At a free "wealth management" seminar three years ago, Luis Corona was persuaded to invest his life savings in people he believed had little time to live and needed financial help.

Corona, a retired airline machinist living in Boynton Beach, Fla., paid $75,000 to buy a portion of three life insurance policies belonging to terminally ill patients—investment vehicles known as viatical settlements (from the Latin word "viaticum," a religious rite for the dying).

"I didn't like the idea of betting on someone's life," recalls Corona, 71. "But the agent I met at that seminar said these people are very ill, and my investment in their policies would help them financially."

Upon their deaths—"expected in three or four years," Corona says he was told—he'd make $37,500 from each insurance policy, a 50 percent return on his investment. "I was told it was a good investment, guaranteed and low-risk."

Instead, he joined more than 29,000 other investors who the U.S. Securities and Exchange Commission (SEC) says were bilked of $1 billion by Mutual Benefits Corp., the Fort Lauderdale-based firm that sold the policies. In May 2004—eight months after Corona purchased the three viaticals from the commissioned sales agent at that free seminar—Mutual Benefits, the country's largest viaticals company, was shut down and sued for fraud by the SEC. Even with the removal of a major player, viatical fraud remains one of the country's top investment scams, says the North American Securities Administrators Association, snaring thousands of victims every year.

Viatical settlements were introduced in the early 1990s to help, in part, dying AIDS patients get cash to pay their bills. The idea is that an ill policyholder sells his life insurance policy at a discounted rate to investors. When the policyholder dies, the investors get the full face value—but the longer the person lives, the longer the investors may have to pay monthly premiums and the smaller the return on the policy.

Investors in viaticals are often victims of deceptive marketing—they are given phony death estimates and false promises of "guaranteed" payoffs, or they are sold the same policy shares as other investors. And they often don't find out what happens to the sick policyholders. Corona says he was promised an update every six months, but, he says, "I never received one."

"Viatical salespeople were paid very lucrative commissions, usually over 10 percent of the investor's stake," says Teresa Verges, the SEC attorney who filed the lawsuit against Mutual Benefits. "But the returns promised to investors occurred only if the insured died when predicted."

The agent who sold Corona his viaticals—R. Larry Helmer, a Florida attorney who claims to specialize in elder care law—could not be reached for comment despite repeated efforts. He's the former president of Franklin National Financial Services, which hosted the 2003 seminar. His business partner at the time, David W. House—who maintains he never "personally" sold viaticals—says their company did extensive research on Mutual Benefits but found no hint of fraud.

Yet a fast Web search indicates that Mutual Benefits and its three principals (including a convicted felon) had a history of federal and state fraud charges and criminal investigations—including some in Florida—before those sales.

SEC Chairman Christopher Cox recently launched a crackdown on so-called "free lunch" seminars that sell risky investments, often to retirees. To learn more about viaticals, visit www.sec.gov. To check an investment offer or salesperson—or file a complaint—contact your local state securities regulator.

Sid Kirchheimer is the author of AARP/Sterling's new book Scam-Proof Your Life.