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1-SF/7192771.2
FIRST AMENDED CLASS ACTION COMPLAINT
MICHAEL E. MOLLAND, State Bar No. 111830 DAVID M. HALBREICH, State Bar No. 138926 BENJAMIN P. SMITH, State Bar No. 197551 MORGAN, LEWIS & BOCKIUS LLP One Market, Spear Street Tower San Francisco, CA 94105-1126 Tel: 415.442.1000 Fax: 415.442.1001 LOUISE H. RENNE, State Bar No. 36508 INGRID M. EVANS, State Bar No. 179094 RENNE SLOAN HOLTZMAN & SAKAI, LLP 50 California Street, Suite 2100 San Francisco, CA 94111 Telephone: 415.678.3800 Facsimile: 415.678.3838
Attorneys for Plaintiffs, the General Public, and the Proposed Class
SUPERIOR COURT OF THE STATE OF CALIFORNIA
CITY AND COUNTY OF SAN FRANCISCO
CALIFORNIA ADVOCATES FOR NURSING HOME REFORM, INSTITUTE ON AGING, WILMA SIMONDS, JAMES THOMPSON, JOHN EVANSON, DONALD AND SHIRLEY McKIBBEN, JUANITA EZELL, and THE ESTATE OF LEO TRAVIS, by and through EXECUTRIX Charlotte Cook, on Behalf of Themselves and All Others Similarly Situated, and on Behalf of the General Public,
Plaintiffs,
vs.
AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY, AMERIESTATE, INC., AMERICAN INVESTORS LIFE INSURANCE COMPANY, ESTATE PRESERVATION, INC, GENTRY GROUP, INC., FAMILY FIRST ADVANCED ESTATE PLANNING, GROUP LEGAL SERVICES, INC., and Does 1-100, Inclusive,
Defendants.
Case No. 04-435933
FIRST AMENDED CLASS ACTION COMPLAINT FOR:
1. Unlawful Business Practices in Violation of California Business & Professions Code § 17200, et. seq.
2. False and Misleading Advertising in Violation of California Business & Professions Code § 17500, et. seq. 3. Violation of the Consumer Legal Remedies Act, Civil Code § 1750, et. seq. 4. Breach of Fiduciary Duty
5. Elder Abuse: Financial (Welf. & Inst. Code §§ 15600 et seq.)
JURY TRIAL DEMANDED Date Filed: October 29, 2004
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1-SF/7192771. 2 1
FIRST AMENDED COMPLAINT
Plaintiffs California Advocates for Nursing Home Reform, Institute on Aging, Wilma
Simonds, James Thompson, John Evanson, Donald and Shirley McKibben, Juanita Ezell, and the
Estate of Leo Travis, by and through his executrix Charlotte Cook, bring this action as stated
herein against Defendants American Equity Life Insurance Company (“American Equity”),
AmeriEstate, Inc. (“AmeriEstate”), American Investors Life Insurance Company (“AILCO”),
Estate Preservation, Inc. (“EPI”), Gentry Group, Inc. (“Gentry”), Family First Advanced Estate
Planning (“Family First”) and Group Legal Services, Inc. (“Group Legal”) (collectively referred
to as “Defendants”). All plaintiffs bring representative claims as Private Attorney Generals under
Cal. Bus. & Prof. Code §§17200 & 17500, and reserve the right to certify such claims as class
action claims under California Code of Civil Procedure §382. The individual plaintiffs bring
class action claims for violation of the Consumer Legal Remedies Act on behalf of all others
similarly situated pursuant to Cal. Civil Code §1750. Finally, the individual plaintiffs bring
individual claims for breach of fiduciary duty and elder abuse, as described herein.
INTRODUCTION
1. This case concerns an industry specifically designed to exploit and prey upon the
financial insecurities of one of our most vulnerable populations, senior citizens. Defendants
AmeriEstate, EPI, Gentry, Family First, and Group Legal (the “Living Trust Mill Defendants”)
are companies that put on “free” estate planning seminars or meetings in order to learn about the
senior’s assets and manipulate them into purchasing manifestly inappropriate financial
investments for seniors, namely annuities. The Living Trust Mill Defendants target seniors and
use deceptive tactics to pressure seniors into investing their life savings into annuities, even
though such annuities make the seniors’ savings inaccessible for 15 to 20 years (even in the case
of emergencies), carry severe tax penalties, have exorbitant “surrender charges,” and create
complicated estate problems after death. The Living Trust Mill Defendants and their agents use
manipulative and coercive tactics to earn inflated and unconscionable commissions by selling
these annuities at the expense of vulnerable elderly victims.
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1-SF/7192771. 2 2
FIRST AMENDED COMPLAINT
2. American Equity Investment Life Insurance Company and American Investors
Life Insurance Company (the “Insurance Company Defendants”) work in tandem with the Living
Trust Mill Defendants, or some of them, to defraud or mislead seniors. Despite the fact that
industry standards and corporate policies expressly recognize the unsuitability of annuities as
investments to persons over the age of 65, the Insurance Company Defendants ignore these
policies as a business practice, turn a “blind eye” toward the unscrupulous tactics used by the
Living Trust Mill Defendants to sell their products, and routinely issue age limit exceptions in
order to generate tremendous profits. The Insurance Company Defendants and their agents have
been repeatedly warned by governmental entities that living trust mill abuse is an unlawful and
unacceptable business practice. In 2002, then-California Insurance Commissioner Harry Low of
the Department of Insurance (“DOI”) issued a Notice to all insurers and insurance agents stating,
in pertinent part,
a living trust mill is an unlawful marketing scheme designed to accomplish the sale of annuities that is principally used in the solicitation of senior citizens. While the specifics of living trust mills may vary, they all share the common attributes of misrepresentation of identity and purpose. Each misrepresents the actual business of the sales representatives and the true purpose of the solicitation. The initial approach to clients may be to solicit senior citizens at “seminars,” purportedly designed to educate participants about the benefits of living trust and other estate planning devices. The approach may be through mass mailing, telemarketing, door-to-door solicitation, or even while providing entertainment at senior related functions. Regardless of how clients are initially solicited, the sales presentations are basically the same. The representatives misrepresent themselves as experts in estate planning. They gain the trust and confidence of the client, and then misuse that trust to discover the extent of the client’s assets under the pretext of determining whether the client can benefit from the living trust (emphasis added).
3. The Department of Insurance’s Notice and warning went unheeded by the
industry. Because of the lucrative nature of annuity sales (to the tune of as much as $115.6
billion annually), the Insurance Company Defendants continue to conspire with Living Trust Mill
Defendants, utilizing them to do the dirty work of marketing and selling the Insurance Company
Defendants’ annuities to seniors. This action seeks to enjoin all defendants from engaging in
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1-SF/7192771. 2 3
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deceitful, unethical and unconscionable sales practices, and to provide for restitution to the
victims.
NATURE OF DEFENDANTS’ COMMON BUSINESS PRACTICE
4. This action is premised upon AmeriEstate’s, EPI’s, Gentry’s, and Family
First’s/Group Legal’s common business practice which markets and sells living trusts to senior
citizens in order to generate commissions for themselves by selling annuities and other similar
financial products (hereafter “annuities”) to the seniors identified and profiled through this living
trust marketing. Under the pretext of providing estate planning, and masquerading as qualified
financial advisors, estate planners, lawyers, and paralegals eager to assist seniors, the Living Trust
Mill Defendants obtain seniors’ personal financial information, and then use that information to
target prospects to sell them annuities. Based on the information they acquire through their
marketing of living trusts, they then coerce, confuse, and force targeted seniors to later purchase
annuities by misrepresenting the disadvantages of seniors’ current investments and the purported
advantages of the annuities the Living Trust Mill Defendants and their co-conspirators and agents
sell.
