UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

 

 : 

AMERICUS DIGIOIA, on behalf of himself : Civil Action No. 

and the class of all other similarly situated persons, : 

 : 

 Plaintiff, : COMPLAINT - CLASS ACTION

 : 

 v. : 

 : 

AMERUS LIFE INSURANCE COMPANY, : JURY TRIAL DEMANDED 

a corporation; AMERICAN INVESTORS : 

LIFE INSURANCE COMPANY, INC., : 

a corporation; AMERUS ANNUITY GROUP : 

CO., a corporation; AMERUS GROUP CO., : 

 : 

 Defendants. : 

 : 

Plaintiff Americus Digioia, brings this action on behalf of himself and all others similarly 

situated, as stated herein to halt the use of unfair and abusive practices by defendants in 

marketing and selling unsuitable annuity policies to senior citizens, and to remedy the harm 

caused by such practices to date. Defendants designed a scheme specifically to exploit and prey 

upon the finances of vulnerable senior citizens, primarily by the deceptive marketing of estate or 

financial planning services in order to obtain the seniors' financial information and target them as 

prospective purchasers of deferred annuities. Furthermore, defendants' deceptive sales tactics 

involved the use of standardized misleading marketing materials which failed to disclose the 

substantial penalties associated with the annuity sold. Besides this, defendants failed to disclose 

that the annuities sold by defendants were fundamentally unsuitable for seniors due to their 

having a maturity date beyond the annuitant's actuarial life expectancy. Plaintiff specifically 

alleges that defendants' egregious sales practices: violate the federal Racketeering Influenced 

Corrupt Organizations Act ("RICO"); violate the unfair competition and deceptive trade practice 

Case 2:05-cv-05878-MAM Document 1 Filed 11/08/05 Page 1 of 44
laws, and unfair advertising laws in those states where defendants market their annuity products 

to senior citizens; breach defendants' fiduciary duties to plaintiff; comprise aiding and abetting in 

breach of defendants' fiduciary duties; bad faith; fraudulent misrepresentation and constitute 

unjust enrichment such that a constructive trust should be established. 

I. NATURE OF ACTION

1. This class action seeks to halt the systematically unfair and unlawful sales 

practices of AmerUs Life Insurance Company and American Investors Life Insurance Company, 

Inc., and their affiliated entities and remedy the harm caused by their use of a deceptive trust mill 

and financial planning scheme to solicit, offer and sell single and flexible premium fixed and 

equity-indexed deferred annuity products ("deferred annuities") to senior citizens (65 years of 

age or older) with substantial inadequately disclosed "surrender" charges and distribution 

payment commencement dates, i.e., maturity dates, beyond the annuitant's actuarial life 

expectancy. Specifically, agents of the defendants' independent marketing organizations 

("IMOs") and their affiliates are carefully trained to approach prospective senior citizens under 

the guise of providing low-cost estate and/or financial planning services in order to sell them 

deferred annuities via a variety of misleading sales techniques. The insidious nature of 

defendants' sales practices is exemplified by plaintiff's experience. In order to reap the sales 

available in the lucrative seniors' market, defendants shifted the financial risk of death to the 

annuitant and used misleading marketing materials which failed to disclose the substantial 

penalties associated with the annuities defendants sold. Beyond this, Americus Digioia 

("Digioia") was 89 years of age when he purchased an American Investors Life Insurance 

Company, Inc. deferred annuity pursuant to the company's standardized misleading marketing 

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materials. The annuity does not mature until 2020 — well beyond Mr. DiGioia's actuarial life 

expectancy at the time of purchase. 

2. Since the mid 1990's, AmerUs Life Insurance Company and American Investors 

Life Insurance Company, Inc., and their affiliated entities, have increasingly targeted their 

deferred annuity sales efforts towards senior citizens. In doing so, they have failed to comply 

with applicable insurance disclosure requirements, consumer protection statutes, the common 

law, and their own internal policies and procedures. For example, defendants have sold, and 

continue to sell deferred annuities that do not mature for 10-20 years or more to senior citizens 

who often need immediate access to their money to pay for health and long term care. They also 

have sold and continue to sell deferred annuities that do not mature until after the purchaser's 

actuarial life expectancy. In addition, defendants have engaged in "churning" activities by 

persuading seniors to surrender existing annuities and/or borrow against the cash value in 

existing life insurance policies to purchase defendants' annuities without informing them that 

they may incur substantial surrender charges and penalties, and pay additional sales 

commissions. Further, defendants repeatedly failed to include in their standard form annuity 

contracts, sales illustrations and related marketing materials, all material facts necessary to 

adequately inform prospective senior citizen annuity purchasers of the true risks and unsuitability 

of these products. Defendants similarly have failed to properly train and supervise their annuity 

sales force to abide by applicable laws and their own internal policies and procedures for selling 

deferred annuities to senior citizens. 

