The State Bar has joined the California Attorney General in filing a civil suit against an Orange County firm they contend uses scare tactics and unlawful business practices to sell living trusts and annuities to senior citizens.
The lawsuit seeks an injuction against Alliance for Mature Americans and asks for more than $200 million in restitution and $3 million in civil penalities. The suit alleges the company engaged in unfair and deceptive business practices and the unauthorized practice of law.
State Bar President Jim Towery called the suit "an unprecedented type of teamwork." The move underscores the bar's recent efforts to crack down on the unauthorized practice of law, he said.
According to Diane Yu, general counsel of the bar, the alleged actions of the firm raise consumer protection concerns such as the lack of an industry-wide code of ethics and regulation, competence to render advice about living trusts and accountability issues.
The bar alleges the firm engaged in the unauthorized practice of law because sales agents provided legal advice in the course of selling and preparing living trusts. The complaint also alleges that sales representatives used scare tactics to convince seniors to buy living trusts and passed along confidential information to sell annuities. The average age of a client is 73, according to the suit, with some clients suffering from Alzheimer's and Parkinson's diseases.
Agents receive a 30 percent commission on living trust packages, which range from $1,000-$2,000 and an additional 10 percent commission from each annuity they sell, the suit says.
In addition, the suit alleges that the seniors are not informed about early withdrawal penalties and capital gains taxes from liquidating IRAs, some bank accounts and stocks.