It’s almost an old-fashioned bait-and-switch: a company promotes estate planning at their free luncheons, then allegedly pushes prospects to buy complex high commissions investments.
A consumer protection lawsuit has been filed against a company that proves the adage “there’s no such thing as a free lunch.”
As KOMO News reports on its website in the story, “State lawsuit accuses estate-planning company of being a deceptive "Trust Mill,"” the lawsuit filed in King County Superior Court names CLA Estate Services, Inc., CLA USA Inc., and Mitchell Reed Johnson, one of CLA'S independent sales contractors, as defendants.
One couple attended one of CLA's seminars five years ago on how to make a trust. They offered a free dinner, and once the couple had paid to set up an estate trust, a salesman (Mitchell Johnson) set up an in-home appointment.
However, at the visit, rather than discussing her trust, Johnson convinced her that she'd make more money for her retirement by transferring the retirement savings she'd invested with her financial advisor into annuities. Those insurance investments come with penalties for withdrawing money, along with high fees. These were two points that were never explained.
State Attorney General Bob Ferguson said that many Washington seniors were victims of what the state's lawsuits calls a "Trust Mill" that used trust seminars to later sell lucrative insurance products.
According to the Attorney General's press release on the court action, CLA sold 1,200 Lifetime Estate Plans in Washington alone, earning CLA more than $2.6 million in commissions. By contrast, investigators say they sold more than 700 annuities and earned more than $4.5 million in commissions. More than $930,000 of that, was from commissions on Johnson's sales alone.
Ferguson remarked that in Johnson's role as one of CLA's top insurance sales agents, he earned more than $278,000 in commissions from sales to consumers in Washington State.
Johnson also allegedly falsified documents, after the couples signed the forms.
State records show that Johnson has hearings pending with two other state agencies, the Office of the Insurance Commissioner and the state Department of Financial Institutions, dealing with alleged violations of state insurance and securities laws.
CLA issued a statement saying that it is fully cooperating with the AG and “…is not a trust mill, does not provide legal advice, and does not sell living trusts, but rather provides valuable services to clients.”
Reference: KOMO News (March 8, 2018) “State lawsuit accuses estate-planning company of being a deceptive "Trust Mill"”