3. Annuities pool the risk of living beyond the annuitant's life expectancy. A 

consumer who purchases a traditional fixed annuity, typically acquires, in exchange for an upfront payment, the right to a stream of periodic payments from the insurer that is guaranteed to 

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continue for as long as the annuitant is alive. The traditional fixed annuity also is known as an 

"immediate annuity" because the annuitant begins receiving payments immediately after tender 

of the premium to the insurer. Traditional fixed annuities can provide comfort and protection for 

persons who fear that they may outlive their assets. 

4. In contrast to an immediate annuity, a deferred annuity — the type of annuity at 

issue in this complaint — is an asset accumulation product. As a leading authority has 

commented: 

It is important to keep in mind that there are two different products called 

'annuities' offered by the insurance industry, and they have very little in 

common. The first such product, the deferred annuity, is basically an 

investment vehicle. Deferred annuities...have settlement options which 

provide a periodic income, but the settlement options are most often not elected 

and almost never play an important part in the purchase or selection of a 

particular deferred annuity. 

Albert E. Easton & Timothy F. Harris, Actuarial Aspects of Individual Life Insurance and 

Annuity Contracts (ACTEX Publications, 1999) at 20. 

5. Purchasers of deferred annuities select from a limited number of investment 

options. For example, defendants offer annuitants the option of investing premiums in: (a) an 

account guaranteeing a fixed minimal rate of interest return; (b) an account whose rate of interest 

return is dictated by a specific market “index,” e.g., Dow Jones Industrial Average, Standard & 

Poor's Composite Stock Index, etc.; or (c) an account which combines and/or blends these 2 

interest accrual methods.1

 Annuitants expect the value of the account to grow prior to using the 

accumulated account assets during retirement. 

 

1

 These latter 2 types of deferred annuities are sometimes referred to in the insurance industry as either "equityindexed" or "multiple-choice" annuities. However, all of the deferred annuities sold by defendants provide for the 

repayment of the invested principal amount upon the annuity's maturity, together with any earned accumulated 

interest — which amount is determined by the particular interest accrual vehicle selected by the annuitant at the time 

of purchase, e.g., fixed, equity-indexed, or multi-choice. According to the National Association of Securities 

Dealers ("NASD") and well recognized industry publications, equity-indexed annuities are generally considered 

more risky in terms of their ability to ensure the annuitant receives more than just the return of annuity's initial 

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6. Annuitants who withdraw any portion of their initial investment or accrued 

interest within the first 10-15 years incur substantial surrender charges and/or penalties which 

severely limit access to their funds. This inherent lack of flexibility, coupled with the 

diminishing resources of the elderly, prompted enactment of Senior Insurance protection 

provisions in various states where defendants principally sell their annuities (the "Market 

States") and impose a duty of honesty, good faith and fair dealing upon insurers when selling 

new or replacement deferred annuity products to senior citizens. In addition, they prohibit 

"churning" and similar unscrupulous sales practices. They also require insurers to adhere to 

strict disclosure requirements in connection with such sales to ensure the suitability of the 

proposed annuity to the senior citizens' actual insurance and financial needs. 

7. Further, only licensed insurance agents may solicit, offer and sell annuities in 

Pennsylvania and the Market States. See, e.g., 40 P.S. §310.31 (West 2005); Cal. Ins. Code 

§1631; Ohio Admin. Code §3901-6-01(E)(34) (West 2004); Fla. Stat. Ann. §626.112 (West 

2004); Tex. Ins. Code §4001.101 (2004); Wash. Rev. Code Ann. §48.17.060 (West 2005). The 

licensing requirement is intended to guarantee that consumers receive appropriate and informed 

guidance from a duly qualified agent, as well as ensure accountability for any statutory or 

common law sales violations. The licensing requirement accordingly limits those permitted to 

transact insurance to professional agents and brokers -- persons who not only have the training 

and knowledge to counsel prospective insureds -- but who are required to refrain from 

misleading the vulnerable consumer. For example, insurance agents are required to disclose all 

facts and information which may be "material" to a prospective annuitant's decision to purchase a 

 principal investment upon its maturity. This is because the guaranteed minimum return for an equity-indexed 

annuity is typically only 90% of the initial premiums paid, and these types of annuities also generally have higher 

surrender charges and longer surrender and maturity periods than fixed deferred annuities. 

