Life Funds Trustee Information Website

RECENT DEVELOPMENTS

On December 22, 2011, the Trustee filed a notice of: (1) confirmation of the Chapter 11 Trustee's Second Amended Plan of Consolidation and Liquidation, and (2) constitution of the Liquidating Trust Creditor Panel [Docket No. 873]. The members of the Liquidating Trust Creditor Panel are: (1) Dr. Michael Kessler, (2) Barry Cohn, (3) Dr. Charles Giger, (4) Evelyn L. Gibson, and (5) Ivo Dabelic.

On December 20, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending November 30, 2011 for each of the Debtors (Docket Numbers: 866, 867, 868, 869, 870, 871, and 872.)

On December 8, 2011, the Bankruptcy Court entered an order confirming the Chapter 11 Trustee's Second Amended Plan of Consolidation and Liquidation [Docket No. 865] (the "Plan"). The Plan cannot become effective until December 22nd (at the earliest). The Trustee will send Creditors a notice of the occurrence of the Plan effective date after it occurs. Under the Plan, Distributions can be made to creditors only after (1) occurrence of the Effective Date and (2) consultation with the Liquidating Trust Creditor Panel. The Trustee anticipates making an initial distribution in early 2012.

On October 26, 2011, the Trustee filed US Trustee Quarterly Fee Statements for the Quarter Ending September 30, 2011 for each of the Debtors (Docket Numbers: 838, 839, 840, 841, 842, 843, and 844.)

Important Update: On Monday, October 24th, 2011, the Trustee's voting agent, Garden City Group, completed the mailing of solicitation packages (consisting of a disclosure statement, proposed chapter 11 plan, and ballot) to all creditors entitled to vote. Such creditors should receive a solicitation package in the mail this week. Please wait until Monday, October 31st, 2011 before contacting the Trustee, his counsel, or the voting agent regarding undelivered solicitation packages. If, by Monday, October 31st, 2011, you have not received a solicitation package, you may contact Brandon Levitan, one of the attorneys for the Trustee, at (312) 962-3521.

On October 19, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending September 30, 2011 for each of the Debtors (Docket Numbers: 830, 831, 832, 833, 834, 835, and 836.)

Approval of Disclosure Statement: At a hearing on October 14th, 2011, the bankruptcy court entered an order approving the disclosure statement (the "Disclosure Statement") to the Trustee's proposed plan of consolidation and liquidation (the "Plan"). The bankruptcy court has scheduled a plan confirmation hearing for December 7th, 2011 at 10:00 a.m., a notice of which is available for viewing here. Creditors must file any objections to confirmation of the Plan no later than November 28th, 2011.

On or before October 24th, 2011, the Trustee will mail a copy of the Plan, Disclosure Statement, and ballot to all creditors entitled to vote on the Plan. In order for a vote to be counted, creditors must send the completed ballot to the Trustee's balloting agent, Garden City Group, by 5:00 p.m. prevailing eastern time on November 28th, 2011, which has been designated as the voting deadline. Mailing instructions, as well as the voting deadline, are provided on the ballot itself.

On October 14th, 2011, the bankruptcy court entered an a order sustaining the Trustee's Seventh Omnibus Objections to claims.

On October 6th, 2011, the bankruptcy court entered an order sustaining the Trustee's Sixth Omnibus Objection to claims. At a hearing on October 27, 2011, the bankruptcy court entered an order sustaining the Trustee's Sixth Omnibus Objection with respect to one additional claimant.

On October 6th, 2011, the bankruptcy court continued the hearing to approve the Trustee's proposed disclosure statement and voting procedures to October 14th, 2011 at 1:30 p.m. The bankruptcy court rescheduled the following hearings for October 14th, 2011: (1) the hearing on the Chapter 11 Trustee’s Seventh Omnibus Objection to Certain Proofs of Claim (No Basis Claims) [Docket No. 762], (2) the hearing on the Fifth Interim Fee Application of Proskauer Rose LLP, Counsel to the Trustee, For Allowance of Compensation For Services Rendered and Reimbursement of Expenses [Docket No. 761], and (3) the status hearing in the Trustee's adversary proceeding against Oncale et. al. (Adv. No. 10-A-42).