5. This is also an action against certain Insurance Company Defendants who
knowingly use Living Trust Mill Defendants as their agents to sell annuities and implicitly and/or
explicitly ratify the unlawful and unfair schemes of the Living Trust Mill Defendants.
6. The scheme begins with the Living Trust Mill Defendants’ marketing of living
trusts. This is often done through television, newsprint, internet, or direct mail advertisements,
which encourage senior citizens to attend “free” meetings and seminars where the estate and tax
benefits of living trusts are explained, “legal” advice is dispensed en masse, and living trusts are
sold, often for less than $400.00 ($400 being the trigger amount for felonies under various
provisions of the California Business and Professions and Penal Codes). In both their
advertisements and seminar speeches, which are well-rehearsed and uniform, Defendants fail to
inform seniors that the seminars and meetings they attend, and the living trusts they are induced
to purchase, are part of a larger scheme to sell annuities to seniors profiled through the marketing
of living trusts.
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7. The seminars and meetings the Living Trust Mill Defendants advertise are held in
seniors’ homes, as well as hotels, senior centers, and other locations such as Veterans of Foreign
Wars and American Legion branches. These and other organizations unwittingly allow these
seminars to be held on their premises because defendants offer to pay them a portion of the
purchase price of each trust sold while withholding from them the true purpose of the seminars.
8. Such meetings and seminars are falsely billed as “community service events that
protect the American family” and “estate planning seminars,” when in fact these meetings consist
of little more than a hard-sell sales pitch for living trusts and an unconscionable vehicle to obtain
financial information from seniors. To ensure the purchase of a living trust, and the receipt of
seniors’ personal financial information, Defendants offer “one day only” discounts on the
purchase price of a living trust, falsely represent that anyone who owns a home or has children
needs a living trust, and further misrepresent that trusts avoid all probate costs and/or allow for
immediate distribution of assets.
9. Once seniors are convinced to purchase a living trust, they are asked to complete
detailed financial questionnaires regarding their income, pensions, social security benefits, IRA
and 401K retirement accounts, securities, life insurance and property holdings. Seniors are
repeatedly reminded not to omit any assets from their worksheets, so the Living Trust Mill
Defendants know exactly who possesses the financial wherewithal to purchase annuities.
Defendants and their agents also use seniors’ financial information to generate the promised
living trust – purportedly prepared by local attorneys retained by Defendants who have neither
met nor counseled the attendees. Once this financial information is in the hands of Defendants,
they misuse it to target their best prospects and sell them annuities.
10. After the trust documents are prepared, Defendants mail or personally deliver the
trust documents back to the target attendees at their homes, often for notarization. In connection
with the delivery of trust documents, or shortly thereafter in connection with their modification,
the Living Trust Mill Defendants and their agents improperly solicit their elderly targets to
liquidate their current investments and assets and invest the proceeds in annuities that will pay the
Living Trust Mill Defendants and agents high commissions. Defendants and their agents do this
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1-SF/7192771. 2 5
FIRST AMENDED COMPLAINT
without providing notice of their intent, without the required qualifications, and without regard or
concern for the appropriateness or suitability of annuities for seniors.
11. Annuities are contracts offered by one or more Insurance Company Defendants,
who knowingly use the marketing services of the Living Trust Mill Defendants as their agents
and conduits to sell annuities. Annuities are designed to provide a stream of income, but only
after a lengthy period, and sometimes as long as 15 to 20 years. Many of these annuities limit, at
least for a decade, an annuitant’s access to their initial investment unless the annuitant is willing
to incur significant “surrender charges” and penalties. Because annuities may require up to two
decades to mature, seniors are unlikely to realize any or full benefit from their investment during
their lifetime, and are unable to access funds trapped in annuities in the event of medical
emergencies or other financial problems. For this reason, the Insurance Company Defendants, as
well as established industry standards, recognize that annuities must be carefully matched to the
needs of those over the age of sixty-five and should not be sold as part of the Living Trust scheme
used by Defendants. Nonetheless, the Living Trust Mill Defendants’ sales personnel and agents
engage in the conduct described above without regard to these needs and are routinely authorized
by one or more of Insurance Company Defendants to waive age limits and issue age exceptions
so that annuities can be sold to their targeted senior prospects.
12. The Insurance Company Defendants fuel living trust mills – and the Living Trust
Mill Defendants – by offering extremely high commissions for the successful sale of annuities
and, on information and belief, provide certain Living Trust Mill Defendants with marketing
funds to hold their living trust seminars and meetings. The sales of annuities have skyrocketed in
the past 15 years. According to the American Council of Life Insurers, premiums on annuities
more than doubled between 1989 and 1999, from $49.4 billion to $115.6 billion. The sale of
variable annuities has, according to a Forbes special report, grown by 1,200 percent over a ten-
year period. This massive increase is due at least in part to high profits the Insurance Company
Defendants earn on annuities. To gain these profits, the Insurance Company Defendants offer
extremely high commissions to agents like the Living Trust Mill Defendants if they will sell their
annuity products for them and, on information and belief, fund certain Living Trust Mill
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1-SF/7192771. 2 6
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Defendants’ seminars. The Living Trust Mill Defendants respond to the lure of high
commissions by churning out the misleading and deceptive marketing practices described herein
to sell annuities for the Insurance Company Defendants. The amount and extent of these
commissions are not disclosed to the consumers who purchase them.
13. Should a targeted senior refuse to purchase an annuity through the Living Trust
Mill Defendants and their agents after a preliminary meeting, Defendants’ marketing machine
simply goes into overdrive. Defendants and their agents send form letters touting the benefits of
annuities. Slick newsletters explaining the purported benefits of annuities – but none of the risks
– are delivered throughout the year. Seniors are advised in still other letters and phone calls that
their living trust needs to be reviewed and updated frequently, yet another pretext designed to
obtain additional face-to-face sales opportunities. Once inside seniors’ homes, Defendants and
their agents – self described “closers” – harangue seniors until they purchase Defendants’ annuity
offerings.
14. All Defendants have either known or should have known for a substantial period
of time that consumers and particularly seniors are prone to confusion caused by their marketing
practices, and the appropriateness of annuities as an investment vehicle through this marketing
practice. Defendant Gentry has been subject to false advertising and unfair practice claims by the
Federal Trade Commission and by several state attorneys general. Moreover, the California
Department of Corporations recently ordered Defendants Gentry and American Equity to cease
and desist from providing investment advice in California, describing Gentry as a “dangerous
operation that targets seniors, luring them into financial situations that are often times unsuitable
for their needs.” For its part, Defendant EPI’s officers and agents were scrutinized by the
California Department of Insurance in 2002 for falsely holding themselves out to seniors as
“financial consultants” during living trust seminars, and thereafter pressuring seniors into
converting individual retirement accounts and certificates of deposit into annuities. In March
2004, Defendants Family First and Group Legal agreed – under pressure from the Washington
Attorney General – to stop all business practices in Washington and to provide restitution to
consumers who succumbed to their “high pressure” sales tactics.
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1-SF/7192771. 2 7
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15. All Defendants have also been on notice that state and federal regulators
disapprove of the operation of “living trust mills” for the sale of annuities to seniors. For
example, last summer, the California Attorney General warned seniors about Defendants’ mills,
and the annuity scams they perpetrate. This summer, the California Department of Corporations
announced a “sweep” of broker/dealers engaged in the fraudulent sale of annuities, noting that
variable annuities are one of the “top ten” investment scams. While some financial service
companies have responded, and informed their agents that “using trusts to generate annuity sales
is inappropriate,” Defendants have placed commissions and profits above all else, and continue
the practice.