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deferred annuity product. An agent's failure to disclose or concealment of such material facts 

entitles the injured party to rescind the insurance contract. 

8. In response to these insurance law requirements, in the early 1990's AmerUs Life 

Insurance Company and American Investors Life Insurance Company, Inc., jointly developed 

and implemented an internal policy and practice whereby senior citizen annuitant applicants 75 

years of age or older are ineligible to purchase a single or flexible premium deferred annuity 

absent the issuance of an age exemption by management level supervisors. 

9. However, defendants do not conduct any due diligence, or otherwise attempt to 

objectively verify the suitability of their deferred annuity products for senior citizens. 

Defendants do not even require management to speak to the potential policyholder prior to 

issuing an age exemption. Instead, defendants offer sales agents a lucrative commission for sales 

of deferred annuities to senior citizens. 

10. By this action, plaintiff, on behalf of himself and all other affected senior citizen 

purchasers of defendants' deferred annuity products, seek an order enjoining defendants from, 

among other things, selling a deferred annuity without first determining its suitability for the 

prospective purchaser and, from ever selling a deferred annuity that does not mature until after 

the prospective purchaser's actuarial life expectancy. Plaintiff also seeks treble damages for 

violations of RICO together with monetary and punitive damages, statutory damages, restitution, 

injunctive and such other equitable relief as may be appropriate to redress defendants' wrongful 

conduct in selling senior citizens annuity products that are inappropriate, unsuitable and 

detrimental to persons in their age group, often by means of the improper replacement of existing 

annuities and/or life insurance policies. 

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II. JURISDICTION AND VENUE

11. Original jurisdiction in this Court is proper pursuant to 28 U.S.C. §1332(d)(2) 

(2005).2 This Court has supplemental jurisdiction over the state law claims pursuant to 28 

U.S.C. §1367 (2005). 

12. The amount in controversy exceeds $75,000 for plaintiff, exclusive of interest and 

costs, and includes the combined loss of annuity benefits and accumulated cash value, the 

payment of surrender charges, and plaintiff's pro rata share of punitive damages, injunctive and 

equitable relief, and attorney fees, in which plaintiff and each class member have an undivided 

interest. Plaintiff further alleges, upon information and belief, that less than one-third of all class 

members reside in the Commonwealth of Pennsylvania and the cumulative amount in 

controversy for the class exceeds $5,000,000.

13. Venue is proper within this judicial district pursuant to 28 U.S.C. §1391(b), (c) 

and (d) (2005). Moreover, a substantial part of the events and omissions giving rise to the claims 

alleged herein arose in part within this judicial district and has been carried out in part within this 

judicial district. 

III. PARTIES

14. Plaintiff Americus Digioia, is and at all times mentioned herein was a resident and 

citizen of the Commonwealth of Pennsylvania, and over 65 years of age and thus a senior citizen. 

15. Defendant AmerUs Life Insurance Company ("AmerUs Life") is, and at all 

relevant times herein was, a corporation duly organized and existing under the laws of Iowa. 

 

2

 The claims asserted herein arise under RICO, 18 U.S.C. §1961 (2004), et seq. Thus, original jurisdiction is also 

proper pursuant to 28 U.S.C §1331 (2005). 

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16. Defendant American Investors Life Insurance Company, Inc. ("American 

Investors"), the sister company of AmerUs Life is, and at all relevant times herein was, a 

corporation duly organized and existing under the laws of Kansas. 

17. Defendant AmerUs Annuity Group Co. is, and at all relevant times herein was, a 

corporation duly organized and existing under the laws of Kansas. 

18. Defendant AmerUs Group Co. (a.k.a. AmerUs Group Co./IA) is, and at all 

relevant times herein was, a corporation duly organized and existing under the laws of Iowa. 

