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Indiana State Bar Association files new trust mill suit: Indianapolis company accused of unauthorized practice of law

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A decade ago, Vesser and Helen Davis met with an estate planning company representative about how to divvy up their assets and their Hamilton County farm.

That representative drew on a flipchart, illustrated ways a partnership and corporation could be set up, outlined differences between wills and trusts, explained the probate process, and advised the pair how they could arrange their finances and establish a corporate structure for the family farm business. In the end, they paid thousands of dollars for an estate planning package they thought would be best for the family.

The elderly couple thought the person they met with was an attorney.

He wasn't. Their estate planning purchase was secured with inadequate and invalid paperwork, forced them to pay out even more money to redo the documents, and the couple ended up losing out on a $4 million offer for their farmland that had been put into a corporation and would have meant double taxation if a sale had happened.

Now that company - United Financial Systems in Indianapolis - is the defendant in an action filed with the Indiana Supreme Court on Oct. 9, accused of operating a trust mill that engaged in the unauthorized practice of law and wrongly collected more than $1 million from at least five families throughout the state. While not common in Indiana, this type of trust mill action follows a string of similar actions seen in courts nationally as the country's population ages and companies look to cater to those growing estate planning needs.

The case is brought on behalf of the Indiana State Bar Association, which with the state Attorney General's Office and the Indiana Supreme Court's Disciplinary Commission are the only three groups allowed to bring unauthorized practice of law actions. Indianapolis attorneys Kevin McGoff and Rafael Sanchez with Bingham McHale are representing the bar association.

In the 36-page filing, the ISBA outlines the background of the 26-year-old United Financial, located on the northwest side of the city. The company advertises itself as providing "suitable estate & financial planning solutions" and selling estate planning documents that include wills, trusts, and powers of attorney. The company also sells securities and insurance products such as annuities.

According to the complaint, an estate planning assistant who is not a lawyer contacts and sells the services; that information is passed on to a licensed lawyer who contacts the client by phone and crafts the documents before returning them to United Financial for review and delivery to the client. The salespeople are encouraged to educate clients about the need for estate planning, and are specifically told, "not to apply any legal principles to a client's specific circumstances." The fee for a basic living trust is $2,495 while a will preparation fee is $695, according to the complaint.

A disclaimer on its Web site says that the corporation is not engaged in the practice of law and isn't a lawyer or law firm, though exhibits presented by the ISBA point out that clients had very limited contact with the licensed attorneys and most of the individuals who advised them were non-attorneys.

A total of five counts are made in the ISBA's action - one for each person or couple who bought into an estate planning package with United Financial.

One victim is a 78-year-old Allen County woman who never married. She had 12,000 shares of Exxon Mobile stock estimated in value at $520,000. A previous will from 1987 would have given her six nieces and nephew 200 shares each, while the remaining shares would be evenly divided between her brother and sister. The complaint details how United Financial advised her to liquidate her stock and purchase annuities in February 2002, which ended up with her relatives receiving $5,000 instead of the stock shares and her getting hit with more than $130,000 in tax liability.

For the Davis family, their decision revolved mostly around their Westfield farm that encompassed more than 80 acres. They started meeting with a United Financial representative in January 1997, and within a few months had paid $5,150 for document preparation and to create a limited family partnership for their family farm business.

"The Davises' estate planning documents were inadequate and contained provisions that are invalid in Indiana," the complaint says. "In addition, the corporate documents sold to the Davises and prepared by United Financial in 1997 were deficient and ultimately resulted in gain being subject to double taxation due to the corporate structure, which United Financial recommended and then established for them."

As a result, the Davises ended up paying the family attorney $8,336 to redo the estate planning and corporate documents prepared through United Financial, and they were unable to accept a $4 million offer for their farm because the corporate structure setup through United Financial would have resulted in double taxation.

Vess Davis died in January and won't see the result of this action, but the ISBA hopes United Financial will be permanently enjoined from continuing this practice. The bar association also requests the court order the company to reimburse about $1 million in fees collected for the unauthorized practice of law, and to consider ordering United Financial to release all the names and address of clients and other employees who might be affected by the court's decision.
 Attorney Ron Elberger with Bose McKinney & Evans in Indianapolis, who is representing United Financial along with attorney Peyton Berg, says the company has taken substantial steps in the past and presently to make sure they are complying with state law.

"That's occurring and is ongoing," Elberger said, declining to elaborate because of the current case. "They have engaged counsel to assist them by adjusting their program so they're in compliance with Indiana law. The company looks forward to the opportunity to present its case in court."

While not common in Indiana, this issue is one that courts across the country are addressing more frequently. One of the two unauthorized practice of law actions filed in Indiana in recent years - State ex. Rel Indiana State Bar Assoc. v. Northouse, 848 N.E.2d 668, 672 (Ind. 2006) - did have a trust mill component, McGoff said.

