Agents convince elderly couple to cash in annuities, reinvest in leaseback agreements: Misrepresentation: Economic losses: Settlement.
Redding v. Welborn, N.C., Yadkin County Super. Ct., No. 02 CVS 229, July 2005.
The Reddings, an elderly retired couple who suffered from physical and mental disabilities, were approached by insurance sales agents regarding about $400,000 in guaranteed annuities that the agents had previously sold to the couple. After the agents allegedly promised the Reddings they would reap 15 percent profits over five years if they sold their annuities and reinvested the proceeds in pay phone leaseback agreements, the couple did so.
The pay phone company subsequently went bankrupt after it was investigated by the U.S. Securities and Exchange Commission, and the Reddings lost all of their investment.
They sued the agents, alleging negligence, negligent misrepresentation, and violation of a North Carolina deceptive trade practices law. Plaintiffs charged that the agents had misrepresented the profitability and level of risk regarding the pay phone investment. Moreover, plaintiffs claimed, the pay phone investments were part of a multilevel marketing or “pyramid” scheme, from which the agents received an undisclosed 25 percent commission.
The parties settled before trial for $695,000. Plaintiffs’ insurance expert was Bryan Tilden, Pittsboro, N.C.
George Francisco, Winston-Salem, N.C.
Note: Two individual defendants paid an additional $30,000.00 to resolve a fraudulent transfer claim.
Professional Negligence Law Reporter
Volume 21, Number 1