16. This action seeks to enjoin Defendants’ unfair, illegal and/or fraudulent business
and marketing practices, as well as Defendants’ practice of misrepresenting both the
appropriateness of annuities for senior citizens and Defendants’ expertise, credentials, and
background. This action also seeks the recovery of restitution and disgorgement of Defendants’
ill-gotten gains including, but not limited to, commissions and profits earned on annuity sales.
Individually, Plaintiffs Wilma Simonds, James Thompson, John Evanson, Donald and Shirley
McKibben, Juanita Ezell, and the Estate of Leo Travis, by and through his executrix Charlotte
Cook, bring claims for breach of fiduciary duty and elder abuse, as set forth below.
JURISDICTION AND VENUE
17. This Court has jurisdiction over this action pursuant to California Code of Civil
Procedure § 410.10. In the aggregate, the damages caused to Plaintiffs and the general public
exceed the jurisdictional minimum of this Court.
18. Venue is proper in the County of San Francisco pursuant to Code of Civil
Procedure §395.5 because, as detailed herein, a substantial number of Defendants’ annuity
contracts were entered into in this County, Defendants and their agents received substantial
compensation from the sales of their products in this County by doing business here, and
Defendants made numerous misrepresentations and/or omissions which had effect in this County.
For example, EPI advertised its free “living trust” seminars in the San Francisco Chronicle at
least three times since June 2004. These advertisements are attached to the Declaration of
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1-SF/7192771. 2 8
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Plaintiff Wilma Simonds, filed herewith, as Exhibit A. EPI also held “living trust” seminars on
numerous occasions in San Francisco.
19. Venue is also proper in this County pursuant to California Civil Code § 1780(c)
because Defendants are doing business in this county, and a substantial number of Defendants’
annuity contracts were entered into in this County.
PARTIES
Individual Plaintiffs
20. Seniors are the segment of our society most vulnerable to financial abuse.
Defendants are targeting senior citizens because they often have substantial assets and disposable
income, and tend to be trusting, lonely, isolated and susceptible to undue influence. Seniors
Against Investment Fraud (SAIF), a division of the California Department of Corporations, found
that 70% of Californians over the age of 50 have been approached by a person seeking to defraud
them and have lost over $3.8 billion to investment fraud.
Wilma Simonds
21. Plaintiff Wilma Simonds is 85 years old, and therefore an “elder” as defined by
Welfare and Institutions Code § 15610.27. On or about 2001, Defendant Gentry – which solicits
customers for estate planning advice in their homes rather than public meeting places – solicited
Ms. Simonds by direct mail to provide estate planning “advice,” even though Gentry’s real goal
was to sell a living trust and then annuities. After touting the purported benefits of living trusts,
Gentry sold a living trust to Ms. Simonds, and retained an unlicensed “attorney” from San
Francisco (Lona L. Monson) to prepare her trust documents, even though she did not need a
living trust to accomplish her financial goals. A Gentry agent delivered the trust documents to
Ms. Simonds and served as a notary for the documents. Thereafter, Gentry and its agents began a
solicitation and harassment campaign to coerce Ms. Simonds to purchase annuities and other
financial products.
22. The campaign began with Gentry agents posing as attorneys at law, and repeatedly
soliciting Ms. Simonds to encourage her to take loans and/or equity lines of credit out on her
home. Agents which solicited Ms. Simonds include Gloria Marguerite Walton, who was recently
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ordered to desist and refrain from advising people to sell securities in order to purchase annuities
by the California Department of Corporations. On information and belief, Gentry and its agents
hoped to convince Ms. Simonds to withdraw equity from her home in order to purchase annuities
and/or other inappropriate financial investments. By August 2003, Gentry’s agents, including
Ms. Walton, tried to convince Ms. Simonds to sign a loan on her home, but the plan was foiled
after Ms. Simonds’ son learned of the plan, and the California Department of Insurance and
police were called.
23. Undeterred, Gentry continued its solicitation efforts through the mail. On or about
August 24, 2004, Gentry wrote to Ms. Simonds claiming that indexed annuities would give her
the “very best of both worlds,” and would enable her to participate “in an up market with ZERO
risk to principal if the market goes down.” And, although Ms. Simonds did not request any
appointment, the letter noted that “A representative from our scheduling center will be calling to
schedule your appointment with the Gentry Retirement Specialist.” Unless Gentry’s unfair and
misleading practices are halted, a significant risk of irreparable harm exists to seniors like Ms.
Simonds.
James Thompson
24. Plaintiff James Thompson is 73 years old, and therefore an “elder” as defined by
Welfare and Institutions Code § 15610.27. Mr. Thompson is a resident of Fortuna, California.
Mr. Thompson saw an advertisement in the local paper for a “free estate planning” seminar by
EPI, which was in reality a high pressure sales pitch designed to sell living trusts and annuities.
The advertisement did not mention that the purchase of a living trust would also lead to the
solicitation for the purchase of annuities by insurance agents sent to the Mr. Thompson’s house.
25. In connection with the seminar, and because of EPI’s misrepresentations that a
living trust would protect his assets in the event he went into in a nursing home, Mr. and Mrs.
Thompson purchased a living trust from EPI.
26. After completing EPI’s financial questionnaire and receipt of living trust
documents, Mr. and Mrs. Thompson were solicited at home by an insurance agent – without
advance notice as required by law – to convert their assets into annuities. Mr. Thompson was
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informed that an annuity was an appropriate investment for him, even though Mr. Thompson was
69 at the time and was sold an annuity from Defendant American Equity that does not mature for
15 years. At no time did EPI’s agent disclose the commission he would earn from the sale of
annuities to Mr. Thompson, nor did he disclose that there was a substantial surrender charge if
Mr. Thompson passes away before the age of 84.
John Evanson
27. John Evanson is 76 years old, and therefore an “elder” as defined by Welfare and
Institutions Code § 15610.27. Mr. Evanson currently resides in an assisted living center in
Vallejo, California because of a heart condition, and attempts to care for his ill wife. Defendant
Gentry provided living trust “services” to Mr. Evanson in his home, and eventually sold him a
living trust, which was prepared by “attorney” Lona M. Monson (the same “attorney” who
provided services to Wilma Simonds). After completion of Mr. Evanson’s living trust, Gentry
and Addison Insurance Marketing agents solicited Mr. Evanson with promises of “quality
insurance products” that are “safe” and “secure.”
28. In or about March 2004, Gentry Agent Stephen Suzuki was able to convince Mr.
Evanson to purchase an annuity from Defendant American Equity that does not mature until 2024
(when Mr. Evanson will be 96), and carries surrender charge penalties of up to 17.5% of the
annuity value until 2020. Agent Suzuki assured Mr. Evanson that cashing out an existing annuity
and replacing it with the American Equity annuity was a wise financial decision. In October,
2004, Mr. Evanson was informed by Gentry that Mr. Suzuki “is no longer affiliated with our
companies (Gentry Group or Addison Insurance Marketing, Inc.) in any respect.”
Donald and Shirley McKibben
29. Donald and Shirley McKibben (the “McKibbens”) are husband and wife, and
reside in Turlock, California. Both Donald McKibben, age 84, and Shirley McKibben, age 76,
are “elders” as defined by Welfare and Institutions Code Section 15610.27.
