California Attorney General Bill Lockyer and Insurance Commissioner John Garamendi filed a $110 million lawsuit in Los Angeles Superior Court on Feb. 10 against an organization they characterized as a “living trust mill” that allegedly tricked senior citizens into using their retirement investments to buy annuities.
San Diego-based Group Legal Services’ Senior Law Practices Group is named as one of the defendants who, according to the suit, conspired to run the annuity scheme.
In the scheme, victims allegedly made checks for annuities payable to Group Legal Services, which kept a portion of the fee, then forwarded a set fee to a lawyer in Woodland Hills and remitted the balance to Woodland Hills-based Family First Advanced Estate Planning, according to the suit brought by the Attorney General’s Office.
“The perpetrators of this fraud deceived seniors into using their hard-earned retirement nest eggs to buy unneeded annuities that actually undermined their financial security, said Lockyer in a press release.
“Living trust mills such as this one violate not only the law, but the trust of their elderly victims. My office will move aggressively to stop these scam operations which prey on vulnerable consumers,” Lockyer added.
The other defendants named in the lawsuit are: Family First Advanced Estate Planning and Family First Insurance Services of Woodland Hills; Nick A. Michaels, the president of Family First Advanced Estate Planning; John Owen, the president of Family First Insurance Services; American Investors Life Insurance of Kansas; and attorney Thomas R. Lee of Woodland Hills.
According to the complaint, the defendants employed 250 to 300 sales agents and deceptively sold tens of thousands of living trusts and related services, and annuities worth hundreds of millions of dollars.
The complaint seeks more than $40 million in civil penalties and a combined total of at least $70 million in consumer restitution and damages. Additionally, the complaint asks the court to permanently prohibit the defendants from engaging in the alleged unlawful business practices.