Charles DePoint's nest egg is dead because four people are not.
The 51-year-old from Palmyra, Wayne County, began building his 401(k) savings plan when he took his first job out of college as a laborer at Garlock Sealing Technologies 27 years ago. Since then, DePoint has eschewed exotic vacations, new vehicles and housing repairs in favor of saving for a comfortable retirement. By the time he left Garlock for another company in 2003, his 401(k) had swelled to $408,000.
On the advice of his financial adviser, DePoint said, he invested it all in four viatical settlements, transactions in which a terminally ill or elderly person, the viator, gets money before death by selling his or her life insurance at a fraction of the policy's face value. When the viator dies, the investors collect the benefit.
DePoint says that his adviser, Richard H. Nichols of Newark, Wayne County, told him that he would earn at least a 50 percent return on his investment — nearly $220,000 — within five years. DePoint said he was told it was a risk-free investment.
That time has passed, DePoint has lost $300,000, and the rest is in jeopardy. What some viatical brokers promised to be a sure bet has turned financially fatal for thousands of investors across the country — including dozens in the area like DePoint, who staked their life savings on the life expectancy of people they have never met.