Minnesota regulators sued a Shorewood, Minn.-based company Monday for allegedly selling trusts for more than $2,000, running a living-trust mill and falsely stating that the trusts were drawn up by an attorney.
Heritage Partners, according to the Minnesota Attorney General's office, sends fliers to lure seniors with a free dinner workshop at a local steakhouse to learn about estate planning from a specialist. The real motive is to sell them insurance products such as annuities.
The lawsuit names Anthony J. Friendshuh LLC, Friendshuhs company Heritage Partners, Dennis H. Lawrence of Arizona and Lawrences company Legal-Ease LLC.
The complaint accuses them of consumer fraud, deceptive trade practices and deception against senior citizens. It also accuses Heritage Partners of home solicitation violations and breach of fiduciary duty and accuses Lawrence of unauthorized practice of law.
Minnesota Attorney General Lori Swanson expressed concerns that a wave of retiring baby boomers could fuel an increase in such "trust mill" schemes. She told the Minneapolis Star-Tribune on Monday that with the aging population, there are concerns that there are a lot of people out there looking at estate planning and thus the problem could worsen if the state doesn't take action.
Kevin Riach, an attorney for Heritage Partners, said in a statement: We have been diligent in working in full cooperation with the Attorney Generals office during its investigation to address any concerns it might have, and we were completely surprised when the complaint was filed today without any notice.
Heritage Partners was established in 2010 and Friendshuh and his wife, Nancy, run it from their home, the complaint states. Since then it has sold Minnesotans more than 500 trusts and estate plans that were prepared by Lawrence. Minnesota law states that anyone doing estate planning is considered to be engaged in the business of financial planning. State law also requires trusts and wills to be prepared by an attorney licensed to practice law in Minnesota.
Heritage Partners customers were led to believe they were getting the services of a trust attorney, according to the states complaint, when in fact the documents were drawn up by Lawrence, who is not licensed to practice law in either Minnesota or Arizona. Lawrence is certified in Arizona as a legal document preparer.
Lawrence and his company in 2005 were sued for fraud by the Internal Revenue Service for taking sales leads from insurance agents and selling sham trusts to businesses to avoid taxes. They were barred from operating that trust scheme.