On October 4th, 2011, the bankruptcy court entered orders sustaining the Trustee's omnibus objections to claims 1-5 (Docket Numbers: 802, 803, 804, 805, and 806). The purpose of these objections was to ensure that the creditors whose claims were subject to each omnibus objection will have one claim allowed in an amount equal to his or her principal investment in the Debtors.

On October 4th, 2011, the bankruptcy court continued the hearing to approve the Trustee's proposed disclosure statement and voting procedures to October 6, 2011 at 1:30 p.m. No ballots have been sent to creditors as of October 6th, 2011, and no ballots will be sent to creditors until after the bankruptcy court has approved the disclosure statement and voting procedures. Once the bankruptcy court has approved the disclosure statement and voting procedures, the Trustee's notice and claims agent will send ballots to creditors entitled to vote on the Trustee's proposed plan.

On October 3rd, 2011, the bankruptcy court entered an order approving the Trustee's motion to approve 209 stipulations between the Trustee and certain individual creditors. Each stipulation is an agreement of a creditor to allow a single claim in the principal amount of his or her investment in the Debtors.

Sentencing of Two Principals of A&O / Life Funds - On September 28, 2011, two A&O principals, Adley Abdulwahab and Christian Allmendinger were sentenced to 60 year and 45 year prison terms, respectively, for their roles in the A&O / Life Funds fraud. Earlier this year, Allmendinger and Abdulwahab were convicted of various charges including mail fraud and money laundering. A copy of the Department of Justice Press Release is available.

On September 20, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending August 31, 2011 for each of the Debtors (Docket Numbers:783, 784, 785, 786, 787, 788, and 789).

On September 16th, 2011, Proskauer Rose LLP filed a notice clarifying that the objection deadline to Proskauer Rose's fifth interim fee application is September 28, 2011. Any objections to the application must be in writing and must be filed with the Bankruptcy Court and served on Proskauer Rose LLP and the office of the United States Trustee.

On September 7, 2011, the Bankruptcy Court held a hearing on the Trustee's motion to approve the disclosure statement and related voting procedures (Docket No. 740). Upon request by counsel to the Group of Investors, the Bankruptcy Court continued the hearing to October 3, 2011 at 10:30 a.m.

On September 6th, 2011, the Trustee filed: (1) an amended plan of consolidation and liquidation (the "Amended Plan") (Docket No. 763), (2) an amended disclosure statement reflecting the changes embodied in the Amended Plan (the "Amended Disclosure Statement") (Docket No. 764), and (3) the Trustee's response to the Group of Investors' objection to the disclosure statement filed on August 6th, 2011 (Docket No. 765).

On September 6th, 2011, the Trustee filed his seventh omnibus objection to proofs of claim (the “Seventh Omnibus Objection”) (Docket No. 762). Responses to the Seventh Omnibus Objection are due on October 7, 2011. The court will hold a hearing on the omnibus objections on October 12, 2011 at 9:30 a.m.

On September 2nd, 2011, Proskauer Rose LLP filed its fifth interim application seeking allowance of $221,436.00 in fees and $508.04 in expenses that Proskauer incurred in its representation of the Trustee from June 1, 2011 through August 31, 2011. Any objections to the application must be in writing and must be filed with the Bankruptcy Court and served on Proskauer Rose LLP and the office of the United States Trustee on or before September 28, 2011. A hearing on the application is scheduled for October 12, 2011 at 9:30 a.m.

On September 2, 2011, the Trustee filed a motion to approve 209 stipulations between the Trustee and certain individual creditors. Each stipulation is an agreement of a creditor to allow a single claim in the principal amount of his or her investment in the Debtors. All other claims of such creditor will not be allowed. Objections to the motion are due on September 30, 2011. The court will hold a hearing on the motion on October 3, 2011.