AmerUs Group Co., is publicly traded on the New York Stock Exchange under the trading 

symbol "AMH." 

19. American Investors is the wholly owned subsidiary of AmerUs Annuity Group 

Co. And, in turn, AmerUs Annuity Group Co. and AmerUs Life are wholly owned subsidiaries 

of AmerUs Group Co. 

20. There exists, and at all relevant times herein mentioned, there existed a unity of 

interest and ownership between AmerUs Group Co. and its wholly owned subsidiaries American 

Investors, AmerUs Annuity Group Co. and AmerUs Life, such that any individuality and 

separateness between them has ceased. In addition to its ownership interest, AmerUs Group Co. 

operated, managed, joint ventured, maintained and controlled the activities of defendants 

AmerUs Annuity Group Co., AmerUs Life and American Investors such that AmerUs Group Co. 

is their alter ego. 

21. For example, upon information and belief, plaintiff alleges that the deferred 

annuity operations of American Investors and AmerUs Life are performed by the same 

employees and supervised by the same management at the Topeka, Kansas corporate offices of 

American Investors. Thus, American Investors and AmerUs Life are, and at all relevant times 

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herein mentioned were, mere shells, instrumentalities and conduits through which their corporate 

parents carried on the business of insurance nationwide. Therefore, the activities, acts and 

omissions of defendants AmerUs Annuity Group Co., AmerUs Life and American Investors 

were and are, in reality, the activities, acts and omissions of the parent AmerUs Group Co. 

22. Consequently, based upon plaintiff's information and belief, adherence to the 

fiction of the existence of AmerUs Group Co. as an entity separate and distinct from the other 

defendants would permit an abuse of the corporate privilege and would promote injustice by 

protecting AmerUs Group Co. from liability for the wrongful acts committed by it under the 

name of AmerUs Annuity Group Co., AmerUs Life and American Investors. Plaintiff shall refer 

to AmerUs Annuity Group Co., AmerUs Life, American Investors, and their common corporate 

parent AmerUs Group Co., collectively as the "American Investors Defendants" or the 

"Company" in this complaint. 

23. Beginning in or about 1999, the American Investors Defendants substantially 

funded the operational expansion of IMOs such as Family First and its wholly-owned affiliate, 

Family First Advanced Estate Planning ("FFAEP"). FFAEP operated what is commonly called a 

"trust mill," which principally focused on selling low-cost estate planning services to senior 

citizens. In return for their funding, the American Investors Defendants gained control over the 

annuity marketing operations of Family First, as well as the corresponding trust mill and 

financial planning operations of its affiliate FFAEP. The American Investors Defendants also 

obtained an option to later purchase both of these companies. The American Investors 

Defendants exercised this option in late 2001 and merged the multi-state trust mill and annuity 

sales operations of Family First and FFAEP. Thereafter, the American Investors Defendants 

controlled their multi-state operations for the purpose of furthering the sale of unsuitable 

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AmerUs Life and American Investors deferred annuities to senior citizens nationwide — first by 

selling estate planning services to senior citizens through various mass marketing techniques and 

then by selling annuities when the trust mill and/or financial planning representative, an 

insurance agent, delivers the trust or other documents. 

24. In their public filings with the United States Securities and Exchange Commission 

("SEC"), the American Investors Defendants describe entities like Family First as "independent 

marketing organizations" or "IMOs" and disclosed that Family First is but one of 5 such entities 

which the Company owned during the relevant time period. According to the American 

Investors Defendants' recent A.M. Best Company, Inc. November 24, 2004 report, these 5 

Company-owned IMO's generated over 75% of all deferred annuity sales for the American 

Investors Defendants in 2003. 

25. Plaintiff believes and thereby alleges that at all times mentioned herein, each of 

the defendants were the agents, employees and partners of each of the remaining defendants, and 

were acting within the scope and authority of such agency, employment and partnership, and 

with the knowledge, consent, approval, and ratification of the remaining defendants. Plaintiff 

further alleges that at all times material the sales agents employed by the defendants were acting 

within the course and scope of such employment when marketing and selling American Investors 

and AmerUs Life deferred annuity products to plaintiff and class members. 

