"Life Settlement Firm" Bought No Policies

The court-appointed receiver has taken control of about $19 million in bank accounts under the control of NLS and company officials, according to officials in Crawford's office.

Regulators say in court documents that NLS returned only $3 million to investors over 2 years but paid more than $3 million in commissions to unregistered securities salespeople. NLS also paid nearly $900,000 to company official Howard Judah, including $230,000 for Judah's salary. Another official, Gregory Jablonski, and his company, JCJ and Associates, Castle Rock, Colo., was paid more than $650,000, according to regulators.

Bank records fail to show that NLS bought any life settlement insurance policies during any of the time that it was raising money from investors, according to court papers.

NLS told investors it would buy life policies and use the proceeds to fund an investment trust that would pay guaranteed returns of up to 10% per year for 5 years, state officials say.

Investigators say the defendants were about to start selling membership interests in special purpose limited liability companies.

Neither Judah nor Jablonski could be reached for comment.