On September 2, 2011, the Trustee also filed six omnibus objections to proofs of claim (the “Omnibus Objections”) (Docket Numbers: 755, 756, 757, 758, 759, and 760). Each omnibus objection objects to multiple claims. The result of the Omnibus Objections, if granted, will be that creditors whose claims are subject to the omnibus objections will have one claim allowed in an amount equal to his or her principal investment in the Debtors. Responses to each omnibus objection are due on September 30, 2011. The court will hold a hearing on the omnibus objections on October 3, 2011.

On August 19, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending July 31, 2011 for each of the Debtors (Docket Numbers: 743, 744, 745, 746, 747, 748, and 749).

Chapter 11 Plan Filed:

On August 5th, 2011, the Trustee filed three important documents. First, the Trustee filed a proposed chapter 11 plan of consolidation and liquidation (the "Plan"). The Plan details how Jeff Marwil, the Trustee, proposes to distribute cash and other assets of the estates to the estates' creditors. Second, the Trustee filed a proposed disclosure statement (the "Disclosure Statement") with respect to the Plan. The Disclosure Statement provides information about the plan, the process by which creditors may vote on and the Bankruptcy Court may consider approval of the Plan, and the Debtors' chapter 11 cases. The Disclosure Statement must be approved by the Bankruptcy Court as providing adequate information about the Plan before the Disclosure Statement and the Plan will be mailed to creditors for their vote on the Plan. Third, the Trustee filed a motion seeking approval of the Disclosure Statement and procedures to govern voting on the Plan. On September 7, 2011, the Bankruptcy Court will hold a hearing to consider the adequacy of the Disclosure Statement and the voting procedures. Creditors must file any objections to the Disclosure Statement or the voting procedures no later than September 2, 2011. If the Bankruptcy Court approves the Disclosure Statement, then the Plan and Disclosure Statement will be mailed to creditors and creditors, at that time, can vote for or against and/or object to the Plan.

On July 29, 2011, the Trustee filed US Trustee Quarterly Fee Statements for the Quarter Ending June 30, 2011 for each of the Debtors (Docket Numbers: 727, 728, 729, 730, 732, 733, and 735).

Press release from the United States Department of Justice: Five Employees of A&O Life Funds Sentenced to Prison

On July 20, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending June 30, 2011 for each of the Debtors (Docket Numbers: 717, 718, 719, 720, 721, 722, and 723).

On June 27, 2011 the Court approved the sale of 17 life insurance policies to Vida Capital, Inc. for the aggregate purchase price of $3,420,888 plus reimbursement to the Debtors for premium payments related to any such policy made by the Debtors from May 1, 2011 until ownership of such policy is transferred. The Trustee is currently taking steps to consummate the sale, and transfer ownership of the life insurance policies to Vida.

On June 24, 2011, the Trustee filed its response in support of the proposed sale of 17 life insurance policies to Vida Capital, Inc., approval of which is set for hearing on June 27, 2011 at 10:00 a.m.

On June 20, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending May 31, 2011 for each of the Debtors ( 690, 691, 692, 693, 694, 695, and 696).

On June 13, 2011, the Court continued the hearing on the proposed sale of 17 life insurance policies to Vida Capital, Inc. to June 27, 2011 at 10:00 a.m.

On May 11, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending April 30, 2011 for each of the Debtors (Docket Numbers: 659, 660, 661, 662, 663, 664, and 665).

On June 10, 2011, Adley H. Abdulwahab was convicted by a federal jury for his role in the Life Funds fraud. A copy of the Department of Justice Press Release is available.

On May 20, 2011, the Trustee filed an amended exhibit to the Marwil Declaration in support of the sale to Vida Capital, Inc.