30. In or about January, 2002, the McKibbens were approached by Sarah M. Johnson,
who identified herself as a representative of Defendant Family First. After presenting a business
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card listing herself as a Family First, Advanced Estate Planning and “Group Legal” agent, Ms.
Johnson told the McKibbens that their current living trust needed to be updated.
31. On January 9, 2002, the McKibbens executed a contract with Group Legal, under
which Group Legal was to prepare an "AB" Trust for the McKibbens in exchange for
consideration of $1,295.00. The contract was signed by Ms. Johnson on behalf of Defendants
Family First and Group Legal.
32. On or about March 1, 2002, Felix M. Rivera delivered a trust package to the
McKibbens on behalf of Group Legal. Mr. Rivera identified himself as a Family First and
“Group Legal” representative, and presented a business card identical to that of Ms. Johnson in all
respects other than name to the McKibbens. After the McKibbens executed the trust, Mr. Rivera
attempted, several times, to persuade the McKibbens to convert an annuity they then held to
another annuity to be sold by a company from San Diego (Group Legal is also based in San
Diego). Mr. Rivera coached the McKibbens on how to talk to their current investment manager
so as to allow the conversion, and stated that he and the McKibbens were “joined at the hip.”
33. After the McKibbens informed Mr. Rivera that their daughter worked for Adult
Protection Services, and that any decision would first need to be discussed with her, Mr. Rivera
never again contacted the McKibbens.
Juanita Ezell
34. Juanita Ezell is 74 years old, and therefore an “elder” as defined by Welfare and
Institutions Code § 15610.27. Ms. Ezell resides in Livermore, California, and attended a living
trust seminar of Defendant EPI at the Elks Club in Livermore on or about mid 2000. Ms. Ezell
attended the seminar after her daughter showed her an EPI advertisement her daughter received in
the mail. Concerned about her children, and following the death of her husband, she attended the
seminar.
35. At the seminar, and thereafter, it was represented to Ms. Ezell that the purchase of
an annuity would render her eligible for state medical benefits and that should she ever be placed
in a nursing home, her assets would be shielded from nursing home costs.
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36. Ms. Ezell purchased a living trust from EPI for $399.00, and disclosed her assets
in connection with the completion of the trust paperwork. Thereafter, EPI agent Victor
Pantaleoni – representing himself as an attorney – visited Ms. Ezell and convinced her to convert
her sole remaining asset ($157,000 held in a Wells Fargo money market account) into an annuity
from Defendant American Equity. Ms. Ezell was again told that should she require nursing home
care in the future, her assets would be protected through the purchase of an American Equity
annuity.
37. Ms. Ezell was sold an annuity that does not mature until October 2026 (when Ms.
Ezell will be 95), and carries large surrender charge penalties of between 15% and 17.5% until
2006, with diminished but equally onerous surrender charges thereafter. Agent Pantaleoni
assured Ms. Ezell that cashing out her money market account (her only asset) and replacing it
with an American Equity annuity was a wise financial decision, but when Ms. Ezell called
repeatedly to inquire about her annuity, none of her calls were returned.
Estate of Leo Travis
38. Prior to his death at the age of 82 in January 2003, Leo Travis was an “elder” as
defined by Welfare and Institutions Code § 15610.27. Mr. Travis was an aviator residing in
Sacramento, California. The Estate of Leo Travis, by and through executrix Charlotte Cook, sues
Defendants on behalf of the Estate.
39. Mr. Travis was solicited by Defendant Gentry (Addison Insurance Marketing) for
estate planning, even though the goal and intent of Gentry was to sell a living trust and gain
access to Mr. Travis’ personal financial information. Responding to Gentry’s solicitation, Mr.
Travis purchased a living trust, and was thereafter repeatedly solicited and pressured to convert
investments with other companies, including Merrill Lynch, to purchase seven separate annuities
from Gentry. Gentry encouraged this conversion, and sold annuities to Mr. Travis, even though
Gentry was not licensed by the California Department of Corporations as an investment advisor,
the annuities would not mature for years, and, at the time of sale, Mr. Travis was already in poor
health, frail and blind. The annuities were issued by Defendant American Equity, who either
knew or should have known that annuities were inappropriate for Mr. Travis.
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40. Because of errors in the creation of Mr. Travis’ living trust, and the fact that
Gentry failed to retain and/or provide qualified attorneys to create and review Mr. Travis’ living
trust, the Estate of Mr. Travis incurred severe tax penalties upon Mr. Travis’ death.
Association Plaintiffs
California Advocates for Nursing Home Reform
41. Plaintiff California Advocates for Nursing Home Reform (“CANHR”) is a not-for-
profit California public benefit corporation, with its registered office in San Francisco, California.
Since 1983, CANHR has fought for the rights of long-term care residents in California by, among
other things, providing consumer information, aiding residents and their families in finding legal
services and prosecuting cases, and providing legal and other assistance to California seniors in
nursing homes who have been victimized by elder financial abuse.
42. The members of CANHR who have been misled and deceived by the acts and
practices alleged herein could sue the named Defendants in their own right, but in many cases are
unable to do so because they lack access to legal services, are elderly, and reside in long-term
care homes. CANHR seeks here injunctive relief and restitution for its members, and on behalf
of others similarly situated and the general public, pursuant to California Business & Professions
Code §§ 17200 and 17500.
Institute on Aging
43. Plaintiff Institute on Aging (“IOA”) is a not-for-profit California public benefit
corporation, with its registered office in San Francisco, California. Since 1985, IOA has fought
for the rights of senior citizens in California by, among other things, providing senior health
services, supporting seniors living independently at home, providing specialized services for
seniors with memory impairment, education, elder abuse prevention and research.
44. The members of IOA who have been misled and deceived by the acts and practices
alleged herein could sue the named Defendants in their own right, but in many cases are unable to
do so because they lack access to legal services, have memory deficiencies, are elderly, and reside
in long-term care homes. IOA seeks here injunctive relief and restitution for its members, and on
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behalf of others similarly situated and the general public, pursuant to California Business &
Professions Code §§ 17200 and 17500.
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Defendants
The Living Trust Mill Defendants
AmeriEstate Legal Plan, Inc.
45. Defendant AmeriEstate Legal Plan, Inc. (“AmeriEstate”) is a California
corporation whose corporate headquarters are located at 2151 Michelson Drive, Suite 220, Irvine,
California. AmeriEstate transacts business in San Francisco, California, and at all relevant times,
engaged in the acts described herein in San Francisco, California, among other locales.
46. AmeriEstate maintains other offices in Arizona, North Carolina, Ohio,
Pennsylvania, Tennessee, Texas, and Virginia. On its website, AmeriEstate represents that the
company was “established to provide individuals and families with effective legal
representation,” even though AmeriEstate is not a law firm, and not authorized to practice law.
47. AmeriEstate advertises “estate planning seminars” throughout the country with
misleading and deceptive claims that the seminars are “FREE community service events,” and by
falsely suggesting that its free seminars are endorsed and/or approved by Elks, Kiwanis, Rotary,
Veterans of Foreign Wars, and church organizations. AmeriEstate’s goal in holding these “estate
planning seminars” is to sell living trusts, obtain private financial information from seniors, and
thereafter sell annuity products to seniors.
48. Last year, AmeriEstate was fined – and ordered to offer refunds to defrauded
customers – by the Pennsylvania Attorney General. The Attorney General charged that
AmeriEstate’s estate planning seminars included the provision of legal advice, and that
AmeriEstate’s speakers engaged in unfair sales tactics to sell living trusts to seniors.