26. Whenever this complaint references acts of any defendant or defendants, such 

allegation shall be deemed to mean the acts of those defendants named in the particular cause of 

action and each of them acting, individually, jointly and severally. 

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IV. DEFENDANTS' TRUST MILL AND FINANCIAL 

 PLANNING DEFERRED ANNUITY SALES SCHEME

27. The American Investors Defendants are titans in the deferred annuity industry, 

with over 267,000 deferred annuities in force as of December 31, 2003, with a corresponding 

face value of approximately $12 billion. The Company markets and sells its annuity products 

nationwide primarily through its wholly-owned IMO network, which accounts for over 75% of 

all sales. The Company's 5 IMO's typically only sell the American Investors Defendants' annuity 

products. The remaining 25% of the Company's annual annuity sales are generated by 

approximately 10 other smaller IMO's and brokerage firms, including but not limited to such 

entities as: Johnson Estate Planning; Estate Planning Services; Studebaker & Associates 

Insurance Services, Inc. ("Studebaker & Associates"); Group Legal Services, Inc. ("Group 

Legal"); Senior Law Practice Group P.C.; AmeriEstate Legal Plan, Inc.; Estate Preservation, 

Inc.; and Gentry Group, Inc. a.k.a. Addison Insurance Marketing, Inc. and The Addison Group, 

which are under contract with the American Investors Defendants to sell the Company's deferred 

annuity products — many on a preferred basis. Plaintiff hereby reserves the right to amend 

these pleadings to include these parties as additional defendants as their relationship with 

defendants becomes clearer. These contracted sales organizations are required to strictly adhere 

to the sales procedures and protocols dictated by the American Investors Defendants, which 

include using only the standard annuity marketing materials, illustrations and form contracts 

created and authorized by the Company, and refraining from deviating from the Company's sales 

presentation scripts. 

28. For at least the last decade, the American Investors Defendants increasingly 

steered their annuity marketing and sales efforts towards the senior market because of the 

billions of dollars in assets maintained by seniors. Further, seniors are generally susceptible to 

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defendants' deceptive and misleading sales practices which prey on their fears of risky and 

unsecured investments. 

29. The American Investors Defendants' formula for their successful annuity sales 

program primarily consists of a simple 2 step process. First, agents of the Company's IMO's 

and/or their trust mill and financial planning affiliates (like American Family Legal Plan, Family 

First and its affiliate FFAEP) are carefully trained to approach prospective senior citizen 

annuitants under the guise of offering to provide low-cost estate and/or financial planning 

services. For example, training begins immediately upon employment with IMO's Family First 

and FFAEP. Agents are required to attend a 3 day training course at the Company's Woodland 

Hills headquarters. During the 3 day course, agents are taught techniques for selling living trusts 

(either an original trust, a restatement of an existing trust or a "completion" of an existing trust) 

and other estate and/or financial planning services to seniors, including, inter alia: 

a. To misrepresent themselves as estate and financial planning experts 

offering free or low cost in-home consultations to senior citizens 

purportedly to educate them about protecting their rights, estate and 

financial assets. Agents are given business cards which identify them 

as a "Group Legal Representative" with "Family First Advanced Estate 

Planning." They do not disclose to senior citizens that they are not 

attorneys, have no legal training, are not experts in estate or financial 

planning, are not versed in matters of "advanced" estate planning, 

"professional" or financial services, or that they are agents with the 

mission of selling annuities; 

b. To engage in the unauthorized practice of law by offering legal 

opinions on the purported benefits and advantages of living trusts and 

other estate planning products and financial services to persuade senior 

citizens to purchase these products and services; 

c. To illegally solicit senior citizens to purchase estate and financial 

planning services; 

d. To provide senior citizens with a training manual, video, "presentation 

book" and other standardized marketing materials that misrepresent the 

benefits and advantages of living trusts, exaggerate the costs associated 

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with a probated estate and misrepresent the nature and extent of a 

probate proceeding; 

e. To use the free in-home estate and financial planning consultations to 

access confidential financial information from which they can identify 

senior citizens with available assets to purchase defendants' annuities 

and sell them annuities; and 

f. To conceal that they are sharing fees with lawyers and that most of the 

fees are not for legal services but for defendants' solicitation services 

related to the sale of annuities. 

