- The Washington Times - Sunday, July 2, 2006

A group representing investors who purchased life insurance policies from the terminally ill is demanding at least $1 million from a D.C. doctor over his predictions for how soon policy sellers would die.

Dr. William C. Sanchez provided “grossly inaccurate” life expectancies in investment deals through bankrupt Beneficial Financial Services Inc. and its affiliates, said documents filed last week in federal court in the District.

The company specialized in so-called “viatical settlements,” which involve the purchase of another person’s life insurance policy for less than the full face value of the death benefit. When the seller dies, investors make a profit by receiving the full benefit.

Premium of America LLC says many deals foundered because Dr. Sanchez’s predictions were wrong and policy sellers lived years longer than he predicted.

Viatical settlement investments can be risky. The longer the life expectancy of the policy seller, the less money investors make. If sellers live too long, investors can lose money because they have to continue to pay the premium on the policy.

The court papers filed in U.S. District Court by Premium of America LLC — which was formed in 2003 to recoup money for investors of bankrupt Beneficial Financial — seeks a trial against Dr. Sanchez. Weeks earlier, a federal bankruptcy judge dismissed the investors’ claims, saying he did not have jurisdiction.

Phone calls to Dr. Sanchez’s attorney and to his medical office were not returned last week.

Dr. Sanchez has defended himself against the investors’ claims in bankruptcy court.

Last month, his attorneys told a bankruptcy judge that Premium of America is “shopping” its claim against the physician to the U.S. District Court because the case collapsed in the D.C.bankruptcy court.

“This double maneuver is nothing more than an attempt to correct a failed litigation tactic,” Dr. Sanchez’s attorneys said in a bankruptcy pleading last month.

Investors say Dr. Sanchez was hired to predict how soon terminally ill people selling their life insurance would die. Such information was critical for the company’s investment deals.

Dr. Sanchez evaluated the life expectancies of 137 persons, but 110 of them outlived his predictions, by 3 years on average.

“Moreover, in many cases there is no evidence in the medical records to support Dr. Sanchez’s short life expectancies, which typically ranged from 12 to 48 months,” Premium attorneys argued.

Many of the thousands who put money into such deals were small investors, including retirees, a small church in Carlisle, Pa., and a Kansas chapter of the Fraternal Order of the Eagles.

David Dionne, 49, a park superintendent from Pasadena, Md., said yesterday that his family put $11,000 into two investments to earn money for college for his two adopted children.

“They told us what we wanted to hear: We’d be helping people who needed the money, and then we’d get a return on it,” Mr. Dionne said.

“We invested in the mid-90s and realized there was a problem about five years later when our stockbroker told us these guys were filing for bankruptcy.”

Since investing the money, Mr. Dionne said, he has received a return of $200.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide