Investment, Real Estate Scams Target Seniors

June 9, 2004

• 'High-Return' Investment Schemes Target Affluent Seniors • Illinois Man Convicted of Scamming Seniors • Minnesota Sues "Trust Mills" • Pennsylvania Asks Court to Shut Down "Living Trust" Sales Scheme • California Sues "Living Trust Mill" • Investment, Real Estate Scams Target Seniors • Pennsylvania Sues Alleged Living Trust Scam --- • News for Seniors

State authorities in Washington and Missouri have cracked down on scams aimed at senior citizens and low-income homeowners. Consumers should be aware that similar scams may still be operating in other states.

One of the scams entices seniors to invest in high-risk ventures and long-term investments that have almost no likelihood of paying off in their lifetimes. In the other scam, seniors are frightened into selling them homes to escape an imaginary tax lien.

In Spokane, Washington Attorney General Christine Gregoire filed suit against two marketing companies that allegedly scammed senior citizens out of their life savings by encouraging them to buy high-risk or bogus investments, including insurance products and living trusts.

The lawsuit also alleges that the defendants encouraged Spokane seniors and others throughout the country to use their home equity and retirement accounts to purchase investments that would never benefit them because of their age. Seniors were contacted by direct mail, public seminars and through internet websites.

Named as defendants are National Marketing Solutions (NMS), Senior Asset Preservation Services, Inc., (SAPS), Jeffrey Mitchell and Michael D. Smith. The suit alleges Mitchell and Smith formed NMS in 2001 and SAPS in 2003; they recruited about a dozen people to act as agents to sell insurance, estate planning and financial products to consumers in Washington and elsewhere.

Mitchell and Smith also marketed products from two other companies, Mobile Billboards of America (MBA) and Heritage America. MBA was touted as a low to medium risk investment that promised seniors, "Monthly Income You Can Count On!"

Seniors were encouraged to invest in a scheme to install two-sided billboards on the sides of large trucks. In return, the investors were promised a 13.49 percent return, plus their original $20,000 investment, at the end of seven years. The lawsuit states MBA is in reality a high-risk venture suitable only to those who can afford to lose their entire investment.

Heritage America sold estate planning services that were not beneficial to seniors. Among other violations, the defendants are accused of deceptive advertising, misrepresentation, unfair business practices and the unauthorized practice of law. The lawsuit calls for a fine of up to $2,000 per violation and restitution to consumers.

In Missouri, Attorney General Jay Nixon obtained a temporary restraining order against Native Solutions, LLC and its manager, Kathleen A. Sanchez of Arlington, Texas. Nixon sought the court order after learning Native Solutions was targeting property owners with a fraudulent scheme.

On June 3 and 4, at least 26 residents called the Camden County collector's office asking about a letter they received from Sanchez that led them to believe foreclosure proceedings had begun on their property. The letter stated a tax lien certificate had been sold on the property. Sanchez offered to help the owners get out from under the debt by buying their property.

After receiving the phone calls, Camden County Collector Linda Sweatt researched the property of those who had received the letters. She found no tax lien certificates had been sold on any of the properties. Sweatt says no tax lien certificates are sold on property unless the consumer first receives a notification from her office.

"Many of the people who received this letter are seniors who were very upset, confused and frightened by what it implied. We will not allow deceitful business owners to try to take the roof from over our seniors' heads," Attorney General Nixon says.

The order issued by Camden County Associate Circuit Judge Bruce Colyer bars Native Solutions and Sanchez from soliciting to purchase property from Missouri consumers or property owners. Sanchez also must provide the court with a list of property owners to whom she sent the letter stating a tax lien certificate had been sold on their property.

Nixon is seeking a preliminary and permanent injunction prohibiting Native Solutions and Sanchez from violating Missouri consumer protection laws. The Attorney General also is asking the court to award a civil penalty of $1,000 per violation of consumer protection law.

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