The state on Monday sued a Twin Cities company for allegedly running a living-trust mill, selling trusts for more than $2,000 and claiming falsely that they were drawn up by an attorney.
The company, Heritage Partners, lures seniors with fliers pitching a free dinner workshop at a local steakhouse to learn about estate planning from a specialist, the state says, but the real motive is to sell them insurance products such as annuities.
“Trust mill” schemes have been around for years, but Minnesota Attorney General Lori Swanson said she’s concerned that the wave of retiring baby boomers could fuel an increase.
“We want to get ahead of this problem,” Swanson said in an interview Monday. “With the aging population, we’re concerned that there are a lot of people out there looking at estate planning.”
Investigators still are looking at what Heritage Partners customers were sold and “whether it will accomplish their needs,” she said.
People running trust mills tend to exaggerate the dangers of probate and exaggerate the benefits of having a trust, she said, and then push other financial products such as insurance.
The lawsuit, filed Monday in Hennepin County District Court, names Anthony J. Friendshuh LLC, Friendshuh’s Shorewood-based company Heritage Partners, Dennis H. Lawrence of Arizona and Lawrence’s company Legal-Ease LLC.
The complaint accuses all of 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.
Kevin Riach, an attorney for Heritage Partners, said in a statement: “Heritage Partners has always and will continue to always work hard to protect its clients and keep its clients’ best interests in mind. We have been diligent in working in full cooperation with the Attorney General’s 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.”
Lawrence said he was aware of the complaint and said he wouldn’t discuss its specifics. “I deny all the charges,” he said.
Heritage falsely markets itself as having special expertise in estate planning, according to the state’s complaint, and downplays that Friendshuh is registered as an insurance agent.
Heritage Partners was formed in 2010 and Friendshuh and his wife, Nancy, run it from their Shorewood home, the complaint says. Since then it has sold Minnesotans more than 500 trusts and estate plans that were prepared by Lawrence.
Customers were wooed at dinners at such popular restaurants as Rudy’s Redeye Grill in White Bear Lake, Woolley’s in Bloomington and the Timber Lodge Steakhouse in Owatonna.
By state law, anyone holding themselves out as an estate planner 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 state’s 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.
In 2005, Lawrence and his company 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.
Swanson announced the lawsuit at a news conference Monday surrounded by about 10 couples who did business with Heritage Partners.
Among them was 70-year-old Glenn Brownewell, a retired businessman and ordained minister from Owatonna. Brownewell said he took the Heritage living trust to a local lawyer and was told the trust arrangement wasn’t necessary. Instead, the lawyer drew up a fairly complex will for about $750.
Gary and Penny Pietila, a couple in White Bear Lake, said they bought a living trust from Heritage Partners for $2,295 and were later sold three annuities. The annuities didn’t perform as they were explained, said Penny Pietila, a hospice oncology nurse. And the trust mistakenly gave both the financial power of attorney and right to make health care decisions to one of their two daughters, when each of their two daughters was supposed to be given one responsibility.
When they finally reached Friendshuh about the mistake, he told them to make the correction by hand on their document, they said. “I feel like this is an example of a growing number of us baby boomers being taken advantage of wrongfully by a tactic of building trust,” Gary said.