Published by Bloomberg Law
August 24, 2018
By Alex Ebert
Attorneys for investors of defunct pension-buyout investments are suing to drag back more than $100 million in lost cash from the financial professionals who sold the plans.
Peiffer Wolf Carr & Kane announced Aug. 23 five lawsuits filed across the country claiming financial advisers, brokers, and insurance agents violated their duty to protect investors by pushing Future Income Payments LLC packages without looking into the legality or legitimacy of the investments.
”There were more red flags than a matador’s closet,” Joseph Peiffer, attorney and managing shareholder, said in an Aug. 23 conference call on the lawsuits. He said his firm intends to file about 70 cases seeking remedy from independent sellers who frequently advised clients to put their entire savings into the faulty products.
‘House of Cards‘ Peiffer said that Future Income Payments LLC was a ”house of cards” that got retirees ”coming and going.” The company worked by ”buying out” pensioners’ retirement plans by offering highly discounted one-time lump-sum payments. Pensioners who needed cash would take the immediate payment and sign over their lifetime benefits to FIP.
”On the pensioner side, they managed to screw over these folks to the tune of up to 200 percent on the interest rate,” Peiffer said.
The company would then repackage the pension payments to other investors at another discount and keep the difference. For example, one client on the phone call said he was told to invest $350 million for 10 years and get a 6 percent monthly return.
States Take Action The lawsuits claim financial advisers should have been aware that these were bad investments because states were taking action to stop them.
Concerned over whether pensioners were being mistreated, Colorado investigated and determined FIP ”investments” were actually illegal loans, and FIP couldn’t sell them without a license.
Soon, other states stepped in as well. First, California ordered FIP to desist selling products without a license, then Massachusetts, North Carolina, and New York.
When Scott Sohn, a landscaper from Rancho Mirage, Calif., sold his business to retire he was persuaded to place $350,000-including his 401K-into a FIP investment based on his financial adviser’s word, he said during the press conference.
Then court actions against the company started piling up, and as courts invalidated the contracts and states cracked down on the company, the payments stopped flowing to investors. The company owner is also believed to have fled the country and lawyers searching for him can’t locate him or his property.
Like hundreds of others, Sohn’s payments stopped coming in 2018, and he’s now left without any retirement investment.
”What they’re left with are losses, devastating losses,” Peiffer said. The people who sold the investments are ”the last chance they have to get the money back,” he added.
What to Do if You Think You Were a Victim of Investment Fraud or Broker Misconduct
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About Peiffer Wolf Carr & Kane, APLC
Peiffer Wolf Carr & Kane is a nationwide litigation law firm that represents individuals and entities that have been the victims of negligence, fraud or the misconduct of powerful interests. We are smart, experienced, and dedicated professionals who work tirelessly for our clients and take pride in the pursuit of justice on their behalf. Too often the powerful interests in our society run over the rights of ordinary people. We do our best to restore that balance.