Other LanguagesFirst case brought utilizing AG-request Pension Poacher Prevention Act
(AGO file photo) Attorney General Bob Ferguson, center, talks with a soldier at a February 2015 event at Joint Base Lewis McChord with Assistant Attorney General Travis Alley, right.
OLYMPIA — Washington State Attorney General Bob Ferguson has stopped the deceptive business practices used by Lynnwood, Wash. company Emerald Capital Preservation, Inc. (ECP) and its owner Donald Smith, who failed to disclose a financial conflict of interest to veteran clients and charged unreasonable fees for basic services. The enforcement action announced today includes $26,564 in restitution to 35 victims.
“Standing up for those who have served our country is a priority of my office,” said Ferguson. “This action sends the strong message that my office will hold accountable those who try to scam our aging veterans.”
ECP provided elder care planning and information about qualifying for Aid & Attendance, a benefit administered by the federal Veterans Administration (VA). ECP solicited customers by providing presentations at local assisted living facilities and other organizations such as Rotary clubs. During these presentations, ECP focused on recruiting veteran clients by providing estate-planning advice and discussed ways individuals could avoid the legal process of administering their estate, also known as probate.
However, ECP never disclosed to attendees that it was not affiliated with or otherwise endorsed by the VA or the Washington State Department of Veterans Affairs, in violation of the state’s Pension Poacher Prevention Act.
ECP’s clients included Washington veterans, many of whom ECP referred to local attorneys to draft living trusts and special house trusts. Establishing these trusts was done in order to reduce the veterans’ incomes so they could qualify for Aid & Attendance.
As part of a referral relationship established between ECP and local estate planning attorneys, after completing the trusts, the respective attorneys would send their veteran clients back to ECP to have the trusts reviewed for spelling errors, executed and notarized. In exchange for providing these rudimentary services, ECP invoiced the attorneys and typically received $1,000 for these services. However, neither the attorneys nor Mr. Smith disclosed the fact that ECP would receive a significant amount of money for services that many firms would provide on a complimentary basis. In short, many veteran clients paid $2,500 for trust documents that should have cost only $1,500.
The Attorney General’s Office (AGO) alleged these were violations of the state’s Consumer Protection Act. This is the first case brought based, in part, on the Pension Poacher Prevention Act, legislation proposed by Attorney General Ferguson and signed into law March 2014. The law makes certain practices of this type per se — or automatic — violations of the CPA.
Under the enforcement action, ECP and its employees are prohibited from:
- Providing advice on any VA benefits.
- Marketing estate distribution documents and providing detailed advice on probate without a license to practice law.
- Engaging in any business relationship with an attorney that involves a potential conflict of interest, without notifying all potential consumers of the existence of a potential conflict of interest in writing and obtaining a written waiver of the conflict by the consumer.
- Failing to disclose to consumers any fee-splitting arrangement between the defendant and an attorney.
- Charging unreasonable fees for basic services such as document notarization or document review.
- Advertising or promoting an event, presentation, seminar, workshop, or other public gathering regarding veterans’ benefits that does not include the following disclosure: "This event is not sponsored by, or affiliated with, the United States Department of Veterans Affairs, the Washington State Department of Veterans Affairs, or any other congressionally chartered or recognized organization of honorably discharged members of the Armed Forces of the United States or any of their auxiliaries. Products or services that may be discussed at this event are not necessarily endorsed by those organizations. You may qualify for benefits other than or in addition to the benefits discussed at this event."
ECP will pay $26,564 in restitution to 35 victims, $17,500 to Washington for costs and fees incurred as part of its investigation and $17,500 in civil penalties — suspended as long as the company complies with the consent decree.
Assistant Attorney General John Nelson was lead on this case.
Tips to avoid pension poachers
- For information regarding estate planning, seek the counsel of an independent, licensed attorney.
- Be wary of asset transfers that may make you ineligible for Medicaid.
- Remember that applying for Aid & Attendance is free through the VA or military service organizations like the Veterans of Foreign Wars.
If you feel you have been the victim of any scam, file a complaint with the AGO. To file a consumer complaint, visit www.atg.wa.gov and click the “File a Complaint” button. For more information, call 1-800-551-4636 between 10 a.m. and 3 p.m., Monday through Friday.
Veteran and military resources are available at www.atg.wa.gov/veteran-and-military-resources.
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The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.
Contact:
Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.go