PENNSYLVANIA Attorney general sues over trusts

Some businesses hid facts about products from their elderly clients.
HARRISBURG (AP) -- Hundreds of elderly investors may have been cheated by illegal sales of living trusts, and some lost tens of thousands of dollars, the state attorney general said Thursday.
Attorney General Jerry Pappert sued seven businesses and nine people for what he said was unlawful advertising, promotion and sales of estate-planning services.
The long-term annuities or charitable gifts were too costly, unneeded or not in the buyers' best interests, he said.
Nonlawyers allegedly used the stationery and business cards of King of Prussia attorney Barry O. Bohmueller to contact customers, leading clients to falsely believe they were getting sound legal advice. Bohmueller and another lawyer in his office, Brett B. Weinstein, are the only two lawyers among the nine people charged.
Probe
Pappert said a nine-month investigation identified victims who were sold $1,800 living-trust kits regardless of need. In one case, an 85-year-old Delaware County man purchased a 10-year deferred annuity that will not pay off until his 95th birthday.
Over the past three years, the two lawyers allegedly used insurance salesmen and brokerage firms to make sales to elderly customers concentrated in the eastern and central parts of Pennsylvania.
The lawsuit, filed in Commonwealth Court, said the defendants falsely claimed living trusts are cheaper, faster, more private and less taxable than wills, and hid the facts about the products they were selling.
State lawyers are seeking restitution, fines, a ban on future illegal sales and an audit of the defendants' commissions and income.
"In my view, these actions are unconscionable. Consumers were lied to and deceived into purchasing long-term annuities based on what the defendants would make in commissions. The sales commission rate was higher if the payout period to consumers was longer," Pappert said.
Bohmueller did not immediately return a phone message seeking comment. Weinstein's office referred questions to his lawyer, Marc Bogutz, who also did not immediately return a message Thursday.
Agents posed
Undercover agents with Pappert's charitable trusts section posed as potential customers with a bogus portfolio of lucrative investments. They were counseled to liquidate those investments and buy deferred annuities instead, Pappert said.
Court records attached to the suit indicate that in 2001, Weinstein entered into a voluntary compliance agreement with the attorney general's office over similar allegations of using nonattorneys to provide living-will services.
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