RETIREMENT VALUE LLC FAQ’s from Investors

Is my money gone?

Not entirely. Your initial investment went to Kiesling Porter. Kiesling Porter set up bank accounts that appear to have been intended to segregate funds for each insurance policy. Your contribution and the contribution of the other investors were allocated among the various bank accounts. Commissions, fees, administrative expenses and Retirement Value’s profits were paid out of these accounts. The balance was used to: (i) acquire policies; and (ii) fund reserves for premium payments.

How much of my investment was paid out in commissions, fees, administrative expense and profits?

The amount varied from investor to investor. Generally, 30%-40% of each investor dollar went towards commissions, fees, administrative expenses and profits.

Do the policies even exist?

Yes, we have found that policies do exist and that funds were reserved to make premium payments. Whether Retirement Value’s premium reserve is adequate to cover premium payments for the remainder of the measuring life is uncertain.

If so, are the policies being maintained or allowed to lapse?

The Receiver’s objective is to protect and preserve Retirement Value’s assets, including the policies. Accordingly, we are paying the premiums on the policies owned by Retirement Value, as they come due, in order to maintain the policies and prevent their lapse.

My agent says this is just about whether Life Settlements are securities?

Whether the investments sold by Retirement Value constitute a security is one aspect of the case. However, a more significant aspect of the case is whether Retirement Value, its agents, representatives and licensees provided you with false information when selling the investment to you.

Is investing in Life Settlements illegal?

No. The issue of the case is not life settlements in general but rather how Retirement Value went about structuring the investment opportunity, and how Retirement Value, its agents, representatives and licensees marketed and sold it.

I never put the money into policies, so can I just get it back?
Or I sent my money in but then the Cease & Desist order was issued, so it never went into any specific policies, where is my money?

Actually, no one ever really put money into policies. What Retirement Value’s investment documents reflect is that you gave money to Retirement Value so that Retirement Value could buy policies, in exchange for repayment of a fixed amount upon the underlying insured’s demise. Once your 10 day “free look” period expired, your investment in Retirement Value became an asset of Retirement Value. Regardless of whether your funds were actually used to acquire one or more policies, you are in the same position as all other investors. Each investor has a claim against the estate of Retirement Value for entire amount of his or her investment. We are in the process of determining the amount of each investor’s investment, so as to fully understand the claims against the estate.

I never received a confirmation that I had acquired any policies? Can I get confirmation of what policies I own?

Again, no investor owns a policy or policies. What you bought was Retirement Value’s promise to pay you a certain amount. Regardless of whether or not you received confirmation that policies were acquired with the funds you provided, you have a claim against Retirement Value for the amount of your contribution.

Can I just take my money out now?

No. The policies acquired by Retirement Value are illiquid investments. We are attempting to ascertain the value of Retirement Value’s assets and to determine how to maximize the return from those assets. Once we have fully assessed the options available to us, we will propose a plan of distribution to the Court and schedule a hearing at which time the court will determine whether to approve the plan. No payments to investors will be made until the Court approves a plan of distribution.

When will I get my money back?

At this point, we do not know when distributions may be made or the amount of any distribution.

If an insured on a policy I invested in passes away while this is going on, will I get my payout from that policy?

If an insured covered by the policies owned by Retirement Value should pass away, the proceeds of that policy will be paid to Retirement Value’s estate. The Receiver will hold that money, like all other Retirement Value assets, for the benefit of the investors until a distribution plan is confirmed by the Court.

Why do I need to send you my documents, shouldn’t Retirement Value have copies?

Among other things, so that we may verify the accuracy of Retirement Value’s books and records. By comparing your records with the companies we are attempting to verify RV’s assets and liabilities. We need your documents to assure that the amount you say you invested and the policies you invested matches up with the documents from RV and the escrow agent.

