PHILADELPHIA, Oct. 28 2004 LAWFUEL – Law, consumer law, legal, attorney, law firm news – Attorney General Jerry Pappert today
filed a civil lawsuit in Commonwealth Court accusing 16 defendants of engaging
in an elaborate statewide living trust sales scheme, that deceived older
Pennsylvanians into purchasing Revocable Living Trusts, long-term annuities or
charitable gift annuities that were costly, not in their best interest and/or
unnecessary. The alleged victims documented approximate losses that range
between $1,800 and $80,000.
Along with the complaint, Pappert filed a preliminary injunction in
Commonwealth Court seeking to ban the defendants from engaging in the unlawful
advertising, promotion or sale of estate planning products or services in
Pennsylvania. The lawsuit and preliminary injunction followed a nine-month
investigation by agents from Pappert’s Charitable Trusts and Organizations
Section.
“This alleged scheme was heavily promoted and potentially hurt hundreds of
senior citizens across the Commonwealth who may be unaware that they were
cheated,” Pappert said. “Today, I’m asking the court to ban the defendants
from engaging in the illegal advertising, promotion and sale of estate
planning products or services in Pennsylvania.”
Pappert identified the defendants as:
— Estate Planning Advisors Corp. (EPAC), 525 West Chester Pike,
Havertown, Delaware County.
— Ben Consulting Corp. (BCC), 525 West Chester Pike, Havertown, Delaware
County.
— Funding & Financial Services Inc. (FFS), 525 West Chester Pike,
Havertown, Delaware County.
— Brian J. Newmark of 913 N. Spring Mill Rd., Villanova, Delaware
County, and president of EPAC, BCC and FFS.
— Barry O. Bohmueller, Esquire, 900 East 8th Ave., Suite 300, King of
Prussia, Montgomery County, and represented by EPAC, BCC and FFS.
— Brett B. Weinstein, Esquire, 900 East 8th Ave., Suite 300, King of
Prussia, Montgomery County, and represented by EPAC, BCC and FFS.
— John Wight of 491 South 9th Street, Quakertown, Bucks County, and
employee of defendants Newmark, Bohmueller and Weinstein.
— Victoria Larson of 332 Washington Place, Wayne, Chester County, and
employee of Newmark, Bohmueller and Weinstein.
— Glenn Larson of 378 Lehigh Ave., Palmerton, Carbon County and employee
of Newmark, Bohmueller and Weinstein.
— Brett Marcus of 1239 Oakland Terrace Rd., Arbutus, Maryland, and
employee of Newmark, Bohmueller and Weinstein.
— Kenneth Krygowski of 1113 Woodstock Lane, West Chester, Chester
County, and employee of Newmark, Bohmueller and Weinstein.
— Steven Strope of One Joac Circle, Royersford, Montgomery County, and
employee of Newmark, Bohmueller and Weinstein.
— New Life Corporation of America, doing business as National Community
Foundation, 10 West Park Dr., Brentwood, Tennessee, and represented by
Newmark, EPAC, BCC and FFS.
— American Investors Life Insurance Company Inc. (AILIC), 555 South
Kansas Ave., Topeka, Kansas, and represented by Newmark, EPAC, BCC and
FFS.
— AmeRus Annuity Group Company (AAG), 555 South Kansas Ave., Topeka,
Kansas, corporate parent and owner of AILIC, represented by Newmark,
EPAC, BCC and FFS.
— AmeRus Group Company (AGC), 699 Walnut St., Des Moines, Iowa, and
corporate parent and owner of AAG represented by Newmark, EPAC, BCC
and FFS.
The seven-count complaint accuses the various defendants of violating
Pennsylvania’s Unfair Trade Practices and Consumer Protection Law,
Solicitation of Funds for Charitable Purposes Act, Telemarketer Registration
Act, as well as the Judicial Code Provisions barring the Unauthorized Practice
of Law.
According to investigators, defendants Bohmueller and Weinstein between
2001 and 2004 promoted their estate planning services using telemarketing,
newspaper ads, mass mailings, senior expos and local seminars held in
restaurants, country clubs, synagogues or other facilities throughout the
state. The attorneys used sales agents from the marketing, insurance or
brokerage firms to sell the estate planning products. The sales efforts were
primarily focused on consumers located in Central, Northeastern and
Southeastern Pennsylvania. Those responding to the ads or promotions were
typically senior citizens often 70 to 80 years old.
According to the lawsuit, the defendants encouraged consumers to meet with
their “Estate Planning Advisors” or “Certified Senior Advisors” to explain
“What Everyone Should Know About Estate Planning Techniques, Financial
Planning Strategies and Estate Preservation.” The promotional materials from
the defendants’ estate planning advisor companies led consumers to believe
that they were receiving impartial estate planning advice.
