9 meetings that they have had in Waco with Life
10 Partners' staff, particularly Mr. Peden and
11 yourself.
12 Do you recall ever having discussions
13 in Waco with Gary Hanson?
15 A. No.
16 Q. (BY MS. STRETESKY) Do you ever recall
17 meeting with a group of potential licensees or
18 licensees in your offices in Waco?
19 A. At any time you mean?
20 Q. At any time.
21 A. I -- I occasionally speak togroups of
22 licensees as a way of telling them usua ly the
23 background of the company and what the company does
Page 9
24 and give them information as to our philosophy and
25 that sort of thing.
0021
1 Q. What do you tell them about the background
2 of the company?
3 A. when it was formed, what our philosophy
4 is, why we do what we do.
5 Q. And that's what I'm asking you. Tell me
6 what you tell potential licensees.
8 A. well, just what I told you I tell them. I
9 mean, if you want me to give you a word-for-word
10 speech, I --
11 Q. (BY MS. STRETESKY) I would like to hear
12 the background of Life Partners Holdings and Life
13 Partners, Inc.; yes.
15 A. I think you could find that information in
16 our public documents filed with the FCC under the
17 "Operations" section.
18 Q. (BY MS. STRETESKY) Are you unable to give
19 the background and history of Life Partners
20 Holdings, Inc. and Life Partners, Inc. at this time?
22 A. No. I just think the information is
23 available publicly.
24 Q. (BY MS. STRETESKY) And did you draft
25 what's found in the annual reports filed with the
0022
1 FCC?
2 A. No.
3 Q. Then could you please, sir, give me your
4 history of Life Partners Holdings and Life Partners,
5 Inc.?
6 MR. HILBERT: This is argumentative.
7 He just did. we just went through this.
8 THE WITNESS: It is the same as what
9 I just told you.
10 MS. STRETESKY: I'm asking him,
11 though, what he told -- what he says when he meets
12 with potential licensees.
13 MR. HILBERT: He just told you the
14 history of the company. He just gave it to you.
15 Q. (BY MS. STRETESKY) Okay. Could you
16 please give me the philosophy of Life Partners
17 Holdings, Inc. and Life Partners, Inc.?
18 A. Well, first of all, Life Partners
19 Holdings, Inc. is a holding company and has no
20 operations, so it's merely a holding vehicle. It
21 does not operate.
22 Life Partners, Inc.'s philosophy is
23 to do the best job we can to act on behalf of the
24 purchaser as their agent. The purchasers, we act as
25 their agent to give them as much information
0023
1 possible about policies that are entered into the
2 market for the purpose of being sold by the sellers
3 and their representatives.
4 So we're kind of the Caldwell Banker
5 of the insurance world, you might say, in that we,
6 Life Partners, represents, through an agency and
7 special power of attorney, clients -- who you would
8 call investors -- clients who are interested in
Page 10
9 purchasing policies. And our philosophy is to do
10 the best job possible to get them the most accurate
11 information, up-to-date information,
i so they can
12 make an informed decision on whether or not they
13 want to buy a policy or a portion of a policy.
14 Q. Is it your opinion that Life Partners,
15 Inc. is in the business of insurance?
17 A. No, we're not in the business of
18 insurance.
19 Q. (BY MS. STRETESKY) Is it your opinion --
20 correct me if I'm wrong -- that Life Partners, Inc.
21 is in the business of brokering insurance contracts?
23 A. No, we're not brokering insurance
24 contracts.
25 Q. (BY MS. STRETESKY) When you have occasion
0024
1 to meet with potential licensees or licensees here
2 in Waco to give them the background and the history
3 and the philosophy of Life Partners, Inc., do you
4 discuss the SEC case, Life Partners versus SEC?
6 A. I do not, but that information is provided
7 by our legal department and it is discussed, yes.
8 Q. (BY MS. STRETESKY) And your legal
9 department would be Scott Peden?
10 A. Yes, or Justin Bound.
11 (Clarification by the reporter.)
12 THE WITNESS: Bound. B O U N D.
- - - -
13 Q. (BY MS. STRETESKY) Do you recall ever

14 having any communications with a client who resides
15 in Colorado?
16 A. No.
17 Q. Have you ever been to Colorado?
18 A. Yes.
19 Q. How many times?
20 A. Twice.
21 Q. And what were the circumstances?
22 A. well, the first time was to go to Vail for
23 a skiing vacation, although I don't ski.
24 (Laughter.)
25 Q. (BY MS. STRETESKY) You can sit by the
0025
1 fireplace; right?