Death of insured under Policy# PL1140-111109-DM

The insured under policy PLI140-111109-DM has passed away. Pacific Life has paid the Receiver's claim. However, our receipt of funds does not change the situation with respect to distributions to Retirement Value's investor-victims. The estate still does not have sufficient funds to repay all of the victims. Generally speaking, the victims share in all estate assets pro rata based on their investment. When and how distributions will be made will be determined by the court when it approves a plan of distribution. Until the court approves a plan of distribution, the Receiver cannot make distributions to the investor victims.

I received an invoice from Provident or IRA Plus Southwest for a maintenance fee on an IRA account, do I need to pay that bill?

Though your claims against the Retirement Value estate are currently in your IRA, your relationship with the IRA's custodian -- is outside of the receivership. The fee you reference is the company’s annual fee to act as the IRA custodian. Failure to maintain a custodian may result in the dissolution of your IRA. If your IRA is dissolved, then the IRS may deem that to be a distribution which may have adverse tax consequences for you. Quite simply, I do not know if the custodian will waive the fee, if you can substitute a custodian, or if you can otherwise maintain the IRA without paying the fee. Moreover, I cannot provide you (or, for that matter, any of the investors) with tax advice.

Accordingly, I encourage you to consult with a tax professional of your choosing. The Internal Revenue Service provides information and answers to common questions on its website. For your convenience, here is a link http://www.irs.gov/retirement/article/0,,id=111413,00.html to a page from IRS.gov dealing with IRAs. You may also contact the IRS through its toll-free tax assistance line at (800) 829-1040.

Value of IRA account?

We have received multiple questions regarding the "fair market value" of the IRA accounts. We understand that if you are unable to provide your IRA custodian with a "fair market value," the custodian may continue to report the investment's "fair market value" at the IRA's cost. As of yet, we have not undertaken a formal valuation of RV's estate or more particularly your claims against the estate. Moreover, for a myriad of reasons, including without limitation, the lack of a market for your investment and the illiquidity associated with the underlying assets, we cannot provide you with a "fair market value" for your investment. The following information is offered solely so that you may make your own valuation and assessment as to whether you wish to report "fair market value" at cost or at some other amount. 

RV's ability to repay the investors depends on our ability to capitalize on the insurance policies that RV acquired. As of 12/31/10, the estate of Retirement Value had: 

1) Cash on hand equal to $20,449,471;
2) Unmatured policies with aggregate face value of $124,835,000 (aggregate purchase price of $25,640,000);
3) Claims for matured policies equal to $10,000,000;
4) Claims against various parties of an undeterminable value; and
5) Investors' claims against the estate totaling approximately $77,000,000.

The policies, for which RV paid approximately $28 million, have relatively little market value and their current liquidation value does not begin to approach the $77 million that RV raised from investors. We have secured current medical records from the majority of the insureds and obtained updated, reliable, life-expectancy estimates. Our actuaries are analyzing that information to give us a more reliable understanding of the portfolio's anticipated future stream of cash flows. We anticipate that analyses will be completed during 1Q2011. Upon completion, we anticipate that the actuarial analysis will provide additional insight as to each policies' and the portfolio's respective value. 

All this is to say, that I cannot, at this time, advise you as to the fair market value for your IRA investment. You should consult with your tax advisor as to what valuation position you should take. 

Should I sue my licensee or investment advisor?

A number of investors have asked whether they should sue their licensees. I cannot advise you as to whether you should or should not sue your licensee. You should be aware, however, that the law generally requires that lawsuits be filed within a set period of time. Exactly how long you have to bring a claim varies between state and federal law and among the various states.

To obtain advice on these issues, you should consult with an attorney of your choosing. While I cannot recommend an attorney to you, I can tell you that the State Bar of Texas operates a Lawyer Referral Information Service (www.texasbar.com), which can assist you in locating a suitable lawyer. The bar associations of other states may provide similar services. There are also a number of legal directories (including the Yellow Pages) that you may also wish to consider.