The complaint claims that consumers who attended the presentations or
allowed the defendants into their homes were advised to purchase a Revocable
Living Trust. The trust was presented as an estate planning document that was
in the consumers’ best interest, regardless of their individual financial
holdings. Many were sold living trust kits for approximately $1,800 whether
they needed them or not. Consumers said they were unaware that the sales
representatives were insurance agents who received sales commissions.
To encourage the sale of living trusts, the suit claims that the
defendants used scare tactics and deceived consumers by falsely claiming that
living trusts are superior to wills because:
— The probate process will result in significant delays and court costs.
— The probate process will greatly reduce the size of the decedent’s
estate because of attorney and executor fees.
— The probate process will require court intervention to supervise the
administration of the estate.
— The probate process will expose private matters to the public.
— The probate process will expose the decedent’s estate to litigation.
— Living Trusts will lessen or eliminate taxes.
Other alleged deceptions included claims that the defendants failed to
disclose that:
— The rate of return would be less than promised on some annuity
contracts.
— There were penalties for early withdrawal of annuity contracts.
— The sale of investment portfolios would result in losses due to
capital gains taxes.
— Living Trusts may not be appropriate in all instances.
— Moving marital, residential real estate property into a living trust
could have a possible negative impact on Medicaid eligibility.
— Consumers had three days to cancel their transactions without paying a
fee.
— The Qualified Charitable Gift Annuities were sold as tax shelters or
investments but the real purpose was to give money to charity.
— They could not provide legal advice because they were not licensed
attorneys.
The alleged victims said they fully trusted the representatives and
followed their advice because they were led to believe that they were lawyers
or estate planners. Consumers said the sales agent defendants gave them
Bohmueller Law Offices business cards and wrote their names at the top,
implying that they are lawyers who work in Bohmueller’s firm. None of the
consumers met or spoke with Bohmueller, yet his name appeared on all of their
completed estate planning documents.
“In reality, the individuals advising consumers about estate planning
products are not unbiased legal professionals but sales or insurance agents
working on commissions,” Pappert said. “These older citizens were given legal
advice from non-attorneys who intentionally steered them toward purchasing
living trusts as a way to find out the contents of their financial portfolios.
After profiling the portfolios, the defendants deceptively convinced consumers
to convert their stocks or other non-real estate investments into charitable
gift annuities or long-term deferred annuities that paid the agents even
higher commissions.”
The defendants, among other charges, are accused of knowingly providing
legal advice and services that can only be lawfully performed by licensed
attorneys.
Pappert said the defendants exploited the trust that many elderly
consumers placed in them when they knew these older citizens could not
determine what was in their best interest. In one case, an 85-year-old
Delaware County man unknowingly was sold a 10-year deferred annuity with his
first payment due when he turns 95.
“In my view, these actions are unconscionable. Consumers were lied to and
deceived into purchasing long-term annuities based on what the defendants
would make in commissions. The sales commission rate was higher if the payout
period to consumers was longer. I am proceeding against these defendants with
every appropriate remedy available under the law,” said Pappert.
Pappert said undercover agents from his Charitable Trusts and
Organizations Section posed as potential customers and presented the various
defendants with a dummy portfolio. Even though the bogus investments paid
generous dividends and interest, the defendants recommended that the entire
portfolio be liquidated and converted to deferred annuities.
Pappert said several consumers told his office that they lost thousands of
dollars in their life savings due to the failure to realize the promised
returns, extra fees or costs, additional tax expenses and the inability to
have access to their investments without paying huge penalties.
The Commonwealth also claims that the sales representatives for New Life
Corporation were not registered and bonded as professional solicitors, in
violation of the Charities Act. Additionally, defendant Weinstein is accused
of violating a November 2001 agreement with the Office of Attorney General
involving similar alleged illegal business practices.
The preliminary injunction asks the court to ban the defendants from
engaging in the unlawful telemarketing, advertising, promotion or sale of
estate planning products or services in Pennsylvania.
The complaint asks the court to:
— Require the defendants to pay full restitution to consumers who come
forward with proof that they were harmed in the case.
— Require defendants to pay civil penalties of $1,000, $3,000 or $5,000
per violation.
— Permanently ban defendants from engaging in the illegal telemarketing,
advertising, promotion or sale of estate planning products or
services.
— Require defendants to pay for attorney fees, investigation costs and
an accounting and audit of their commissions and income.
Pappert urged consumers who suspect that they were victimized in the
alleged scheme to contact his office immediately by calling 1-800-441-2555 to
obtain a complaint form. Consumers may also download a complaint form or
electronically file a complaint by visiting http://www.attorneygeneral.gov.
The complaint and preliminary injunction was filed in Commonwealth Court
in Harrisburg. The case is being handled by Senior Deputy Attorney General
Thomas M. Devlin of Pappert’s Charitable Trusts and Organizations Section.
CONTACT: Barbara Petito, Deputy Press Secretary, Pennsylvania Office of
Attorney General, +1-717-787-5211.
Web Site: http://www.attorneygeneral.gov