In Northouse, the court addressed a case where two northern Indiana men had been engaging in the unauthorized practice of law by advising people on wills, trusts, and other documents without having law licenses. In a per curiam opinion, the court stated unequivocally that preparing and drafting a will and advising others on the legal consequences of specific estate-planning decisions constitutes the practice of law.

"Taking an action like this is not a common action within the legal community, but it's an action that's essential to protect elderly citizens from this type of practice," said ISBA president Bill Jonas of South Bend. "This is a consumer protection issue, and one we have to address because the legal community is often called upon to clean up what took place in these actions." •    
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  1. Call it unauthorized law if you must, a regulatory wrong, but it was fraud and theft well beyond that, a seeming crime! "In three specific cases, the hearing officer found that Westerfield did little to no work for her clients but only issued a partial refund or no refund at all." That is theft by deception, folks. "In its decision to suspend Westerfield, the Supreme Court noted that she already had a long disciplinary history dating back to 1996 and had previously been suspended in 2004 and indefinitely suspended in 2005. She was reinstated in 2009 after finally giving the commission a response to the grievance for which she was suspended in 2004." WOW -- was the Indiana Supreme Court complicit in her fraud? Talk about being on notice of a real bad actor .... "Further, the justices noted that during her testimony, Westerfield was “disingenuous and evasive” about her relationship with Tope and attempted to distance herself from him. They also wrote that other aggravating factors existed in Westerfield’s case, such as her lack of remorse." WOW, and yet she only got 18 months on the bench, and if she shows up and cries for them in a year and a half, and pays money to JLAP for group therapy ... back in to ride roughshod over hapless clients (or are they "marks") once again! Aint Hoosier lawyering a great money making adventure!!! Just live for the bucks, even if filthy lucre, and come out a-ok. ME on the other hand??? Lifetime banishment for blowing the whistle on unconstitutional governance. Yes, had I ripped off clients or had ANY disciplinary history for doing that I would have fared better, most likely, as that it would have revealed me motivated by Mammon and not Faith. Check it out if you doubt my reading of this, compare and contrast the above 18 months with my lifetime banishment from court, see appendix for Bar Examiners report which the ISC adopted without substantive review: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS

  2. Wow, over a quarter million dollars? That is a a lot of commissary money! Over what time frame? Years I would guess. Anyone ever try to blow the whistle? Probably not, since most Hoosiers who take notice of such things realize that Hoosier whistleblowers are almost always pilloried. If someone did blow the whistle, they were likely fired. The persecution of whistleblowers is a sure sign of far too much government corruption. Details of my own personal experience at the top of Hoosier governance available upon request ... maybe a "fake news" media outlet will have the courage to tell the stories of Hoosier whistleblowers that the "real" Hoosier media (cough) will not deign to touch. (They are part of the problem.)

  3. So if I am reading it right, only if and when African American college students agree to receive checks labeling them as "Negroes" do they receive aid from the UNCF or the Quaker's Educational Fund? In other words, to borrow from the Indiana Appellate Court, "the [nonprofit] supposed to be [their] advocate, refers to [students] in a racially offensive manner. While there is no evidence that [the nonprofits] intended harm to [African American students], the harm was nonetheless inflicted. [Black students are] presented to [academia and future employers] in a racially offensive manner. For these reasons, [such] performance [is] deficient and also prejudice[ial]." Maybe even DEPLORABLE???

  4. I'm the poor soul who spent over 10 years in prison with many many other prisoners trying to kill me for being charged with a sex offense THAT I DID NOT COMMIT i was in jail for a battery charge for helping a friend leave a boyfriend who beat her I've been saying for over 28 years that i did not and would never hurt a child like that mine or anybody's child but NOBODY wants to believe that i might not be guilty of this horrible crime or think that when i say that ALL the paperwork concerning my conviction has strangely DISAPPEARED or even when the long beach judge re-sentenced me over 14 months on a already filed plea bargain out of another districts court then had it filed under a fake name so i could not find while trying to fight my conviction on appeal in a nut shell people are ALWAYS quick to believe the worst about some one well I DID NOT HURT ANY CHILD EVER IN MY LIFE AND HAVE SAID THIS FOR ALMOST 30 YEARS please if anybody can me get some kind of justice it would be greatly appreciated respectfully written wrongly accused Brian Valenti

  5. A high ranking Indiana supreme Court operative caught red handed leading a group using the uber offensive N word! She must denounce or be denounced! (Or not since she is an insider ... rules do not apply to them). Evidence here: http://m.indianacompanies.us/friends-educational-fund-for-negroes.364110.company.v2#top_info

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