My Clients: In 1995, an elderly couple came to my law office because they had discovered that they had been "conned" by a salesman for an organization called the "Alliance for Mature Americans."
The "con" started with a phone call: a telemarketer called, asking if the clients might be interested in a revocable living trust. (In California and most states, it is illegal for an attorney or law firm to use telemarketing.) A salesman from the "Alliance for Mature Americans" called and scheduled an appointment on an evening when only the two seniors would be present. During this meeting, the salesman misrepresented the benefits of living trusts, and convinced the clients that they needed a trust, and he collected payment of $1,250. A few weeks later, a different salesman arrived with the trust documents, and assisted the clients in signing the documents.
Then came the "hook" -- at this second meeting, the new salesman claimed that in order for their trust to be valid, the clients needed to "fund" it by rolling over some retirement assets into an annuity with a company called "Fremont Life." The salesman claimed the annuity was safe and would pay more interest than the investment being liquidated. Of course, the salesman was lying: Fremont Life is an unrated, unstable insurance company, the annuity paid less interest than the old investment, and the salesman failed to disclose to the clients that they would pay a huge surrender charge for withdrawing their money from their prior investment.
Several months later, long after the clients' money had been transferred, the "Alliance for Mature Americans" refused to respond to inquries and "Fremont Life" claimed it had no record of the transfer.
The clients retained me, and within two weeks, their investment money had been returned, their "living trust fee" refunded, and they hired me (for a lower fee) to prepare a proper revocable living trust.
My clients were the lucky ones: thousands of other California seniors lost millions of dollars to this illegal scam.
Legal Action: In July 1996, the State Bar of California and the Attorney General of California jointly filed suit against the "Alliance for Mature Americans" and a number of its attorneys and salespeople. The lawsuit alleged:
The lawsuit sought an injuction against Alliance for Mature Americans and asks for more than $200 million in restitution and $3 million in civil penalities. The suit alleged that the company engaged in unfair and deceptive business practices and the unauthorized practice of law.
Attorney General and State Bar Reach Settlement with Alliance for Mature Americans: In early 1997, the Attorney General's office announced that a settlement was reached with the Alliance for Mature Americans, which agreed to reimburse its clients $1 million in fees to prepare living trusts, and to also pay a $100,000 civil penalty. The company also agreed to stop selling and preparing living trusts for individuals, and to make other major changes in the way it conducts its business. (The State Bar's pending disciplinary actions against the attorneys who worked with the Alliance for Mature Americans have not yet been resolved.)
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