Wall Street Firm Bankruptcy Puts Thousands Of Pensions In Jeopardy

As many as 27,000 Mainstreet Investors are at risk of losing part of their retirement or investment savings after GWG Declared Chapter 11 Bankruptcy last month. Mike Papantonio is joined by attorney Michael Bixby to discuss more.

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*This transcript was generated by a third-party transcription software company, so please excuse any typos.

As many as 27,000 main street investors are at risk of losing part of the retirement or investment savings after GWG declared chapter 11 bankruptcy last month. Attorney Michael Bixby joins me now to explain this and this is a guy that deals with the sociopaths all the time. This story is really troubling. Tell us a little bit about what these Wall Street hustlers did here.

Sure. So GWG Holdings is it's an alternative asset management company, Pap, and what they did their business model was to buy life insurance policies. So the company would go out and buy life insurance policies. If you had a life insurance policy on yourself and you didn't want it anymore, you could sell it to them. Maybe it was getting too expensive for you. And their whole business model was based on raising money from investors to go out and buy these life insurance policies

Betting on death is what they were doing.

They were betting on death and here's what they were doing. They were using nontraditional models to do it. So they said, we're not gonna follow the standard actuarial models. We've got our own things that we're going to do. And it was extremely risky because if they were wrong even by a little bit, they basically, Pap, they issued bonds and they had payments that were due to the bond holders that they had to meet. And what happened is they stopped being able to issue their bonds. And in 2021, they didn't issue some financial statements, some SEC filings, their auditor resigned and basically their ability to go get new people to invest in the bonds.

Yeah.

To be able to continue paying for the bonds and invest with other life insurance policies, it dried up.

In other words, the investment they would, they would stay ahead of going bankrupt by selling more, almost like a Ponzi scheme. Isn't it? I mean, you, it, there's no difference. I think a headline that I saw in here is they were borrowing from Peter to pay Paul. Anytime we see that in Wall Street, that's a Ponzi scheme. Now my guess is the DOJ will do nothing about it. Nobody will be prosecuted. But put that in terms of who was affected here. Let, let the viewers understand who, who is the, who's the risk.

That, that's exactly, I think the important thing, Pap, is you understand, because this isn't just, oh, a hedge fund did something crazy and the hedge fund owners are now. What we're talking about here is literally main street investors.

Mm-hmm.

We're talking about over 25,000 individuals. These are retail investors who were sold these bonds because it wasn't, the hedge funds are probably too smart to really make a major investment in these things. We're talking about mom and pop investors. We're talking about people that I represent your teachers, nurses, regular folks, working folks who went to a financial advisor who told 'em I have this great bond for you.

Now, are you handling the case?

Yes.

Okay. And as you look at the case, my guess is this. When you micromanage who's in charge, you're gonna find that the folks involved have past histories of similar kinds of deals, which brings me to this. Why in the world won't our Department of Justice prosecute these folks? Yeah, they're dressed up in Armani suits. They drive Bentley's. But they got MBAs from Harvard and Yale. But why won't the DOJ just prosecute 'em just like we would a kid selling marijuana on street corner?

No, Pap. I mean, this is, this is a constant problem. You and I have talked about this before many times. And the issue is what these Wall Street firms have learned, what these investment companies have learned.

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