2 A. And that was about 20 years ago.
3 Q. Okay. And the other occasion that
4 you've --
5 A. The other occasion was to lay a courtesy
6 call on our -- the owner of the -- tie trustee we
7 were using at the time, which was a bank there that
8 owns Sterling Trust, a Texas nonbank trust company.
9 Q. And what was the purpose of the courtesy
10 call?
11 A. To eat dinner. We had dinner with the
12 chairman and senior officers and just talked to them
13 about the, you know, the business. Just a courtesy
14 call; there was no specific purpose.
15 Q. Do you recall when that was?
16 A. It was more than a year ago, but I don't
17 recall exactly when.
18 Q. Are you still -- is Life Partners, Inc.
19 still using Sterling Trust as the escrow agent?
Page 11
20 A. We do still use them; yes.
21 Q. Are they your primary escrow agent at this
22 time?
23 A. Well, they are one of three.
24 Q. How often do you discuss Life Partners,
25 Inc.'s business with Scott Peden?
0026
2 A. well, pretty much on an ongoing basis.
3 He's a senior officer of the company. we both work
4 here so we --
5 Q. (BY MS. STRETESKY) would it be fair to
6 say on a daily basis?
7 A. To the extent we are here, yes.
8 Q. Does he consult you prior to making
9 decisions with regard to Life Partners, Inc.?
11 A. well, not all of them, no. Not all
12 decisions, no.
13 Q. (BY MS. STRETESKY) Most decisions?
15 A. I don't know that I would say most
16 decisions. It would be a -- probably not.
17 Q. (BY MS. STRETESKY) what type of decisions
18 does he consult you on?
19 A. He consults with me on legal matters and
20 personnel matters. Part of his role is operational,
21 and so he consults with me on that. Primarily
22 technical issues of the company's operations.
23 MR. KLEIN: Can we take a little
24 break?
25 (Recess at 9:33 a.m. to 9:38 a.m.)
0027
1 Q. (BY MS. STRETESKY) I just had a few more
2 questions.
3 A. okay.
4 Q. Could you describe the process by which --
5 how Life Partners, Inc. finds policies for sale?
7 A. They are tendered to us by -- usually by
8 representatives of the sellers.
9 Q. (BY MS. STRETESKY) Could you describe the
10 process by which Life Partners utilizes licensees to
11 market policies to purchasers?
14 A. we don't market policies to purchasers.
15 Q. (BY MS. STRETESKY) What do you do?
16 A. we make policies available for purchasers
17 who are interested in owning a policy or a piece of
18 a policy as an investment.
19 Q. How do you do that?
20 MR. HILBERT: Ob . ct to form.
21
22
A. h
well, by going throug a very significant
underwriting pprocess to gather all the information
23 that we possibly can that would be pertinent as to
24 all the aspects of the policy that could possibly
25 have an effect one way or the other, you know, on
0028
1 the owner if they chose to buy it. They make the
2 choice.
3 Q. (BY MS. STRETESKY) Who determines what
4 information would be pertinent to a potential
Page 12
5 purchaser?
8 A. well, the purchasers in -- over the years
9 have pretty well, you know, told us what is
10 important to them. And then we, ourselves, having
11 an expertise in underwriting now thousands of
12 ppolicies, also understand that there are also, you
13 know, legal and technical matters concerning, for
14 instance, as an example, illustrations of premiums
15 in the future and that sort of thing that they
16 wouldn't necessarily know about.
17 So I would say it's been a
18 combination of us and purchasers, who all of our
19 purchasers are sophisticated investors under the
20 meaning of the act. And so they are pretty smart
21 people, as you found out.
22 Q. (BY MS. STRETESKY) And when you say
23 "under the act," which act are you referring to?
24 A. The Securities Act.
25 Q. The Colorado Securities Act?
0029
1 A. Well, I'm talking about the Securities Act
2 3334. I think Colorado adheres to the uniform
3 Securities Act.
4 Q. Do you understand the process by which the
5 policies are presented to potential purchasers?
8 A. I'm not sure I understand the question.
9 Q. (BY MS. STRETESKY) Could you describe to
10 me how it is that Life Partners is presented with a
11 policy for potential purchase or for sale by a
12 viator, and then how it goes from there to getting
13 in front of a potential purchaser, clients of LPI?
16 A. well, as I said, the policy, which is now
17 almost all senior life settlements, no longer --
18 viatica] settlement, as you know, is a term of art.