On May 17, 2011 the Trustee filed a notice of hearing seeking approval of a purchase agreement with Vida Capital, Inc. and approval to sell to Vida 17 life insurance policies for the aggregate purchase price of $3,420,888 plus reimbursement to the Debtors for premium payments related to any such policy made by the Debtors from May 1, 2011 until such policy is sold. Attached to the notice are a proposed sale order and a declaration of the Trustee in support of the sale. Objections to the sale must be filed with the Court and served on counsel to the Trustee on or before June 2, 2011 at 5:00 p.m. Also on May 17, 2011, the Trustee filed a motion asking the Court to restrict access to the purchase price allocation filed with the Vida sale agreement.

On April 20, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending March 31, 2011 for each of the Debtors (Docket Numbers: 641, 642, 643, 644, 645, 646, and 647).

On April 27, 2011, the Trustee filed a Notice of Intended Lapse of Lincoln National Insurance Policy JF5571385, which lapse the Trustee expects to become effective May 7, 2011.

On April 15, 2011, the Court rescheduled all hearings previously scheduled for April 20, 2011 at 10:00 a.m. All matters previously scheduled for hearing on that date are now scheduled for hearing on April 27, 2011 at 10:00 a.m.

On April 15, 2011, Proskauer Rose LLP, counsel to the Chapter 11 Trustee, filed its Third Interim Application seeking payment of fees and reimbursement of expenses in the aggregate amount of $253,177.01 and for the period of time from December 1, 2010 through February 28, 2011. Any objection to the application must be filed with the Court and served on Proskauer Rose on or before May 6, 2011. A hearing on the application is scheduled for May 25, 2011 at 9:30 a.m.

On March 24, 2011, the jury in the case of U.S. v. Allmendinger (Criminal No. 3:10CR248) returned a guilty verdict for Christian Allmendinger, former A&O principal, on the following charges: (1) two counts of mail fraud; (2) one count of mail fraud conspiracy; (3) one count of conspiracy to commit money laundering; (4) two counts of money laundering; and (5) securities fraud.

On March 21, 2011, the Trustee filed a Notice of Intended Lapse of ING Security Life of Denver Policy 1618622, which lapse the Trustee expects to become effective April 3, 2011.

On March 16, 2011, the Court entered an order granting Proskauer Rose LLP's ("Proskauer") second interim application in the amount of $262,079.50 in fees and $2,963.90 in expenses, which amount constitutes fees and expenses incurred by Proskauer during its representation of the Trustee from September 1, 2010 through November 30, 2010.

On March 14, 2011, the Court entered a Final Pretrial Order setting a trial date of July 6, 2011 at 1:30 p.m. for Perkins Coie LLP's first and final application for compensation.

On March 15, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending February 28, 2011 for each of the Debtors (Docket Numbers: 622, 623, 624, 625, 626, 627, and 628).

On February 18, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending January 31, 2011 for each of the Debtors ( Docket Numbers: 598, 599, 600, 601, 602, 603, and 604).

On February 18, 2011, the Trustee filed a motion for default judgment against defendant Life Funds, LP in Marwil v. Oncale, et. al. (Adv. No. 10-00042). The Trustee seeks an order declaring that transfers from the Debtors to Life Funds, LP made between September 2, 2007 and September 2, 2009 constitute fraudulent transfers. Specifically, the Trustee seeks a declaration that: (1) the transfers of Transamerica Policy No. 60134442, a $5,000,000 life insurance policy, and Transamerica Policy No. 60134441, also a $5,000,000 life insurance policy, (together, the "Transamerica Policies") were fraudulent; and (2) the Transamerica Policies are owned by Life Fund 5.2, LLC. A hearing on the motion is scheduled for March 2, 2011 at 10:00 a.m.

On February 16, 2011, counsel to the Trustee filed an application to retain Lasko & Associates as accountants to complete 2009 and 2010 tax returns for the estates. On this date, counsel to the Trustee also filed an application to retain Interfor, Inc. as asset search and recovery consultant on a contingent fee basis. Both applications are scheduled for hearing on February 23, 2011 at 9:30 am.


