Financial Advisers Sued By Victims Of $100M Loan Scheme

Published by Law360
August 23, 2018, 9:02 PM EDT
By Carolina Bolado

Law360 (August 23, 2018, 9:02 PM EDT) — Victims of Future Income Payments LLC’s $100 million predatory lending scheme filed five lawsuits Thursday in New Jersey, Texas, Illinois, California and Florida against financial advisers and insurance agents who they say recommended they invest all of their savings into FIP.

The victims, represented by attorneys at Peiffer Wolf Carr & Kane, are targeting the investment advisers and financial planners who billed FIP as a conservative investment plan for their retirement that would guarantee them a monthly income stream. Instead, they were swindled out of their life savings, and many had to return to work to make ends meet, according to the suits.

Jason Kane, a partner at Peiffer Wolf, said this wasn’t a typical swindle that relied on the charm of an individual. The scheme happened because of all of the help the owner of FIP, felon Scott Kohn, who has now disappeared, received from these middlemen around the country who promoted FIP to retirees, he said.

“FIP flourished because it enlisted a willing army of financial professionals,” Kane said.

FIP promoted its products as “pension sales” that encouraged investors to scrape together money from savings, retirement accounts and home equity refinancings to buy into “structured cash flows” through FIP, according to Peiffer Wolf. Investors paid to buy a monthly income stream for a set term, like five or 10 years, under a pension advance arrangement, according to the firm.

But in reality, FIP offered predatory installment loans at interest rates as high as 200 percent in exchange for monthly electronic payments from consumers’ pension plans.

The company stopped making payments to investors in April after pressure and cease-and-desist orders from attorneys general in various states.

“The loss of the monthly income streams that investors thought they purchased from FIP has been devastating, since in many cases these trusting individuals tied up all their money in the scheme,” Joseph Peiffer of Peiffer Wolf said.

The advisers targeted in the lawsuits are Gregory Durette of Future Secured Financial in Niceville, Florida; Michael A. Frisch of Arizona-based Secure Investment Management; Matthew J. Linklater of Linklater Financial Group in Chicago; Paul Ferraresi of Founders Group Inc. in Houston; Joshua Mellberg of J.D. Mellberg Financial in Tucson, Arizona; and Daniel T. Sharpe of New Jersey.

The defendants could not be reached for comment Thursday.

The plaintiffs are represented by Joseph Peiffer, Jason Kane, Adam B. Wolf and Tracey B. Cowan of Peiffer Wolf Carr & Kane.

Counsel information for the defendants was unavailable.

The cases are Kayser v. Sharpe et al. in the Superior Court of New Jersey, Ocean County Law Division; Mourglia v. Ferraresi et al. in the District Court of Harris County, Texas; Burton et al. v. Linklater Group et al, case number 2018CH10666, in the Circuit Court of Cook County, Illinois; Iacono v. Frisch et al. in the Superior Court for the State of California for the County of Los Angeles; and Primosch v. Durette in the Circuit Court of the First Judicial Circuit Court of Florida. Case numbers for most of the cases were unavailable.

–Additional reporting by Lauraann Wood.

What to Do if You Think You Were a Victim of Investment Fraud or Broker Misconduct

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