Estate Preservation, Inc.
49. Defendant Estate Preservation, Inc. (“EPI”) is a Nevada corporation with its
principal place of business located at 360 North Sepulveda Boulevard, Suite 1064, El Segundo,
California. EPI transacts business in San Francisco, California, and as recently as September 9,
2004 held a “living trust seminar” at the Cathedral Hill Hotel in San Francisco, California.
Moreover, EPI routinely purchases large advertisements in newspapers such as the San Francisco
Chronicle that attempt to induce seniors to attend their seminars by claiming that “Your family’s
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assets are in danger!” On its web-site, EPI claims to be “#1 in California” with over 40,000
living trusts created. It’s web-site also provides “legal” advice to frequently asked questions such
as “If I have a Living Trust, do I still need a will?;” “Who is in charge of my Trust?;” and “Who
should I name as a Successor Trustee?” Copies of EPI’s advertisements in the San Francisco
Chronicle are attached as Exhibit A to the Declaration of Wilma Simonds.
50. Paul and/or Sinclair Noe are the founders of EPI. On information and belief, EPI
is the successor corporation and mere continuation of other companies owned and/or controlled
by members of the Noe family, including Estate Planning of California (“EPoC”), Estate Planning
and Investment Company (“EPICO”), and the American Association of Independent Paralegals
(“AAIP”). Mr. Paul Noe and/or Robin Goltsman Noe controlled and/or managed EPoC, EPICO,
and AAIP. These three companies have used the same and/or similar advertising as EPI, and
engaged in the fraudulent, unfair, and deceptive practices alleged herein. As a successor and
mere continuation of EPoC, EPICO, and AAIP, EPI is liable for all of their acts and practices
alleged herein.
51. EPI, like the other defendants, is in the business of holding “estate planning
seminars” which in fact are sales presentations for living trusts and “mining operations” to profile
seniors for annuities. On or about June 28, 2002, the California Department of Insurance filed
accusations against Robin Goltsman Noe, a “control person” of both EPI and AAIP, as well as
another related organization. The Department of Insurance detailed various violations of the
Insurance Code, as well as a series of high-pressure and fraudulent sales tactics used against
seniors to sell annuities, including the sale of annuities through Defendant American Equity.
52. On September 16, 2004, the California Department of Insurance issued a cease and
desist order against Mr. Paul Noe for improperly acting as a sales agent without proper licensure.
The order was prompted by Mr. Noe and EPI’s sale of a living trust to a California resident, and
subsequent sale of approximately $400,000 in annuities.
53. Despite these regulatory efforts against EPI, it continues to target seniors across
the country with the lure of living trust seminars and the creation of inexpensive living trusts.
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Gentry Group, Inc. a.k.a. Addison Insurance Marketing, Inc. and The Addison Group
54. Defendant Gentry Group, Inc. a.k.a. Addison Insurance Marketing, Inc. and The
Addison Group (“Gentry”) is a Texas corporation conducting business in California, and
maintaining offices in this state, including “Gentry Group Locations” in San Ramon and Fountain
Valley, California. Neither Gentry nor its Chief Executive Officer, Michael Paul McIntyre, have
applied for or secured certificates to conduct business as investment advisors in California.
Nonetheless, Gentry is in the business of marketing and selling annuities throughout the state. On
its web site, Gentry recruits sales personnel who “have experience selling and are proven closers”
and are willing to join the “Gentry Crusade.”
55. On or about July 20, 2004, the California Department of Corporations issued a
Desist and Refrain Order against Gentry, Gentry President Michael McIntyre, and Defendant
American Equity ordering them to “desist and refrain from advising people to sell securities to
buy annuities.” The order was prompted by Gentry’s solicitation of a 78 year-old California
woman who was unknowingly induced by Gentry to sell approximately $100,000 in securities
and purchase two annuities through Gentry from Defendant American Equity.
56. The actions of the California Department of Corporations against Gentry are
simply the latest unsuccessful efforts to curb the unfair and deceptive practices of Gentry, its alter
ego corporate entities, and its president Michael McIntyre. For example, in 1997, the Federal
Trade Commission obtained a cease and desist order against Mr. McIntyre, which prohibited Mr.
McIntyre from making a number of misrepresentations, including claims that living trusts avoid
all probate and administrative costs, living trusts have no disadvantages, and a living trust cannot
be challenged, among others. In 2001, the Attorney General of Oregon brought charges against
Mr. McIntyre and Addison Insurance Marketing for operating a “living trust mill” which targeted
seniors and pressured them into buying trusts and annuities. The claims were resolved with an
agreement by Mr. McIntyre that he would not engage in insurance sales tied in any way to the
sale of estate-planning documents.
57. Despite these and other stern admonishments, Gentry continues the false, unfair,
and misleading practices alleged herein. Indeed, Mr. McIntyre recently boasted of Genrty’s
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success by submitting to an interview regarding corporate jets for the June 2004 edition of
Fortune Small Business. In connection with the interview, Mr. McIntyre touted his recent family
vacations using Gentry’s Cessna Citation III, including vacations in Venice, Italy (costing
$132,000 for air travel alone), Disney World, Napa Valley, and Cancun, among other locales.
Family First, Advanced Estate Planning
58. Defendant Family First is a California corporation with its headquarters in
Woodland Hills, California. Family First also maintains offices in other cities in California.
Family First is a wholly-owned subsidiary of AmerUs Annuity Group of Topeka, Kansas.
Defendant American Investors Life Insurance Company is also a wholly-owned subsidiary of
AmerUs. On information and belief, Family First is somehow affiliated with Defendant Group
Legal Services for the sale of living trusts and annuities to seniors.
59. Like Defendant Gentry, Family First solicits California residents to purchase living
trusts through face-to-face meetings at seniors’ homes, including Plaintiffs Donald and Shirley
McKibben. During these meetings, Family First and its agents provide erroneous legal advice
and advice regarding the need for or effect of living trusts. On information and belief, Family
First engages in these acts to sell annuities, including annuities sold through its affiliated
corporation, Family First Insurance Services, and its co-subsidiary Defendant American Investors
Life Insurance Company.
60. Earlier this year, Family First entered into a Assurance of Discontinuance in King
County Superior Court (Seattle, Washington), requiring it to cease all living trust sales in the state
of Washington, provide a list of its Washington “clients” to Washington authorities, and refund
Washington consumers’ money. Family First was accused of making misrepresentations during
sales presentations and engaging in high-pressure sales tactics.
Group Legal Services, Inc.
61. Defendant Group Legal Services, Inc. is a California corporation with its principal
place of business in San Diego, California.
62. Like the other Living Trust Mill Defendants, Group Legal solicits California
residents to purchase living trusts through face-to-face meetings at seniors’ homes, including
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Plaintiffs Donald and Shirley McKibben. On information and belief, Group Legal engages in
these acts to sell annuities in connection with Defendant Family First, and acts as the co-
conspirator, agent, servant, partner, joint venturer, successor, assign, or aider and abettor of
Family First.
63. Earlier this year, Group Legal (along with Family First) entered into a Assurance
of Discontinuance in King County Superior Court (Seattle, Washington), requiring it to cease all
living trust sales in the state of Washington, provide a list of its Washington “clients” to
Washington authorities, and refund Washington consumers’ money. Group Legal (along with
Family First) was accused of making misrepresentations during sales presentations and engaging
in high-pressure sales tactics.
