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Monday, October 19, 2009
Courts - More on "$6.4M fine in Ohio for illegal practice of law"
"Ohio High Court Hits Alleged Trust Mill With $6.4 Million Fine" is the title of this article by Karen Sloan in the Oct. 19th The National Law Journal. Some quotes:
The Ohio Supreme Court on Oct. 14 fined a so-called trust mill and its affiliate company nearly $6.4 million for the unlicensed practice of law in the biggest penalty of its kind in the state's history.The ruling ended seven years of legal wrangling between the Columbus Bar Association and American Family Prepaid Legal Corp. and its affiliated Heritage Marketing and Insurance Services Inc., both former companies based in California and owned by the father-and-son team of Jeffrey and Stanley Norman.
In addition to the penalty, the three-judge Ohio Supreme Court panel barred the companies from operating in the state, where they allegedly duped thousands of senior citizens into buying living trusts and insurance products that they often didn't need and couldn't afford. * * *
According to court documents, American Family purchased lists of individuals in Ohio aged 65 and older and sent postcards with warnings about huge probate costs. Those who sent the cards back, and some who didn't, received calls from the company to schedule in-home appointments with sales representatives. The representatives, who were not lawyers, used aggressive, high-pressure tactics to sell the customer a $1,995 plan that purported to include an array of legal services. However, the only services rendered in nearly all cases was the creation of a living-trust portfolio, according to court records. The sales agents also answered questions, sometimes incorrectly, about the probate process, according to the court.
Jeffrey Norman disputed that the company's sales representatives dispensed legal advice.
"They would give general information about legal issues, like, 'Are you aware there is such a thing as probate? Don't you think you would like access to an attorney to discuss that?' " he said.
The customers' financial information was passed to an attorney in the company's Ohio office, then forwarded to the company's California headquarters where living trust form documents were completed and sent back to Ohio. There, they received a review by the attorney. The court concluded that the attorney did not provide enough supervision during this process, however.
The documents were then forwarded to Heritage Marketing and Insurance Services Inc., which shared the same Ohio office. Heritage agents delivered the documents to the customers to be signed and notarized. While there, the agents would attempt to sell the customers insurance, the court said.
"This was all under the auspices of getting into people's homes with their financial information and selling annuities and other insurance products, which, of course, was how they would make their money," Edelman said.
Posted by Marcia Oddi on October 19, 2009 12:55 PM
Posted to Courts in general