30. To guide the "junior agents" along what Family First calls the "Path to Prosperity" 

to becoming a "senior agent" and annuity salesperson, junior agents are armed with standardized 

forms designed to elicit financial and other information necessary for the preparation of legal 

documents. In the process of helping the senior citizens complete the forms, defendants' agents 

work towards gaining the seniors' trust and confidence while simultaneously determining 

whether the senior citizens have available assets to purchase the American Investors Defendants' 

annuity products. The agents are specifically trained to identify all assets and list them in 

standardized documents. 

31. After the agents complete the standardized forms, FFAEP forwards them to 

Group Legal, who in turn, provides them to an attorney for finalization. The agents do not 

disclose that they are not estate planning experts and that Group Legal is not a bona fide group 

prepaid legal plan but, a subterfuge for Family First's mass-marketing of trusts by persons 

engaged in the unauthorized practice of law. They also do not disclose that an attorney will do 

minimal work, if any, on the trust and will receive 20% or less of the fee, with most of the 

remainder going to FFAEP. Seniors also are not told that a "senior agent" will deliver their 

asset-protecting trust and attempt to sell them an annuity. 

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32. To reach "senior agent" status and sell annuities, "junior agents" must attend 

another 3 day training course at American Investors' headquarters on annuity sales that focuses 

on sales techniques designed to mislead senior citizens regarding the purported benefits and 

advantages of annuities versus other forms of investments, and to engender in the targeted senior 

citizens a false sense of trust in the agents. More particularly, the agents are trained to: 

a. Use the "Two Minute Irresistible Presentation" wherein agents conceal 

load-commissions and other costs and misrepresent that in the event of 

a medical emergency or death, Family First/FFAEP will always be 

there to offer assistance to the senior citizen and his family — 

regardless of how far into the future this event may take place; 

b. Frighten senior citizens into believing their other investments, including 

money in banks, are not safe; 

c. Use the "7 Page Presentation" to misrepresent that money placed into 

annuities is "guaranteed" and is the safest investment possible as 

compared to money in banks or the stock market, and to draw unfair 

analogies of the relative investment risks (e.g., an annuity is safe like 

the foundation of a house; a stock is like an unsafe attic in an 

earthquake); 

d. Falsely represent that annuities will enable them to qualify for 

Medicaid should they suffer a long term illness that could waste assets; 

and 

e. Falsely describe surrender penalties without disclosing all surrender 

charges. 

33. After they complete their annuity sales training, the senior agents use defendants' 

"Two Minute Irresistible" and "7 Page Presentation" sales scripts, and other preprinted marketing 

material to extol the virtues of the Company's deferred annuity products as providing 

"guaranteed" investment returns and "lifetime income" while remaining "nursing home safe." 

These representations are untrue and deceptive because they fail to disclose the high 

commissions and other surrender charges that remain in effect for the first 10-15 years of the 

annuity, that the annuity will not mature until after the actuarial life expectancy of the annuitant, 

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and that annuities are not exempt from the criteria used by governmental agencies to determine 

eligibility for government-sponsored senior assistance programs such as Medicaid. 

34. Further, the Company's sales brochures uniformly fail to disclose that the 

defendants' deferred annuities include a death benefit surcharge -- even though the brochures 

prominently feature the "death benefit" provision as a key attribute. To find this death benefit 

surcharge, one has to search through a maze of fine print in the annuity contract itself, where it is 

strategically hidden because defendants knew the death benefit surcharge frustrates a primary 

purpose senior citizens have in purchasing such an annuity. Indeed, the American Investors 

Defendants intentionally designed their deferred annuity contracts to mislead and confuse senior 

citizens and obfuscate the very provisions which make the annuity inherently unsuitable for 

seniors, e.g., the annuity's harsh surrender terms and penalties, the volatile nature of its interest 

accrual features (particularly with equity-indexed deferred annuities), and limitations on 

withdrawals -- even upon the contract's annuitization or the annuitant's death. 

35. Defendants' annuity contracts obscure and hide penalty provisions by, inter alia, 

the use of false and misleading directions and mislabeled section headings, indistinguishable text 

characteristics, confusing verbiage, inconsistent and ambiguous definitions, and "chain" 

provisions requiring the reader to refer from one provision to another provision in a concerted 

effort to conceal these penalties. 

