Summary Judgment Granted to Analysis Group Client in SEC Ponzi Scheme Litigation

October 5, 2023

Analysis Group was retained by the US Securities and Exchange Commission (SEC) in a securities fraud litigation brought against Pacific West Capital Group (PWCG) and its president, subsidiary, and sales agents. PWCG securitized life insurance policies and sold investment contracts for interests in policy settlements – marketed as “life settlements” – to the public. The SEC claimed that PWCG defrauded investors through a Ponzi scheme in which it used funds from the sales of new life settlements to pay the premiums for existing life settlements.

An Analysis Group team led by Managing Principal Mark Gustafson and Manager Joel Wiles supported academic affiliate Daniel Bauer, who filed expert reports and testified at deposition, opining on PWCG’s policies. Professor Bauer determined that the claims PWCG sales agents made to investors had no reasonable basis and that PWCG’s safeguards for investors were inadequate.

The SEC and PWCG reached a $64.5 million settlement, under which PWCG permanently relinquished control to a court-appointed receiver, leaving only sales agents as the remaining defendants. A judge in the US District Court for the Central District of California granted summary judgment for the SEC against the remaining defendants, citing Professor Bauer’s testimony. Additionally, the court-appointed receiver’s report stated that “Professor Bauer was able to provide valuable insight into the life settlements industry, the Policies, [and] the operational challenges confronting the Receiver.”