A case alleging fraud against senior citizens by American Investors Life Insurance Company and two of its subsidiaries was cleared for a class action under a May 12 ruling by a California state court.
The ruling by San Luis Obispo Superior Court Judge Martin Tangeman sets the stage for a September 2005 trial on the allegations, which originally were filed in 2003.
The suit claims that three senior citizens and “thousands of others” were victimized by a marketing scheme involving agents posing as estate planning experts to gain the confidence and financial information of senior citizens.
According to papers filed by plaintiffs’ attorneys, the agents then sold living trusts to the seniors, along with annuities.
The suit was filed by Los Angeles area law firms Gianelli and Morris, Ernst & Mattison, and Stephen Dorsi.
An attorney in San Francisco, Ingrid M. Evans of Renne Sloan Holtzman & Sakai, says she has a similar suit on behalf of a client, Beverly Buhs, Millbrae, Calif. Like the San Luis Obispo case, the charges involve alleged fraud in the sale of annuities and living trusts to seniors.
Buhs charges that a living trust sold to her and her husband by agents of another California insurance agency was badly put together. In her suit, Buhs charges that after her husband died, she had to hire an attorney to restructure the trust. She also lost $20,000 of a $90,000 death benefit from an annuity that the agents sold to her.
Buhs also is suing American International Group, manufacturer of the annuity. Buhs says she did not discover until after her husband died that the annuity had high surrender charges, meaning she could not cash it in without penalty.
Evans says it is inappropriate to sell deferred annuities to a senior who may not outlive the surrender-charge period.
In another case filed in February, California Insurance Commissioner John Garamendi and Attorney General Bill Lockyer are seeking more than $110 million in penalties, restitution and damages from the operators of what it called a “living trust mill.”
Companies named in the suit included Family First Advanced Estate Planning and Family First Insurance Services of Woodland Hills, Calif., along with their parent firm, American Investors Life Insurance, Topeka, Kan.
“Using lies, trickery and outright fraud, these defendants took away the hard-earned savings of thousands of seniors who trusted them with nearly everything they had,” says Garamendi.
Garamendi and Lockyer charge the firms sold thousands of living trusts and related services to seniors as a guise for selling them inappropriate annuities.
“Life agents would tell the seniors that their existing investments were no good, and then induce the seniors to close out their existing investments and purchase the annuity policies,” Garamendi says.