36. Adding to the egregious nature of defendants' conduct is that sales agents from the 

Company's 5 wholly-owned IMO's represent themselves to prospective senior citizen annuitants 

as being completely independent from the American Investors Defendants when just the opposite 

is true. For instance, Family First and FFAEP are specifically beholden to American Investors to 

sell its annuities instead of its competitors' annuities based on their financial relationship. 

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Additionally, at no time are seniors ever told that the agent is permitted to only recommend the 

Company's annuity products, nor are they told about the high commissions and performance 

bonuses defendants pay their agents, e.g., the top sales producers receive cash bonuses and free 

vacations to exotic locations in Europe and the Caribbean. These conflicts of interest are 

universally concealed by the American Investors Defendants in all annuity transactions. 

37. Regardless of which IMO or brokerage firm they are employed by, all sales 

agents are instructed that to avoid immediate termination and/or forfeiture of sales commissions, 

they are not to deviate from the limited information presented in the Company's standard form 

annuity contracts, uniform pre-printed sales illustrations, and marketing materials when making 

sales presentations. Agents also are instructed not to conduct the in depth client interview 

necessary to obtain the information crucial for a management level supervisor to make an 

objectively informed, good faith determination of whether a deferred annuity age exemption 

should be issued. Indeed, American Investors does not even require management to speak to the 

potential annuitant prior to issuing an age exemption. Rather, the age exemptions are 

systematically issued in nearly each and every instance and without regard to the actual 

suitability of the annuity for the senior citizen applicant's insurance and financial needs. 

38. Because senior citizens will not live to see the return on such a long-term 

investment and often need access to their money to pay for health care and nursing homes, a 

deferred annuity is simply not a suitable investment. 

V. CONSPIRACY/AIDING & ABETTING ALLEGATIONS

39. The American Investors Defendants have not engaged in the above described 

wrongful acts and practices alone. Instead, they acted as part of a common scheme and 

conspiracy with other IMO's, including American Legal Plan, brokerage firms, and un-named 

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co-conspirators who agreed to market and sell American Investors' unsuitable deferred annuities 

to senior citizens. 

40. Each defendant and member of the conspiracy, with knowledge and intent, agreed 

to the overall objective of the conspiracy. They also agreed to, and actually committed, the 

above-alleged acts of fraud and unlawful conduct with the goal of depriving plaintiff and other 

class members of their money and property in connection with the sale of unsuitable deferred 

annuities. 

41. Indeed, for the fraudulent deferred annuity marketing and sales scheme described 

above to be successful, each defendant and other members of the conspiracy had to agree to 

enact and utilize the same devices and fraudulent tactics against the plaintiff and class members. 

42. Numerous common facts and similar activities evidences the existence of a 

conspiracy among all of the defendants and other sellers of the American Investors Defendants' 

deferred annuities, including, inter alia: (a) senior citizens are intentionally targeted for the 

marketing and sale of deferred annuities with maturity dates beyond their actuarial life 

expectancy; (b) deferred annuity sales presentations are commonly made by agents of Family 

First and other IMO's such as American Family Legal Plan, and brokerage firms owned, 

operated or controlled by the American Investors Defendants, in conjunction with a so-called 

"estate planning services" and/or "financial planning services" sales pitch; (c) the American 

Investors Defendants' own internal deferred annuity senior citizen age exemption protocols and 

procedures are deliberately disregarded; (d) existing policyholders with large accumulated cash 

values are churned into defendants' deferred annuity products; and (e) the lavish incentives that 

the American Investors Defendants offer their annuity sales force. 

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43. Within the applicable statute(s) of limitations, the conspiracy was conducted 

through and implemented by: (a) defendants' sharing of its policyholder lists with IMOs and 

brokerage firms for the purpose of generating annuity sales; (b) the American Investors 

Defendants' development of uniformly deceptive and misleading sales materials, illustrations and 

scripted sales presentations which were disseminated to their sales force; (c) defendants' use of 

agents to promote low-cost estate and financial planning services as means to facilitate deferred 

annuity sales to senior citizens; (d) defendants' direction to their sales force to refrain from 

collecting information concerning a prospective senior citizen's suitability for American 

Investors' deferred annuity products; and (e) the American Investors Defendants' utter disregard 

of the Company's internal deferred annuity age exemption protocols and procedures. 

