ILNews

Adding UPL to Indiana RICO statute

Back to TopCommentsE-mailPrintBookmark and Share

An Indiana Supreme Court case involving an estate planning “trust mill” has led to a policy discussion about whether certain types of unauthorized practice of law should rise above a misdemeanor crime and involve a racketeering component.

The Indiana General Assembly will likely be asked to consider a proposal during its next session, following an interim Probate Code Study Commission recommendation for changes to state statute about how the state targets those individuals or businesses that illegally practice law. Specifically, lawmakers could address whether a pattern of UPL should be added to the list of three dozen crimes covered by the Racketeer Influenced and Corrupt Organizations statute.

foley-ralph-mug.jpg Foley

“This is a phenomenon we’ve tried to address in the past,” said Rep. Ralph Foley, R-Martinsville, an attorney who practices probate law and chairs the study committee. “The problem is that these are charlatans trying to deceive people. They aren’t lawyers and are nothing but a bad way to separate people from their money.”

The case against Indianapolis-based United Financial Systems Corp. initiated this policy discussion. The Indiana Supreme Court determined United Financial was illegally practicing law when preparing and selling estate planning documents and services to people. The Indiana State Bar Association filed a “trust mill” suit three years ago, and in April 2010 the justices determined United Financial should have known what it was doing was UPL and ordered the disgorgement of fees the company received from its UPL. All of the Indiana estate plan customers going back to 1995 were to be notified of the decision, but the company refused to pay those refunds immediately, and the justices in December 2010 ordered United Financial to notify those customers and return the fees as previously ordered.

An exact monetary figure of refunds or claims isn’t outlined in the order or in court filings. But in the court’s ruling, it provided context for the potential amount: from October 2006 through May 2009, the company’s Indiana business included 1,306 estate plans grossing more than $2.7 million. Nationally, 18.8 percent of United Financial’s total income was reported to have come from estate planning services in this state.

The Indiana Supreme Court in June said it wouldn’t reconsider its 2010 ruling, and now former Monroe Circuit Judge Viola Taliaferro is acting as commissioner and deciding what resolution is best for the case.

Earlier in the year, she determined that United Financial had failed without good cause to pay refunds to 346 customers, and she’s now determining whether contempt sanctions should be imposed. At a hearing in late October, the commissioner heard evidence about the company’s information on past customers, tax returns and financial documentation, and both sides have submitted proposed findings for Taliaferro to consider. The proposals call for repaying the restitution amount over the course of seven years, according to attorneys in the case.

Separate from the restitution action before Taliaferro, two lawsuits against United Financial are pending in Marion and Fulton counties as a result of the Supreme Court’s decision about the company’s prior activity.

The lawsuits and judicial action sparked legislative discussion about strengthening state criminal and probate code to address what some consider racketeering.

At the probate commission meeting Oct. 12, members voted 11-2 in support of recommending law changes to the General Assembly.

The changes would add UPL, currently a Class B misdemeanor outlined in Indiana Code 33-43-2, to the list of crimes covered under the RICO statute in IC 35-45-6. By definition, a pattern of racketeering activity occurs when a business or person engages in two or more incidents that had the same or similar intent, result, method of commission or was otherwise interrelated by distinguishing characteristics to other incidents. The current statute lists 36 crimes or activities including murder, arson, theft, child solicitation, promoting professional gambling and money laundering.

Proposed legislation would take effect July 1, 2012. It would allow for enhanced penalties under the racketeering statute, such as giving prosecutors the discretion to make UPL a Class C felony.

Vincennes attorney Jeff Kolb, who chaired the ISBA’s UPL section during the initial United Financial investigation, said he agrees this UPL activity fits into the racketeering definition and that a law change would strengthen the ability to collect restitution or even obtain attorneys fees from the prosecution of these actions.

Foley said that he and former Rep. Trent Van Haaften, D-Mount Vernon, had previously tried unsuccessfully to add UPL to the list of racketeering activities and that now is the time to move forward.

“They’ve developed a scheme and are taking advantage of people and stealing from them,” Foley said about those engaging in UPL similar to the United Financial activity. “Pure and simple, I think it’s a scheme that is racketeering.”

blakey-robert-mug.jpg Blakey

Not everyone on the probate panel agrees. Sen. Susan Glick, R-LaGrange, a former county prosecutor, said she didn’t believe UPL fit with the other listed crimes such as arson and child solicitation. Two non-attorney committee members – Tom Hardin and David Pendergast – voted against the proposal.

“I just wonder if there’s a need here, and if we’re not using a sledge hammer to hit at this when a misdemeanor should be used,” Hardin said.

University of Notre Dame law professor G. Robert Blakey, who helped craft the federal RICO Act in 1970, and is considered one of the nation’s foremost experts on RICO law, said he thinks the kind of UPL activity at issue in this discussion should be covered by the state racketeering statute.

The predicate may not be the same as other offenses, such as murder or drug trafficking, but Blakey says RICO was designed to target illegal businesses operating as an enterprise.

“Organized crime is not limited to the mob, and white-collar crime equals RICO,” he said. “This sounds like white-collar crime to me and it (the proposed statute revisions) makes a lot of sense to me.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. From his recent appearance on WRTV to this story here, Frank is everywhere. Couldn't happen to a nicer guy, although he should stop using Eric Schnauffer for his 7th Circuit briefs. They're not THAT hard.

  2. They learn our language prior to coming here. My grandparents who came over on the boat, had to learn English and become familiarize with Americas customs and culture. They are in our land now, speak ENGLISH!!

  3. @ Rebecca D Fell, I am very sorry for your loss. I think it gives the family solace and a bit of closure to go to a road side memorial. Those that oppose them probably did not experience the loss of a child or a loved one.

  4. If it were your child that died maybe you'd be more understanding. Most of us don't have graves to visit. My son was killed on a state road and I will be putting up a memorial where he died. It gives us a sense of peace to be at the location he took his last breath. Some people should be more understanding of that.

  5. Can we please take notice of the connection between the declining state of families across the United States and the RISE OF CPS INVOLVEMENT??? They call themselves "advocates" for "children's rights", however, statistics show those children whom are taken from, even NEGLIGENT homes are LESS likely to become successful, independent adults!!! Not to mention the undeniable lack of respect and lack of responsibility of the children being raised today vs the way we were raised 20 years ago, when families still existed. I was born in 1981 and I didn't even ever hear the term "CPS", in fact, I didn't even know they existed until about ten years ago... Now our children have disagreements between friends and they actually THREATEN EACH OTHER WITH, "I'll call CPS" or "I'll have [my parent] (usually singular) call CPS"!!!! And the truth is, no parent is perfect and we all have flaws and make mistakes, but it is RIGHTFULLY OURS - BY THE CONSTITUTION OF THIS GREAT NATION - to be imperfect. Let's take a good look at what kind of parenting those that are stealing our children are doing, what kind of adults are they producing? WHAT ACTUALLY HAPPENS TO THE CHILDREN THAT HAVE BEEN RIPPED FROM THEIR FAMILY AND THAT CHILD'S SUCCESS - or otherwise - AS AN ADULT.....

ADVERTISEMENT