On April 15, 2003, Trade Partners, Inc. was placed into receivership by the Receiver for Advanced Financial Services, Michael J. Quilling. This occurred in the Western District of Michigan, United States District Court. (Click here to view the Agreed Order Appointing Receiver.)

Do not call the Office of Financial and Insurance Services (hereafter “Office”) regarding the Order. All such questions should be directed to:

Borod & Kramer, P.C.
Attention: Bruce S. Kramer
Beale Street Landing
245 Wagner Place
Suite 350
Memphis, Tennessee 38103

Phone: 901-524-0200
Facsimile: 901-523-0043

Q & A

Why didn’t the State begin investigating Trade Partners sooner?

Due to the limited resources of the Office coupled with the fact that the federal authorities were well ahead in their investigation, it was determined to let the federal authorities pursue their investigation while the Office acted in more of a support role, at least initially.

1. A person furnishes capital, other than services, to an issuer;
2. A portion of that capital is subjected to the risks of the issuer’s enterprise;
3. The furnishing of that capital is induced by representations of an issuer, promoter, or their affiliates that give rise to a reasonable understanding that a valuable tangible benefit will accrue to the person furnishing the capital as a result of the operation of the enterprise;
4. The person furnishing the capital does not intend to be actively involved in the management of the enterprise in a meaningful way; and,
5. . A promoter or its affiliates anticipate, at the time the capital is furnished, that financial gain may be realized as a result thereof.

It is the position of the Office of Financial and Insurance Services (OFIS) that a viatical investment meets the above criteria. For that reason, a person offering and/or selling a viatical investment must be registered under Section 201 of the Act. As a security, a viatical investment needs to be a registered securities offering or offered and sold under an appropriate exemption from registration. Any issuance of a viatical investment must comply with the provisions of Sections 101 and 301 of the Act. (Click here to view Bulletin No. 2002-07-SEC)

The Court found that Tyler and AFS made material misrepresentations and omissions that "were unquestionably deliberate and clearly intentional" in connection with fraudulent sales of AFS-issued investments backed by viatical settlement contracts.

The Court further stated that Tyler and AFS made "false guarantees about the investments' liquidity, interest rates and `fixed' maturity dates". Thus, the Court concluded that the "Defendants' actions adequately demonstrate an intentional pattern to deceive."

The SEC alleged in its complaint, filed February 11, 2002, that since May 1998, the defendants raised at least $30 million by fraudulently enticing more than 480 mostly elderly investors into purchasing investments issued by his company, AFS. (Click here to view SEC’s complaint to the US District Court for the Northern District of Texas)

According to the SEC, Tyler deceived the elderly investors with false guarantees about the AFS investment's liquidity, above-market interest rates and "fixed" maturity dates. Tyler used investors' funds to buy viaticals, which rendered the guarantees false because, by definition, viaticals are illiquid investments with no fixed maturity dates and uncertain rates of return. Tyler hid the fact that the underlying viaticals could not fulfill the promises that he had made to investors and that the investors had to rely on him and AFS to carry through on the promises of guaranteed returns, fixed maturities and liquidity. Two weeks before the SEC filed its suit, Tyler and AFS both filed for bankruptcy.