64. The names of other Living Trust Mill Defendants, sued herein as Does 1-50, are
presently unknown to Plaintiffs, who therefore sue such Defendants in this action by such
fictitious names. Each of the Defendants designated herein as a Doe is legally responsible in
some manner for the unlawful acts referred to herein. Plaintiffs will seek leave of the Court to
amend this complaint to reflect the true names and capacities of the Defendants designated as
Does 1-100 as and when their identifies become known.
The Insurance Company Defendants
American Equity Investment Life Insurance Co.
65. Defendant American Equity Investment Life Insurance Co. is an Iowa corporation
conducting business in California, and with a registered agent for service of process in
Sacramento, California. This summer, American Equity, along with Defendant Gentry, was
ordered to “desist and refrain from advising people to sell securities to buy annuities.” According
to the California Department of Corporations, American Equity derives its primary income from
sales of annuities and other life insurance products to senior citizens. American Equity has also
been implicated in unfair, misleading, and deceptive annuity sales practices in connection with
Defendant EPI.
66. American Equity issues the annuity contracts sold to seniors, and pays its agents
(including Defendant Gentry) substantial commissions for those sales. American Equity, in turn,
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receives substantial profits from the sale of annuities to seniors, even though American Equity
knows, or should know, that annuities are an inappropriate investment for those over age 65.
American Equity has waived age limits on annuity policies for senior citizens, including annuity
policies sold to Plaintiff Travis. On information and belief, American Equity has also approved
and/or ratified misleading and deceptive marketing plans designed to target senior citizens,
approved and/or ratified the sale of annuities to consumers it knows to be inappropriate, and
offered large commissions to various Living Trust Mill Defendants to improperly induce the sale
of annuities to senior citizens.
67. American Equity has known, or should have known, for a substantial period of
time that Living Trust Mills Defendants’ (including, but not limited to, Gentry’s) marketing
practices are unfair and misleading, that the sale of living trusts to generate annuity sales is
inappropriate, and that annuities are inappropriate for seniors over the age of 65. Nonetheless,
American Equity has continued to sell annuities to Plaintiffs through the Living Trust Mill
Defendants, earning substantial profits along the way.
American Investment Life Insurance Co.
68. Defendant American Investment Life Insurance Co. (“AILCO”) is an insurance
and annuity company based in Topeka, Kansas, and registered to do business in California.
AILCO is a wholly-owned subsidiary of Amerus Annuity Group, which is in turn a wholly-
owned subsidiary of AmerUs GroupCo., a Des Moines, Iowa holding company whose
subsidiaries, including AILCO and Family, are engaged in the improper sale of annuities to senior
citizens.
69. AILCO issues the annuity contracts sold to seniors, and pays its agents, including
on information and belief Defendant AmeriEstate or AmeriEstate’s agents or Defendant Family
First or Group Legal or their agents, substantial commissions for those sales. AILCO, in turn,
receives substantial profits from the sale of annuities to seniors, even though AILCO knows, or
should know, that annuities are an inappropriate investment for those over age 65. On
information and belief, AILCO has waived age limits on annuity policies for senior citizens,
approved and/or ratified misleading and deceptive marketing plans designed to target senior
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citizens, or offered commissions to one or more of the Living Trust Mill Defendants to
improperly induce the sale of annuities to senior citizens.
70. The names of other Insurance Company Defendants, sued herein as Does 51-100,
are presently unknown to Plaintiffs, who therefore sue such Defendants in this action by such
fictitious names. Each of the Defendants designated herein as a Doe is legally responsible in
some manner for the unlawful acts referred to herein. Plaintiffs will seek leave of the Court to
amend this complaint to reflect the true names and capacities of the Defendants designated as
Does 1-100 as and when their identifies become known.
71. Each Living Trust Mill Defendant and each Insurance Company Defendant was at
all relevant times the co-conspirator, employee, servant, partner, joint venturer, successor, assign,
aider or abettor of one or more other Defendants with respect to the wrongful conduct alleged
herein. In addition each Insurance Company Defendant used one or more of the Living Trust
Defendants as its agent or conduit to sell its annuities or other financial products. Each was
acting within the course and scope of said conspiracy, agency, employment and/or joint venture
and with the permission and consent of each other, and each is responsible and liable in some
manner for the damages or injuries sustained or threatened to be sustained by Plaintiffs.
Representative and Class Action Allegations
72. Without prejudice to later expansion or modification, Plaintiffs in this action bring
both representative, class action, and individual claims. First, all Plaintiffs bring claims under
Cal. Bus. & Prof. Code §§17200, et seq. and 17500 against all Defendants. Plaintiffs assert such
claims as representative claims, and as Private Attorney Generals, under Cal. Bus. & Prof. Code
§§17204 and 17535. The purpose of such a claim is to enjoin Defendants from engaging in the
unfair business practices and false advertising alleged in this Complaint, and to require
Defendants to restore to the affected members of the General Public all monies wrongfully
obtained by Defendants through their false advertising and unfair business practices. A Private
Attorney General Action is necessary and appropriate because Defendants have engaged in the
wrongful acts and false advertising described herein as a general business practice.
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73. Second, all individual Plaintiffs – i.e. Simonds, Thompson, Evanson, the
McKibbens, Ezell, and the Estate of Leo Travis – bring class action claims for violation of the
Consumer Legal Remedies Act against the Living Trust Mill and/or Insurance Company
Defendants that respectively solicited each of the individual Plaintiffs to purchase a living trust
and/or annuity. Class treatment for these claims under the CLRA is appropriate because bringing
all members of the class (or, if necessary, sub-classes) before the court would be impracticable,
substantially similar questions of law and fact exist among class (or, if necessary, sub-class)
members, the claims of the various individual plaintiffs against the Living Trust Mill and/or
Insurance Company Defendants they transacted business with are typical of many other
consumers, and the individual plaintiffs are competent and adequate representatives of others
harmed in the same way.
74. If for any reason the individual Plaintiffs’ claims under the CLRA cannot be
certified for class treatment, Plaintiffs will assert such claims individually.
75. Finally, each of the individual Plaintiffs assert individual claims for financial elder
abuse and breach of fiduciary duty, as alleged below.
76. Plaintiffs explicitly reserve the right to add additional class action claims at a later
time, if appropriate.
REPRESENTATIVE CLAIMS
FIRST CAUSE OF ACTION
(Violation of California Business & Professions Code § 17200, et seq.)
(Brought By All Plaintiffs Against All Defendants)
77. Plaintiffs hereby incorporate the above allegations by reference as if set forth fully
herein.
78. Defendants have engaged in and continue to engage in unlawful, unfair,
fraudulent, untrue, and business acts and practices likely to deceive members of the general
public whereby Defendants target the elderly with sales tactics designed to scare, deceive, coerce,
confuse, and/or force seniors into converting their liquid assets and investments into annuities. In
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order to effectuate their sales practices, Defendants masquerade as lawyers and/or financial
advisors in order to earn large commissions.
79. Defendants gained the trust of seniors and induced them into disclosing their
financial assets in order to set up a living trust. Once Defendants obtained access to seniors’
financial information, they solicit, market, pressure, and harass seniors into purchasing an
annuity, all the time knowing that annuities are inappropriate investments for seniors.
80. Moreover, Defendants misrepresent and/or omit the benefits and disadvantages of
having an annuity, and the access seniors would have to their annuity investment.
81. By engaging in the above-described acts and practices, Defendants have
committed one or more acts of unfair competition within the meaning of California Business &
Professions Code §§ 17200, et seq.
82. Defendants’ acts and practices as described herein have deceived and/or are likely
to deceive members of the consuming public.