On February 10, 2011, the Trustee filed US Trustee Quarterly Fee Statements for the Quarter Ending December 31, 2010 for each of the Debtors (Docket Numbers: 589, 590, 591, 592, 593, 594, and 595).


On January 20, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending December 31, 2010 for each of the Debtors (Docket Numbers: 580, 581, 582, 583, 584, 585, and 586).


Provident Capital Indemnity, Ltd. ("PCI") Indicted and its Principals Arrested: On January 19, 2011, the United States Department of Justice issued a press release stating that Minor Vargas Calvo and Jorge Castillo, principals of PCI, had been arrested and that an indictment against those individuals and PCI for mail and wire fraud had been unsealed. The release stated that the Department of Justice had been working with the Office of the United States Attorney for the Eastern District of Virginia to bring such charges and that the indictments sought the forfeiture of more than $40 million of assets. A copy of the press release can be found on the web at http://www.justice.gov/opa/pr/2011/January/11-crm-075.html and is reproduced here. PCI issued bonds to secure payment on most life insurance policies held by the Debtors. Although the Trustee and his attorneys have been in contact with PCI and its principals, PCI has been delinquent on all of its obligations to the Debtors and has not remitted any payment to the Debtors for several months.


On January 19, 2011 Christian Allmendinger filed his answer to the Trustee's complaint. In his answer, Mr. Allmendinger responded to much of the complaint by asserting his rights under the Fifth Amendment to the Constitution and declining to affirm or deny the allegations in the Trustee's complaint. In addition to the Trustee's complaint, Mr. Allmendinger is a defendant in a criminal action that is being prosecuted by the United States Attorney for the Eastern District of Virginia.


On January 18, 2011, the Trustee filed a Summary of Cash Receipts and Disbursements for Filing Period Ending November 30, 2010 for each of the Debtors (Docket Numbers: 567, 568, 569, 570, 571, 572, and 573).

On January 18, 2011, Proskauer Rose LLP filed its second interim application seeking allowance of $309,162.00 in fees and $8,061.07 in expenses that Proskauer incurred in its representation of the Trustee from September 1, 2010 through November 30, 2010. Any objections to the application must be in writing and must be filed with the Bankruptcy Court and served on Proskauer Rose LLP and the office of the United States Trustee on or before February 8, 2011. A hearing on the application is scheduled for March 2, 2011 at 10:00 a.m.


On December 7th, 2010, the Bankruptcy Court entered an order approving the sale of American General Life Insurance Company Policy U100033937L, and John Hancock Life Insurance Company Policy UL1402937.


On November 24, 2010, the Trustee filed a notice of hearing on the proposed sale of American General Life Insurance Company Policy U100033937L, and John Hancock Life Insurance Company Policy UL1402937. On November 29, 2010, the Trustee filed an amended notice of hearing, which changed the time of the hearing to 9:30 a.m. on December 6, 2010. As a result of the Competitive Sale Procedures approved by the court on August 24, 2010, the Trustee has obtained sale prices of the following: (1) American General Life Insurance Company Policy U100033937L: $500,000; and (2) John Hancock Life Insurance Company Policy UL1402937: $160,000. These sales are subject to Bankruptcy Court approval at a sale hearing scheduled for December 6, 2010 at 10:00 a.m. At the sale hearing, the Trustee will request that the Bankruptcy Court enter an order approving the sale of the policies.


ALERT RE FRAUD RECOVERY GROUP: It has come to the attention of the Trustee that some investors may have been contacted by an individual on behalf of the Fraud Recovery Group. Although the Trustee is not aware of the identity of the individual or entity contacting investors in Life Funds, investors should be aware that the Department of Justice, acting through the United States Attorney for the Southern District of Ohio, has filed suit against an entity known as the Fraud Recovery Group for, among other things, making misrepresentations to clients and potential clients. More information is available at the website for the Department of Justice. A copy of the complaint is available here and a copy of Fraud Recovery Group's answer to the complaint is available here.




