Michael Hild, Bond Fraud Scheme, New York 2023

Michael Hild, the founder and former CEO of Live Well Financial, Inc., has been convicted of securities fraud, wire fraud, and bank fraud charges in connection with a scheme to fraudulently inflate the value of a portfolio of bonds owned by Live Well Financial.

According to the United States Attorney for the Southern District of New York, Audrey Strauss, Hild grossly inflated the value of bonds used as collateral to obtain millions of dollars in secured loans for Live Well Financial. He deceived a third-party pricing service by providing it with inflated marks, resulting in the pricing service publishing valuations for the bonds far in excess of market value. Lenders were hoodwinked into lending far more than they otherwise would have.

The scheme allowed Live Well Financial to grow its bond portfolio exponentially, from approximately 20 bonds with a stated value of approximately $50 million in 2014 to approximately 50 bonds with a stated value of over $500 million by the end of 2016. In May 2019, in conjunction with an effort to wind down the company, Live Well Financial wrote down the value of its portfolio by over $200 million.

Live Well Financial was a Richmond, Virginia-based company that originated, serviced, and securitized government-guaranteed reverse mortgages known as Home Equity Conversion Mortgages (“HECMs”). In or about 2014, Live Well acquired a portfolio of approximately 15 bonds, each entitling the holder to receive a portion of the interest payments, but not the principal payments, from a particular pool of reverse mortgages (“HECM IO bonds”).

The majority of Live Well Financial’s lenders were securities dealers whose lending arrangements with the company were structured as bond repurchase agreements, also known as “repo agreements.” A repo agreement is a short-term loan in which both parties agree to the sale and future repurchase of an asset within a specified contract period. The seller sells the asset to the lender with a promise to buy it back at a specific date and at a price that includes an interest payment.

At the end of 2016, the bond portfolio had grown to approximately 50 bonds with a stated value of over $500 million. However, in May 2019, Live Well Financial wrote down the value of its portfolio by over $200 million, revealing the extent of the overvaluation. As a result, Hild awaits sentencing for his crimes.

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