83. The acts and practices of Defendants are unlawful because they violate one or
more of the following: the Consumer Legal Remedies Act, California Civil Code § 1750, et seq.;
California Business & Professions Code § 17500, et seq., § 17500.3; California Insurance Code
§§ 762, 785 et. seq., 789.8 et. seq., 790 et. seq., 791.03 et. seq., 1861.03; California Business &
Professions Code §§ 6125, et. seq., 6126 et. seq., 6175.3, 6175.4, 6450; Welfare and Institutions
Code §§ 15610.30 and 15657; California Civil Code § 1575; and/or California Penal Code §§ 368
et seq., 459, 484, 487, and 532.
84. Each Defendants aided and abetted, encouraged, and rendered substantial
assistance to one or more Defendants in accomplishing the wrongful acts complained of herein.
In aiding and abetting and substantially assisting the commission of the acts complained of, each
such Defendant acted with an awareness of their wrongdoing and realized that their conduct
would substantially assist the accomplishment of the wrongful conduct alleged herein.
85. Unless Defendants are enjoined from continuing to engage in the unlawful, unfair,
fraudulent, untrue, and deceptive business acts and practices as described herein, members of the
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General Public residing within the United States, including California, will continue to be
damaged.
86. So as not to be unjustly enriched by their own wrongful conduct, Defendants
should be required to provide restitution and disgorge all monies wrongfully obtained by
Defendants as a result of its unfair competition, including, but not limited to, the purchase price of
falsely-advertised living trust seminars and Defendants’ commissions and profits from the sale of
annuities, together with interest thereon.
SECOND CAUSE OF ACTION
(Violation of California Business & Professions Code § 17500, et seq.)
(Brought By All Plaintiffs Against All Defendants)
87. Plaintiffs hereby incorporate the above allegations by reference as if set forth fully
herein.
88. The Living Trust Mill Defendants have purposefully and intentionally engaged in
advertising to directly or indirectly induce seniors to purchase living trusts and annuity products.
Letters and marketing materials prepared by Defendants, as well as web-site information and
information provided at seminars, are tailored to attract a class of retired individuals, over the age
of 65, who own homes, but who are unsophisticated in investing and vulnerable to such
marketing ploys. The marketing materials are designed to exploit the seniors’ insecurity and fear
about their finances. On information and belief, the Insurance Company Defendants help fund
these marketing and advertising efforts.
89. Defendants fail to disclose to Plaintiffs, or the General Public, that their “living
trust seminars” are not, in fact, community service events or estate planning seminars, but instead
are sales presentations. Defendants also falsely advertise the purposes and intents of their
preparation of living trusts, which are designed to gather personal financial information and allow
for further marketing of improper financial products. Finally, Defendants falsely advertise the
appropriateness of annuities as investment vehicles. Defendants do not disclose that annuities
may be inappropriate for seniors because of their life expectancies and their need for liquidity in
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the event of health care emergencies, the need to reside in a nursing home, or other financial
situations.
90. For example, as part of its marketing campaign, Defendant Gentry prepared and
mailed several issues of “Perspectives,” a newsletter designed to prey on seniors’ insecurities. In
an issue entitled “10 Reasons Fixed Annuities are Better than CDs for Seniors,” Gentry urged “a
conservative strategy free of risky mutual funds, stocks or other investments in which principal
can be lost.” Defendant EPI makes the same claims with regard to annuity products in its
“Updates” newsletter, mixing advice regarding living trusts, Medi-Cal, and annuities with which
seniors purportedly “cannot lose.”
91. In making and disseminating the statements and advertisements alleged herein,
Defendants knew or should have known that the statements were untrue or misleading, and were
in violation of California Business & Professions Code § 17500, et seq.
92. Each Insurance Company Defendant aided and abetted, encouraged, and rendered
substantial assistance to one or more Living Trust Mill Defendants in accomplishing the wrongful
acts complained of herein. In aiding and abetting and substantially assisting the commission of
the acts complained of, Defendants acted with an awareness of their wrongdoing and realized that
their conduct would substantially assist the accomplishment of the wrongful conduct alleged
herein.
93. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiffs,
members of the class and the General Public have suffered monetary and non-monetary damage.
94. Unless Defendants are enjoined from continuing to engage in such wrongful
actions and conduct, members of the General Public will continue to be damaged by Defendants’
false and/or misleading advertising.
95. So as not to be unjustly enriched by its own wrongful actions and conduct,
Defendants should be required to disgorge and restore to Plaintiffs and the General Public all
monies wrongfully obtained by Defendants as a result of its false and/or misleading advertising,
together with interest thereon.
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CLASS ACTION CLAIM
THIRD CAUSE OF ACTION
(Violation of California Civil Code § 1750, et seq.)
(Brought by Plaintiffs Simonds, Thompson, Evanson, Don and Shirley McKibben, Ezell, and Estate of Leo Travis Against Defendants American Equity, EPI, Gentry, Family First and Group
Legal)
96. Plaintiffs hereby incorporate the above allegations by reference as if set forth fully
herein.
97. Plaintiffs bring this cause of action on behalf of the class seeking permanent relief
pursuant to the Consumer Legal Remedies Action, Civil Code § 1750, et seq. (“CLRA”).
98. The CLRA applies to Defendants’ actions and conduct described herein because it
extends to transactions that are intended to result, or which have resulted, in the sale or lease of
goods or services to consumers.
99. Plaintiffs and each member of the Class are “consumers” within the meaning of
California Civil Code § 1761(d).
100. The living trusts and/or annuities that Defendants sell to seniors are “goods”
within the meaning of Civil Code § 1761(a). The sale of living trusts and/or annuities to senior
citizens constitutes a “transaction” pursuant to Civil Code § 1761(c).
101. Defendants have violated, and continue to violate, the CLRA in at least the
following respects.
(a) in violation of Civil Code § 1770(a)(5), Defendants have represented that
the living trust and/or annuity products they sell have characteristics and
benefits the products do not have;
(b) in violation of Civil Code § 1770(a)(14), Defendants have represented that
a transaction confers or involves rights which the transaction does not
have.
102. Each Defendant aided and abetted, encouraged, and rendered substantial assistance
to one or more other defendants in accomplishing the wrongful acts complained of herein. In
aiding and abetting and substantially assisting the commission of the acts complained of,
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Defendants acted with an awareness of their wrongdoing and realized that their conduct would
substantially assist the accomplishment of the wrongful conduct alleged herein.
103. Unless Defendants are permanently enjoined from continuing to engage in such
violations of the CLRA, other senior citizens will be damaged by its acts and practices in the
same way as have Plaintiff and other members of the proposed class.
104. Pursuant to Civil Code § 1780(a)(3), Plaintiffs and members of the class seek
restitution. Plaintiffs and the members of the class also seek statutory penalties of $5,000 per
senior harmed by Defendants’ practices, pursuant to Civil Code § 1780(b), as well as their costs
and reasonable attorney’s fees, pursuant to Civil Code § 1780(d). Plaintiffs and members of the
Class further request that this Court to enjoin Defendants from continuing to employ the unlawful
methods, acts, and practices alleged above in whatever context it occurs, pursuant to Civil Code §
1780(a)(2).
Notice Pursuant to Civil Code § 1782
Plaintiff hereby demands that within 30 days from service of this Complaint, Defendants
correct, repair, replace or otherwise rectify the deceptive practices complained of herein for
the entire Class pursuant to Civil Code § 1770. Failure to do so will result in Plaintiff
amending this Complaint to seek damages for such deceptive practices pursuant to Civil
Code § 1782.