Continued Non-Payment by Provident Capital Indemnity, Ltd. ("PCI") - On October 4, 2010, the Trustee and his counsel met with Minor Vargas, President of PCI, in Chicago, IL to discuss PCI's current and future obligations to the bankruptcy estates. At the time of that meeting, PCI was 2 months delinquent in its settlement obligations to the bankruptcy estates and, the Trustee alleged, delinquent in other obligations to the bankruptcy estates. At that meeting, PCI agreed to make payments sufficient to become current on its bankruptcy court approved settlement agreement with the bankruptcy estates prior to October 14, 2010. As of October 19, 2010, PCI has failed to make such payments and is 3 months (approximately $2.5 million) in arrears on its settlement obligations to the bankruptcy estates. The Trustee is evaluating his ability to pursue meaningful rights and remedies against PCI on account of PCI's breach of its settlement agreement with the bankruptcy estates.


On October 18, 2010, the Bankruptcy Court entered an order approving the sale of Transamerica life insurance policy 60059453, Metropolitan Life life insurance policy U7403296, and John Hancock life insurance policy UL00267681.


On October 15, 2010, the Trustee filed a Declaration in support of proposed sales of life insurance policies. The Declaration provided current information on the policies to be sold and more broadly on the chapter 11 cases.


On October 8, 2010, the Trustee filed a notice of hearing on the proposed sale of Transamerica Life Insurance Company Policy 60059453, MetLife Insurance Company of Connecticut Policy U7403296, and John Hancock Life Insurance Company Policy UL00267681. As a result of the Competitive Sale Procedures approved by the court on August 24, 2010, the Trustee has obtained sale prices of the following: (1) Transamerica Life Insurance Company Policy 60059453: $85,000; (2) MetLife Life Insurance Company of Connecticut Policy U740396: $525,603; (3) John Hancock Life Insurance Company Policy UL00267681: $155,000. These sales are subject to Bankruptcy Court approval at a sale hearing scheduled for October 18, 2010 at 9:30 a.m. At the sale hearing, the Trustee will request that the Bankruptcy Court enter an order approving the sale of the policies.




Principals of A&O / Life Funds Indicted - Personal Assets Seized - During the week ending September 10, 2010, the United States Department of Justice, acting through the United States Attorney for the Eastern District of Virginia, charged Christian Allmendinger, Brent Oncale, Adley Abdulwahab, Russell Mackert, David White, Tomme Bromseth, and Eric Kurz with various counts of mail fraud and/or wire fraud and/or money laundering and/or other charges related to their respective roles in the A&O Life Fund entities. If convicted, the criminal defendants may face incarceration and/or be ordered to pay restitution to their victims and/or other monetary damages. The Bankruptcy Trustee understands that criminal defendants Oncale, Mackert, Bromseth and Kurz have executed plea agreements with the United States Attorney whereby each agreed to plead guilty to certain criminal counts. The Bankruptcy Trustee further understands that (1) defendants Allmendinger, Abdulwahab and White were initially taken into custody, although one or more of the foregoing may have been released pending arraignment and (2) the United States Attorney has seized personal property of multiple of the defendants to secure monetary damages that may be awarded in the future and is seeking to hold such property pending resolution of the criminal counts.


The Bankruptcy Trustee has been in contact with the United States Attorney regarding the criminal charges and understands that the United States Attorney is taking aggressive steps to restrain assets of the criminal defendants so that such assets may be used to provide restitution to victims of the crimes allegedly perpetrated by the criminal defendants. The United States Attorney is in possession of many of the assets identified in the indictment of Allmendinger, Abdulwahab and White. The Bankruptcy Trustee understands that the typical practice of the United States Attorney for the Eastern District of Virginia is to use assets forfeited by convicted criminals to provide restitution to victims. The Bankruptcy Trustee is in discussions with the United States Attorney regarding whether restitution will be most efficiently provided by the United States District Court overseeing the criminal matters making payments directly to victims or by contributing forfeited funds to the Bankruptcy Trustee to be distributed to victims through the chapter 11 cases. The Bankruptcy Trustee will continue to work with the United States Attorney to maximize the value of assets seized for the benefit of victims of the crimes allegedly perpetrated by the named criminal defendants.




