Former CEO of Live Well Financial arrested in bond fraud scheme

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Live Well Financial CEO Michael Hild has been charged with misrepresenting the value of a bond portfolio in parallel actions by the U.S. Attorney's Office and the Securities and Exchange Commission.

The charges are "in connection with a scheme, from in or about September 2015 through in or about May 2019, to fraudulently inflate the value of a portfolio of bonds owned by Live Well," according to a press release issued by the U.S. Attorney's office in the Southern District of New York.

The portfolio in question was represented to contain 20 bonds worth at least $50 million in 2014, and to contain approximately 50 bonds with a stated value of at least $500 million by year-end 2016. When Live Well ceased funding in May, it wrote down the value of the portfolio by around $141 million. The bonds in question entitled holders to interest-only payments on a pool of government-insured reverse mortgages.

Charges against former Chief Financial Officer Eric Rohr and Darren Stumberger, the company's former head trader, also have been unsealed in connection with the alleged scheme. Rohr and Stumberger have entered guilty pleas "and are cooperating with the government," according to the press release.

Rohr and Stumberger also have "consented to partial judgments against them" related to the separate charges by the SEC.

The SEC alleges "Hild directed Live Well to submit falsely inflated bond prices to an industry-leading pricing service, who he knew would simply publish the prices Live Well gave it."

Creditors had previously stated in bankruptcy proceedings that they had "been contacted by one or both of the SEC and the FBI regarding Live Well and Mr. Hild."

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Enforcement actions Reverse mortgages MBS Bankruptcy U.S. Attorneys Office SEC