INDIVIDUAL CLAIMS
FOURTH CAUSE OF ACTION
(Breach of Fiduciary Duty)
(Brought by Plaintiffs Thompson and Ezell against EPI and American Equity, by Plaintiffs Don and Shirley McKibben against Family First and Group Legal, and by Plaintiffs Simonds, Evanson
and Estate of Leo Travis Against Gentry and American Equity)
105. Plaintiffs hereby incorporate the above allegations by reference as if set forth fully
herein.
106. By reason of their purported positions as lawyers, financial advisors, and estate
planning specialists, and because of their superior knowledge and ability to manipulate and
control seniors’ finances and legal status and by providing “estate planning,” legal, and
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investment advice and counseling to senior citizens. Defendants as described above assumed
fiduciary duties to Plaintiffs.
107. Defendants as described above owed to Plaintiffs fiduciary obligations of fidelity,
trust, loyalty, and due care and were and are required to use their utmost ability to provide estate
planning and investment advice in a fair, just, and equitable manner, and to act in furtherance of
the best interests of Plaintiffs and the class so as to benefit their clients, and not themselves.
108. As set forth above, Defendants violated and breached their fiduciary duties of care,
loyalty, reasonable inquiry, oversight, good faith, and supervision.
109. Defendants performed the acts complained of herein with the intent of gaining
their own financial advantage to the disadvantage of the Plaintiffs as set forth above.
110. The Insurance Company Defendants were the principals of and aided and abetted
one or more of the Living Trust Mill Defendants as set froth above, and encouraged and rendered
substantial assistance to each other in accomplishing the wrongful acts complained of herein. In
so aiding and abetting and substantially assisting the commission of the acts complained of,
Defendants acted with an awareness of their wrongdoing and realized that their conduct would
substantially assist the accomplishment of the wrongful conduct alleged herein.
111. As a result of the wrongful conduct of Defendants, and each of them, Plaintiffs and
the class have suffered and continue to suffer economic and non-economic losses, all in an
amount to be determined according to proof at trial.
112. On information and belief, the wrongful acts of Defendants, or some of them, were
done maliciously, oppressively, and with the intent to mislead and defraud, and Plaintiffs are
entitled to punitive and exemplary damages, as appropriate to punish and set an example of
Defendants, pursuant to Civil Code § 3294, et. seq.
FIFTH CAUSE OF ACTION
(Financial Elder Abuse, Welf. & Ins. Code § 15600, et. seq.)
(Brought by Plaintiffs Thompson and Ezell against EPI and American Equity, by Plaintiffs Don and Shirley McKibben against Family First and Group Legal, and by Plaintiffs Simonds,
Evanson, and Estate of Leo Travis Against Gentry and American Equity)
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113. Each Plaintiff named above hereby incorporates the above allegations by reference
as if set forth fully herein.
114. At all relevant times, each Defendant had a fiduciary relationship to each Plaintiff
as alleged above in that they provided estate planning and/or financial advise to such Plaintiffs.
Plaintiffs gave Defendants access to their financial information so that Defendants could create a
living trust for their assets. Plaintiffs placed their confidences in the advice that was given to
them by Defendants.
115. Defendants manipulated Plaintiffs as set forth above into purchasing a living trust
in order to have access to their financial information with the intent to defraud them into
purchasing an annuity.
116. Defendants knew or should have known that the information they requested from
Plaintiffs as set forth above – purportedly for preparation of a living trust – was requested for an
improper purpose and by means of coercion and intimidation.
117. Each Defendant aided and abetted, encouraged, and rendered substantial assistance
to one or more other Defendants as set forth above in accomplishing the wrongful acts
complained of herein. In aiding and abetting and substantially assisting the commission of the
acts complained of, Defendants acted with an awareness of their wrongdoing and realized that
their conduct would substantially assist the accomplishment of the wrongful conduct alleged
herein. In performing these acts each Defendant as alleged above either acted as agents of the
Insurance Defendants or the Insurance Defendants ratified such acts, or both.
118. Defendants’ conduct constitutes financial abuse under Welfare and Institutions
Code § 15657 as defined in Welfare and Institutions Code § 15610.30.
119. Defendants’ conduct was reckless, oppressive, fraudulent and malicious within the
meaning of Welfare and Institutions Code § 15657.
120. Under Welfare and Institutions Code § 15657(a), Defendants are liable for
reasonable attorney fees and costs for the investigation and litigation of this claim.
121. Under Civil Code § 3294 and Welfare and Institutions Code § 15657(a),
defendants are liable for punitive damages.
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122. Under Civil Code § 3345, Defendants as set forth above are liable for treble
damages and penalties because: (a) Defendants knew or should have known their conduct was
directed to a senior citizen and/or a disabled person; (b) Defendants’ conduct caused a senior
citizen and/or disabled person to suffer substantial loss of property set aside for retirement, and of
assets essential to their health and welfare; and (c) Plaintiffs are senior citizens and/or disabled
persons substantially more vulnerable than other members of the public to Defendants’ conduct
because of their age, impaired understanding, impaired health and/or restricted mobility, and they
actually suffered substantial physical, emotional and economic damages resulting from
Defendants’ conduct.
123. Under Welfare and Institutions Code § 15657(b) Defendants are liable to Plaintiffs
for their pain and suffering.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs, on behalf of themselves, members of the Class defined herein,
and as private Attorney Generals on behalf of the General Public, pray for judgment against
Defendants as follows:
1. For a temporary, preliminary and/or permanent order for injunctive relief enjoining
Defendants from pursuing the policies, acts and practices complained of herein;
2. For a temporary, preliminary and/or permanent order for injunctive relief requiring
Defendants to undertake an immediate public information campaign to inform
members of the general public as to their prior practices and notifying the
members of the proposed Class as to the presence of potential restitutionary relief;
3. For an order requiring disgorgement of Defendants’ ill-gotten gains and to pay
restitution to Plaintiffs and all members of the Class and the General Public all
funds acquired by means of any act or practice declared by this Court to be
unlawful, fraudulent or unfair, or found to be a violation of any law, statute or
regulation;
4. Assuming later certification of this action as a class action, for distribution of any
moneys recovered on behalf of members of the Class via fluid recovery or cy pres
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recovery where necessary to prevent Defendants from retaining any of the profits
or benefits of their wrongful conduct;
5. For reasonable attorneys’ fees and costs of investigation and litigation pursuant to,
inter alia, Code of Civil Procedure, § 1021.5, Welfare and Institutions Code §
15657(a), and Civil Code § 1780(d) and/or under the common fund doctrine;
6. For compensatory and general damages according to proof on all causes of action.
7. For punitive and exemplary damages under Welfare and Institutions Code §
15657(a), Civil Code § 1780(a)(4), and Civil Code § 3294;
8. For treble damages and penalties under Civil Code § 3345, Business and
Professions Code §§ 6153, 6175.4, 6175.5 and 17206.1 and Insurance Code § 789.
9. For double damages under Probate Code § 859;
10. For transfer of the wrongfully obtained monies and/or property under Probate
Code §§ 850-859 et seq.;
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11. For costs of suit, pre-judgment and post-judgment interest, and attorneys’ fees;
12. Such other and further relief as the Court may deem necessary or appropriate.
JURY DEMAND
Plaintiffs demand a trial by jury.
Dated: February 9, 2005 MORGAN, LEWIS & BOCKIUS LLP
By Michael E. Molland David M. Halbreich Benjamin P. Smith Morgan, Lewis & Bockius LLP
RENNE SLOAN HOLTZMAN & SAKAI, LLP By:
Louise H. Renne Ingrid M. Evans Renne Sloan Holtzman & Sakai, LLP