19 But life settlements are generally seniors who are
20 wishing to sell their policies. And I think I
21 already told you they are presented to us through
22 their brokers or agents who are wanting us to buy
23 the policy or find a buyer for the policy.
24 Once the policy is vetted and deemed
25 to be acceptable, then it is circulated in brief in
0030
1 what we call a confidential case history to
2 licensees who have clients, their clients,
3 interested in buying policies. And then they make
4 the decision. HOw they, each one, goes about making
5 that decision is up to them. we just provide them
6 with the information.
7 Q. (BY MS. STRETESKY) You mentioned that the
8 policies are vetted. Are they vetted to determine
9 who the insurance carrier is?
10 A. I think that would be pretty important,
11 wouldn't you?
12 Q. Is that a "yes"?
13 A. Yes, that's a yes. YOU can put that in
14 the definite "yes" column.
15 Q. Are they vetted to ensure that the
Page 13
pardo briar 8-27-08.txt
16 contestability period of the policy is completed?
17 A. Yes.
18 Q. Are they vetted for determination of life
19 expectancy?
20 A. Yes.
21 Q. Who makes the determination of life
22 expectancy?
23 A. Usually that's --
25 A. -- done by a third party. Doctors or
0031
1 medical underwriters experienced in estimating life
2 expectancy; although the senior settlements, the
3 average age of the insured is 78 to 82, so their
4 life expectancies are estimated. But it doesn't
5 take a mental giant to figure out that, you know,
6 these people are probably not going to be around,
7 you know, a long, long time.
8 Q. (BY MS. STRETESKY) Regardless of what
9 health issues they may have?
10 A. Well, if they have a serious health issue,
11 then, of course it could be less; but if they have a
12 family history of good health, it would be
13 conceivably longer.
14 Q. Who contracts with the third party making
15 the life expectancy determinations?
16 A. We do. Life Partners does.
17 MS. STRETESKY: I don't think I have
18 anything else.
19 MR. HILBERT: Thank you.
20 (DEPOSITION CONCLUDED AT 9:45 A.M.)
21
22
23
24
25
0032
1 CHANGES AND SIGNATURE
2 WITNESS NAME: BRIAN D. PARDO DATE: 08-27-08
3 PAGE LINE CHANGE REASON
4
5
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7
8
9
10
11
12
13
14
15
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18
19
20
21
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0033
Page 14
pardo Brian 8-27-08.txt
1 I, BRIAN D. PARDO, have read the foregoing
2 deposition and hereby affix my signature that same
3 is true and correct, except as noted above.
4
5
6
BRIAN D. PARDO
7
THE STATE OF
8 COUNTY OF
9
10 Before me, , on this
11 day personally appeared BRIAN D. PARDO, known to me
12 (or proved to me under oath or through
13 ) (description of
14 identity card or other document)) to be the person
15 whose name is subscribed to the foregoing instrument
16 and acknowledged to me that they executed the same
17 for the purposes and consideration therein
18 expressed.
19 Given under my hand and seal of office this
20 day of
21
22
NOTARY PUBLIC IN AND FOR
23 THE STATE OF
COMMISSION EXPIRES:
24
25
0034
1
DISTRICT COURT, CITY AND )
2 COUNTY OF DENVER, )
COLORADO )
3 )
1437 Bannock Street )
4 Denver, CO 80202 )
)
5 FRED J. JOSEPH, )
Securities Commissioner )
6 for the state of )
Colorado, )
7 )
Plaintiff, )
8 )
v. )
9 )
LIFE PARTNERS, INC., a )
10 Texas Corporation, LIFE )
PARTNERS HOLDINGS, INC., )
11 a Texas Corporation, )
SCOTT PEDEN, SCOTT )
12 BEEMER, ERIC COX, LOWRY )
LYNNE DAVIS, GARY HANSON, )
13 TIM HARPER, KENNETH )
KELLER, MIKE LOWE, LARRY )
14 MICKELSON, JOHN ROTH, )
RALPH SIEBERT, AND BRIAN )
15 PARDO, )
)
16 Defendants. )
)
17 JOHN W. SUTHERS, )
Page 15
Attorney General ) Case No, 2007 CV 5218
18 CHRISTINE C. STRETESKY, )
31749* )
19 RUSSELL KLEIN, ) Div.: 5
31965* )
20 Asst. Attorneys General )
1525 Sherman Street, )