On August 31, 2010, Perkins Coie LLP, counsel for former trustee Patrick Collins, filed its First and Final Application for Allowance of Compensation for Services Rendered and Reimbursement of Expenses as Counsel to Trustee Patrick Collins. The application seeks allowance of $842,726 of fees and $25,533.57 of expenses for the period of time from September 17, 2009 through July 31, 2010. A hearing on the application is scheduled for Monday, September 27, 2010 at 9:30 a.m.


On August 25, 2010, the Trustee filed a motion to compromise interpleader complaint with the chapter 7 trustee for Stephen Colson. On August 26, 2010, the Trustee filed a supplement to his settlement motion, which supplement included a revised proposed order approving the proposed compromise. As described in greater detail in the motion and the supplement to the motion, the Trustee is seeking authority to agree to be dismissed from two lawsuits pending in the United States Bankruptcy Court for the Southern District of Mississippi, in exchange for which the Life Funds bankruptcy estates will receive a $4.6 million allowed claim in the chapter 7 bankruptcy of Stephen Colson. The Trustee will present the settlement motion to the United States Bankruptcy Court for the Northern District of Illinois at a hearing on September 15, 2010 at 9:30 a.m.


On August 24, 2010 (subsequent to a hearing on August 18, 2010), the Bankruptcy Court entered a sale procedures order. The order does not authorize the sale of any life insurance policy, but establishes procedures that allow the Trustee to seek authority to sell life insurance policies after a hearing and 10 days notice to certain parties, to redeem policies for their accrued cash value on notice to certain parties, and to allow policies to lapse on notice to certain parties. All notices of any proposed sale, redemption or lapse will be posted to this web site and provide information regarding such proposed action and details on how to contact the Trustee with questions regarding such proposed action.


On August 5, 2010, the Estates received from PCI a settlement payment in the amount of $1,667,000. This payment was made on account of settlement payments due from PCI on June 15 and July 15, respectively, under a settlement agreement between PCI and the Estates previously approved by the Bankruptcy Court. With the agreement of PCI, the Trustee continues to hold as a partial guaranty of future obligations PCI owes to the Estates a life insurance policy with a death benefit of $1 million. The Trustee remains in regular communication with PCI and looks forward to continuing to work with PCI to administer all PCI issued bonds and address all related issues in connection therewith.




On July 29, 2010, the Trustee commenced Adversary Proceeding 10 A 1558 against ING, American General Insurance, Lincoln Insurance, Brent Oncale, Chris Allmendinger, and Inayah Smith (who the Trustee believes to be the sister of Adley Abdulwahab), and trust controlled by those individuals. The purpose of the lawsuit is to determine ownership of 6 insurance policies issued by the insurers named above. Also on July 29, 2010, the Trustee filed a motion in the adversary proceeding seeking a temporary injunction to preserve the insurance policies at issue until the Bankruptcy Court can enter a ruling on the adversary complaint. A hearing on the motion seeking a temporary injunction has been scheduled for Aug. 4, 2010 at 9:30 a.m.


On July 14, 2010, the Estates received payment from PCI in the amount of $247,750.00.


As of July 16, 2010, the Trustee has not received any PCI settlement payments for the month of July. The Trustee will post notice when payment has been received.




The Trustee has not received from PCI the settlement pay due from PCI on June 15, 2010 in the amount of $833,333. PCI initially informed the Trustee that it intended to make this payment but that it was unable to do so due to a banking delay. The Trustee will post notice if and when this payment is made.


On June 30, 2010 the Bankruptcy Court entered this order establishing August 31, 2010 as the last day to file proofs of claim in these bankruptcy cases. The order specifies that individuals who have already filed a proof of claim do not need to file another proof of claim. Individuals who have not yet filed a proof of claim but wish to do so may use this court-approved proof of claim form.


