The SEC found that Laib, who is based in Oklahoma City, Okla., engaged in improper professional conduct in his audits of the financial reports of Life Partners Holdings, a company based in Waco, Texas. Laib conducted the audits of that client's annual financial statements from 2005 through 2008 while a partner with Murrell Hall, McIntosh & Co. After that firm merged with Eide Bailly, he audited the 2009 statements as a partner there.

The problems Laib is alleged to have missed are reflected in court and regulatory actions taken this year. In January, the SEC accused the company and three senior executives of a fraudulent disclosure and accounting scheme. Life Partners has denied accusations of wrong-doing. Life Partners itself has been subject to actions by the Texas attorney general. A Texas judge ruled the settlements are not securities and do not fall under Texas securities laws, effectively ending most of that state's action, although it is expected to appeal.

Life Partners brokers the sale of life insurance policies by policy owners to investors in the secondary market, in transactions referred to as "life settlements". It makes its money from the difference between the amounts investors pay to acquire an interest in a life settlement and the amounts for which policy owners agree to sell their policies. For a 15-day period following the closing date, a policy owner can rescind the contract without a penalty.

The SEC said that Life Partners' problem was that rather than wait for the closing date to recognize revenue, it did so as of the earlier date listed on the Policy Funding Agreement. Laib was said to have identified potential fraud risks, including what was termed a very aggressive revenue recognition policy. However, Laib, the SEC said, did not go further and perform procedures that might have identified management's overriding of controls.

Life Partners obstructed the audit by backdating documents. But Laib was found to have failed to plan for or perform procedures that might have discovered the client improperly recognized revenue.

Life Partners is the subject to a lot of legal activity. In August, Texas asked for court permission to seize Life Holdings' assets, alleging it would run out of funds in two months. A class action suit was certified this month by a court in the Lone Star State. A major part of the SEC's case is its allegation that Life Partners underestimated life expectancies based on estimates provided by Dr. Donald T. Cassidy, a Reno, Nev.-based doctor with no actuarial training or prior experience rendering life expectancy estimates. Because insured individuals were living longer than anticipated in the settlement contracts, investors' returns were impacted. The figures were also used to sell stock at what the SEC said were inflated prices.

The SEC's action was taken against chairman and CEO Brian Pardo, president and general counsel Scott Peden, and chief financial officer David Marti with all three alleged to have known about the problems with the life expectancy tables. The SEC also accused Pardo and Peden of insider trading. Pardo and his family own 50.3 percent of the company's common shares and two named executives, VPs Kurt and Deborah Carr, are Pardon's son-in-law and daughter.

The company paid $14.9 million in dividends to shareholders, even though it lost $3.1 million with a $5.7 million operating loss a 67.6-percent decline in revenue for the year ended February 2008. The company's results for the six months ended August 31 show a 57.3-percent decline in revenue to date for fiscal 13 with a $4.3 million operating loss substantially offset by a $3.6 million gain on the sale of assets. It paid out $3.7 million in dividends during the period, compared to $7.5 million a year ago.