Attorney General Hardy Myers today filed settlement agreements with a Missouri lawyer licensed in several states including Oregon and a Texas insurance company, its affiliate company and several key employees for allegedly operating a "living trust mill" that targeted seniors and pressured them into buying trusts and insurance annuities.
Named in Assurances of Voluntary Compliance filed today in Marion County Circuit Court are attorney Lona L. Monson of Kansas City, Missouri, and Michael P. McIntyre of Dallas, Texas, president and CEO of Addison Insurance Marketing, Inc. and ALMS LTD, LP that did business in Oregon as Advanced Legal Systems. Also named are Herb Perilloux of Salem, the Oregon manager of Addison Insurance Marketing and Fawn Phibbs of Forest Grove, manager of the Oregon office of Advanced Legal Systems. The respondents had offices in the same building in Portland. Advanced Legal Systems has no relationship to Advanced Legal Systems, Inc. of Portland, a legitimate company that provides web services to the legal community.
"Living trusts can be valuable estate planning tools but are not appropriate in all cases," Myers said. "However, estate planning should not be "sold" like a commodity by a hard-sell, door-to-door salesperson who is working on commission and not under the direct supervision of a lawyer."
Working with families and lawyers of elderly victims, the Department of Justice investigated allegations that seniors who responded to printed offers of free information about estate planning were pressured into buying living trusts and later coerced into purchasing insurance annuities.
Department of Justice investigators found that as many as 500 Oregon consumers purchased living trusts from the defendants in the last year. An estimated two fifths of those consumers went on to purchase annuities. The Department takes no position on whether in individual cases the documents were properly drafted and executed.
The sales scenario went like this: Oregon seniors, who responded to a letter from lawyer Lona Monson for free information, were telemarketed from Dallas, Texas. The telemarketers set up appointments for sellers of living trusts from Advanced Legal Systems. These "runners," who operated under the apparent but not actual control of Monson, were instructed by manager Phibbs to "not take no for an answer" and sell trusts for $2,495. The sale was sometimes followed up by a brief telephone call to the client by Monson and a living trust was prepared and shipped from out-of-state to Portland for delivery to the consumer.
Manager Perilloux of Addison Insurance would then send agents to the consumers' homes to help execute and notarize the living trust. Oftentimes, the occasion was used to hard sell annuities. The annuities were the product of a legitimate insurance company that eventually found itself addressing a much higher than normal rate of cancellations due to the use of overly aggressive sales tactics.
Justice found that the agents for these companies represented that they had the capacity to give legal advice when they weren't lawyers. The salespersons also falsely represented that a letter of agreement with an attorney would protect the consumer even if the consumer died that night.
"The lawyer was negligent in permitting non-lawyers to use her business card to legitimize the sale of living trusts," Myers said. "Instead of thoughtful considered legal advice, consumers had to deal with a "don't take no approach" by persons working to earn trips in sales contests with a graduated commission based on the number of trusts sold."
Under her settlement, Ms. Monson agrees to not practice law in Oregon for the next four years and ALMS LTD, LP (dba Advanced Legal Systems) agrees to not do business in the state. However, Ms. Monson will answer questions from her trust clients.
Respondents will provide restitution to consumers who file complaints with Justice by January 1, 2002. Monson has paid $5,000 and the other respondents $60,000 to the Consumer Protection and Education Fund.
McIntyre, Perilloux and Phibbs agreed not to practice law, to not prepare nor sell living trusts and to not sell insurance based upon the sale of living trusts. They also agreed to not violate the Unlawful Trade Practices Act and Oregon's insurance and securities laws and regulations. Under threat of contempt, they will not engage in insurance sales tied in anyway to the sale of estate-planning documents.
The non-lawyer respondents and business entities will process all the necessary paper work in order to assist consumers wanting to unwind any annuity purchases they may have made.
The insurance company, whose annuities were sold, has assured both Justice and the State Insurance Division that the company is conducting an internal review of all of its policies.
Consumers wanting information on living trusts may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392.
Jan Margosian, (503) 947-4333 (media line only) firstname.lastname@example.org