Completed proofs of claim may be sent via US Mail to:

The Garden City Group, Inc.
Attn: Life Funds Claims Processing
P.O. Box 9553
Dublin, OH 43017-4853


On June 17, 2010, the Estates received payment from Provident Capital Indemnity, Ltd. in the amount of $247,750.00 due under the PCI Settlement Agreement.


On June 24, 2010, the Trustee filed its Fourth Status Report. That pleading appears as docket number 395.


Update: Additional cash recoveries for the bankruptcy estates. On June 2, 2010, the Trustee received payment in the amount of $376,830 from the receiver for W Financial Group. The receiver sold a house previously inhabited by Adley Abdulwahab and transferred to the Trustee the portion of those sale proceeds payable to the A&O bankruptcy estates under the settlement agreement between the estates and the receiver. On June 10, 2010, the Trustee received $16,362.62 in funds voluntarily turned over to the Trustee upon written demand from the Trustee. On June 14, 2010, the Trustee received $4,765.10 in funds voluntarily turned over to the Trustee upon written demand of the Trustee. These voluntarily turned over funds had been held by attorneys previously retained or consulted by the Debtors.




On May 30, counsel to the Trustee filed March operating reports for the Life Fund debtors. The March operating reports appear at docket entries 376, 377, 378, 379, 380, 381 and 382.

On May 14, the Estates received a $243,750 payment due under the PCI Settlement Agreement. On May 24, the Estates received a check in the amount of $1,279 on account of unearned premiums refunded due to the cancellation of a bond securing performance by former trustee Patrick Collins. On May 24, the Trustee filed a motion seeking court authority to examine Principal Financial Group regarding policy 4621303, which policy the Trustee has reason to believe is an asset of the bankruptcy estates. That pleading appears at docket number 373.




On April 15, 2010, the Debtors' estates received from Provident Capital Indemnity, Ltd. a settlement payment in the amount of $243,750.00, in accordance with a settlement agreement between the Debtors and PCI approved by order of the Bankruptcy Court dated March 24, 2010. The Trustee looks forward to continuing to work with Provident Capital Indemnity, Ltd. under both settlement agreements approved by the Bankruptcy Court and with respect to all PCI bonds securing policies held by the Debtors' estates.


On April 7, 2010, Chapter 11 Trustee Jeff Marwil held a listen-only conference call to address creditors of and investors in the A&O / Life Fund bankruptcy cases. A recording of the call can be heard by clicking here.




On March 22, 2010, Trustee Jeff Marwil filed a Routine Motion to Pay a Bond Premium. See Motion.


On March 18, 2010, the Court issued an Order allowing Chapter 11 Trustee Jeff Marwil’s motion to retain Proskauer Rose LLP as his counsel.


On March 16, 2010, Trustee Jeff Marwil filed a statement regarding the pending motion to dismiss or transfer the bankruptcy cases.


On March 8, in a written opinion, the Court Certified the election of Jeff Marwil as Chapter 11 Trustee. Patrick Collins, outgoing Trustee, has pledged his cooperation during a brief transition period. Mr. Marwil will continue to use the current website (www.lifefundstrustee.com), telephone hotline (1-800-826-6412) and email address (LifeFundsInfo@gardencitygroup.com) to communicate with creditors, investors, and other parties of interest in the Chapter 11 cases.



POLICY UPDATE: As the Trustee has previously advised investors, there are two significant policies that are in danger of lapsing in the event substantial premiums are not paid. Information regarding the circumstances of each policy and related decisions as to payment of premiums are set forth below. The Trustee welcomes prompt investors' opinions on these important decisions as he continues to explore all options and seek out additional information. In addition, any individual or entity that is interested in purchasing either of the policies identified below should contact Rob Stark of Melville Capital at (212) 380-4277.


$10,000,000 face value, American General Policy #U10033937L:

$13,700,000 face value, West Coast Policy #ZUA341379 (also referred as ULA341379):

Additional information about recent activity can be found here.



Frequently Asked Questions