The U.S. Securities and Exchange Commission (SEC) has charged an offshore financial company and the company's president with carrying out fraud involving life settlement bonds.
Provident Capital Indemnity Ltd. (PCI), Costa Rica, misrepresented its ability to satisfy obligations under the life settlement financial guarantee bonds, according to an SEC complaint filed in the U.S. District Court for the Eastern District of Virginia.
PCI President Minor Vargas Calvo and Jorge L. Castillo also misrepresented PCI's ability to satisfy its obligations under the bonds, the SEC alleges.
"They made material misrepresentations about the assets that backed PCI's bonds, PCI's credit rating, the availability of reinsurance to cover claims on PCI's bonds, and whether PCI's financial statements had been audited," according to the SEC.
The U.S. attorney's office for the Eastern District of Virginia and the fraud section of the U.S. Department of Justice's Criminal Division have announced that they also are taking action against the defendants. Vargas was arrested Jan. 18 at John F. Kennedy International Airport in New York, and Castillo was arrested Jan. 19 in New Jersey, according to the U.S. attorney's office.
The bonds PCI sold were supposed to protect investors in life insurance policies by paying an amount equal to the face value of a policy if the named insured lived beyond the estimated life expectancy, according to the complaint. From 2004 to March 2010, PCI issued about 197 bonds backstopping investments in life insurance policies with a total face value of about $670 million, according to court pleadings.
