Ritchie Plaintiffs File Rule 41 Notice, Plan to Re-file Fraud, Breach of Contract Suit Against Coventry First

Business Wire, March 18, 2008

LISLE, Ill. -- Ritchie Capital Management, L.L.C. and the other plaintiffs in the lawsuit brought against Coventry First LLC have exercised their legal right to voluntarily dismiss the case, without prejudice, under Rule 41(a) of the Federal Rules of Civil Procedure. Ritchie Capital and the other plaintiffs are planning to re-file fraud and breach of contract claims, and potentially other claims, against Coventry First in an appropriate court in the near future. The plaintiffs originally brought a complaint against Coventry First and its principals for fraud, breach of fiduciary duty and breach of contract on May 2, 2007.

"Coventry First and its principals put their own financial interests first and the elderly and our investors last," says Thane Ritchie, CEO of Ritchie Capital, as he elaborated on Ritchie's strategy to re-file a comprehensive lawsuit against Coventry First. "Our investors lost hundreds of millions of dollars as a direct result of Coventry First's conduct and the New York Attorney General's complaint against their fraudulent activities, and we are as committed as ever to holding them responsible for their actions and recovering these damages."

Rule 41(a) of the Federal Rules of Civil Procedure gives a plaintiff in a federal action a one-time right to dismiss a case without prejudice and re-file the same and other claims at a later date.

Background on Ritchie Complaint against Coventry

Starting in 2005, the Ritchie Risk-Linked Fund purchased several hundred million dollars of debt securities issued by two special purpose entities, Ritchie Risk-Linked Strategies Trading (Ireland), Limited and Ritchie Risk-Linked Strategies Trading (Ireland) II, Limited (known as Ritchie I and II). Ritchie I also borrowed several hundred million dollars from a senior lender. Ritchie I and II used this capital to purchase life insurance policies from Coventry First, who was then known as the creator and leader of the secondary market for life insurance policies. Coventry assured Ritchie Capital that they complied with all legal and regulatory requirements when they purchased the policies and understood Ritchie I and II intended to sell the policies in a rated securitization transaction.

On October 11, 2006 Moody's Investor Services issued a Pre-Sale Report assigning a provisional "A3" investment grade rating to the senior notes to be issued in the securitization. The Pre-Sale Report relied in part on the due diligence that Coventry First had performed when it acquired the policies and that an affiliate of Coventry First would be the servicer of the policies.

On October 26, 2006, the Attorney General of the State of New York sued Coventry First, alleging that it orchestrated a broad scheme to defraud owners of life insurance policies. The civil complaint alleged that Coventry First made secret payments, dubbed "co-brokering fees," to life settlement brokers and that, in exchange for these payments, the brokers suppressed competitive bids from other life settlement companies. The suit asserts antitrust violations, fraud, and other state law claims and cites e-mail and other evidence showing that Coventry First executives were well aware of their illegal conduct. Further, the complaint cites at least three instances where Reid Buerger, a senior executive of Coventry First and the son of its founder Alan Buerger, invoked his Fifth Amendment right against self-incrimination.

Later that day, Moody's issued a press release revoking its provisional rating of the securitization stating the withdrawal was based on uncertainty surrounding the transaction in light of the complaint filed by the New York State Attorney General.

Coventry First continuously represented to Ritchie Capital that they complied with all laws in originating the life insurance policies that they knew Ritchie I and II intended to securitize, and that there were no material legal or governmental proceedings threatened against them. According to the New York Attorney General's complaint, these representations were patently false, and Coventry First and its principals were systematically engaged in fraudulent and unethical behavior against dozens of elderly people, including widows and widowers in their 70s and 80s, and earning millions of dollars in wrongful profits at their expense. At the same time, Coventry First caused several hundred millions of dollars of damages to Ritchie I and II, to their lenders and to Ritchie Capital's investors.

About Ritchie Capital

Ritchie Capital is a diversified alternative asset management firm established in 1997 with interests in hedge funds, private equity, venture capital, insurance, energy and real estate and with offices in Lisle, IL, New York, and Menlo Park, CA.