21 7th Floor )
Denver, CO 80203 )
22 303-866-5278 )
303-866-5395 Facsimile )
23 *Counsel of Record )
24
ORAL DEPOSITION OF BRIAN D. PARDO
25 AUGUST 27, 2008
0035
1 I, Sherry D. Current, Certified shorthand
2 Reporter in and for the State of Texas, hereby
3 certify to the following:
4 That the witness, BRIAN D. PARDO, was duly sworn
5 by the officer and that the transcript of the oral
6 deposition is a true record of the testimony given
7 by the witness;
8 That the deposition transcript was submitted on
9 to the witness or
10 to the attorney for the witness for examination,
11 signature and return to me by
12
13 That the amount of time used by each party at the
14 deposition is as follows:
15 MS. STRETESKY 00 HOURS:38 MINUTE(S)
16 MR. KLEIN 00 HOURS:00 MINUTE(S)
17 MR. HILBERT 00 HOURS:00 MINUTE(S)
18 MR. TENENBAUM 00 HOURS:00 MINUTE(S)
19 That pursuant to information given to the
20 deposition officer at the time said testimony was
21 taken, the following includes counsel for all
22 parties of record:
23 PLAINTIFF FRED J. JOSEPH, Securities Commissioner
for the State of Colorado:
24
JOHN W. SUTHERS, Attorney General
25 CHRISTINE C. STRETESKY, 31749
0036
1 Asst. Attorneys General
1525 Sherman street, 7th Floor
2 Denver, CO 80203
(303) 866-5278 Telephone
3 (303) 866-5395 Facsimile
4 FOR THE DEFENDANTS LIFE PARTNERS, INC., a Texas
Corporation, LIFE PARTNERS HOLDINGS, INC., a Texas
5 Corporation, SCOTT PEDEN, TIM HARPER, LARRY
MICKELSON, JOHN ROTH, AND BRIAN PARDO:
6
Mr. Otto K. Hilbert, II
7 Robinson waters & O'Dorisio, P.C.
1099 18th Street
8 26th Floor
Denver, Colorado 80202-1926
9 (303) 297-2600 Firm
(303) 824-3120 Direct
10
Page 16
11 FOR THE DEFENDANTS SCOTT BEEMER, ERIC COX, LOWRY
LYNNE DAVIS, GARY HANSON, KENNETH KELLER, MIKE LOWE
12 AND RALPH SIEBERT:
13
Mr. Thomas Tenenbaum
14 The Tenenbaum Law Firm
Park Ridge Corporate Center, Suite 600
15 10475 Park Meadows Drive
Lone Tree, Colorado 80214
16 (303) 804-3800 Telephone
(303) 804-3802 Facsimile
17
18 I further certify that I am neither counsel for,
19 related to, nor employed by any of the parties or
20 attorneys in the action in which this proceeding was
21 taken, and further that I am not financially or
22 otherwise interested in the outcome of the action.
23 Further certification requirements pursuant to
24 Rule 203 of TRCP will be certified to after they
25 have occurred.
0037
1 certified to by me this 12th of September, 2008,
2
3
4
Sherry D. Current
5 Texas CSR No. 3113
Expiration Date: 12-31-09
6 ASSOCIATED COURT REPORTERS
Firm No. 29
7 P. 0. Box 1247
Waco, Texas 76703
8 (254) 753-3330 Telephone
(800) 340-5881 Toll Free
9 (254) 754-4050 Facsimile
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
0038
1 FURTHER CERTIFICATION UNDER RULE 203 TRCP
2
3 The original deposition was/was not returned to
4 the deposition officer on •
5 If returned, the attached changes and Signature
6 page contains any changes and the reasons therefor;
7 If returned, the original deposition was
8 delivered to MS. STRETESKY, Custodial Attorney;
9 That $ is the deposition officer's
10 charges to the PLAINTIFF FRED J. JOSEPH, Securities
11 Commissioner for the State of Colorado for preparing
Page 17
12 the original deposition transcript and any copies of
13 exhibits;
14 That the deposition was delivered in accordance
15 with Rule 203.3, and that a copy of this certificate
16 was served on all parties shown herein on and filed
17 with the Clerk.
18 Certified to by me this day of
19 , 2008.
20
Sherry D. Current
21 Texas CSR No. 3113
Expiration Date: 12-31-09
22 ASSOCIATED COURT REPORTERS
Firm No. 29
23 P. 0. Box 1247
Waco, Texas 76703
24 (254) 753-3330 Telephone
(800) 340-5881 Toll Free
25 (254) 754-4050 Facsimile

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pardo brian 8-27-08.

13 Q. (BY MS. STRETESKY) Do you recall ever

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