VI. AMERICUS DIGIOIA'S INDIVIDUAL TRANSACTION

44. Within the applicable statute of limitations, defendants, through their standardized 

marketing materials and the sales presentation performed by a duly appointed American 

Investors Life Insurance Company, Inc. insurance agent, induced Mr. Digioia to purchase 

American Investors Life Insurance Company, Inc., "Flexible Premium Deferred Annuity Policy" 

deferred annuity issued under policy number 468309. Mr. DiGioia’s premium payments on this 

deferred annuity was $78,415.71. The annuity has a maturity date of January 10, 2020 and 

further provides for a 12 year surrender charge period. 

45. Defendants' scheme involved the use of a Trust "mill," whereby through scare 

tactics, including exaggerating costs attributable to probating estates, senior citizens are lured 

into purchasing living trusts and long term deferred annuities. Mr. Digioia was enticed into 

purchasing the unsuitable American Investors Life Insurance annuity through such a scheme. As 

part of the scheme the representatives of the IMO, in this case American Family Legal Plan, hold 

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themselves out to senior citizen victims as independent or neutral estate or financial planners, 

acting for or on behalf of an attorney who can prepare their legal documents, and they lead the 

senior citizen victim into believing they are acting in his or her best interests, never telling the 

senior citizen victim of their true identity and purpose, which is to sell annuities to senior 

citizens, regardless of whether the senior citizen needs them. 

46. American Family Legal Plan, one of Defendants' IMO's, held itself out as an 

experienced expert in the area of estate planning, informing Mr. Digioia that it could provide 

estate planning services that would benefit him. Representatives of American Family Legal Plan 

made presentations to Mr. Digioia in his home, ostensibly concerning estate planning, and Mr. 

Digioia was given counseling regarding estate planning. Through these counseling sessions, 

American Family Legal Plan induced Mr. Digioia to purchase the unsuitable American Investors 

deferred annuity, which had a 2020 maturity date, well beyond Mr. DiGioia’s actuarial life 

expectancy. 

47. At no time, either prior, during or after these in home counseling sessions, was 

Mr. Digioia informed that the American Family Legal Plan representatives he spoke to were 

insurance agents and that their true objective in meeting him and offering him estate planning 

services was to solicit him to purchase an American Investors Life Insurance Company annuity. 

American Family Legal Plan did not offer Mr. Digioia any choice in annuity products or 

companies, further Mr. Digioia was never informed of the restriction, early withdrawal penalties 

and other aspects of the annuity which made it completely unsuitable for Mr. Digioia. 

48. American Family Legal Plan also induced Mr. Digioia to purchase a living trust 

through attorney Brett Weinstein. Attorney Weinstein, working hand in hand with American 

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Family Legal Plan, made American Family Legal Plan his delivery agent with respect to the 

living trust and related documents. 

49. All of this was part of a scheme to induce Mr. Digioia to engage in unneeded 

estate planning and purchase unsuitable annuity products, thus reaping fees for everyone 

involved at Mr. DiGioia’s expense. 

50. At the time of the annuity purchase plaintiff Americus Digioia was 89 years old. 

In 2020, on the maturity date for the policy, Mr. Digioia, assuming he is still alive, will be 104 

years old. Thus, under the American Investors Defendants' internal protocols and procedures, 

Mr. DiGioia’s purchase required the issuance of an age exemption following a determination of 

the suitability of the annuities for their insurance and financial needs. However, no such 

suitability review was conducted by the American Investors Defendants prior to issuance of an 

age exemption for Mr. DiGioia’s annuity purchases. 

51. Mr. Digioia was harmed by his American Investors Life deferred annuity 

purchase because of its extended maturity date, restricted fund access and substantial surrender 

charges which makes it an unsuitable financial product for him. 

52. In contrast, this annuity transaction benefited the American Investors Defendants 

and its sales agent who collected premiums, fees and commissions from the sale of the annuities. 

VII. RICO ALLEGATIONS

A. The American Investors Annuity Enterprise

53. Plaintiff and class members are each "persons" within the meaning of 18 U.S.C. 

§1961(3) (2004), and each of them has sustained injury to their business or property as a result of 

the acts and the conduct of the defendants described herein. 

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54. Based upon plaintiff's current knowledge, the following group of individuals 

associated in fact (which plaintiff refers to as the "American Investors Annuity Enterprise" 

("AIAE")) is responsible for the marketing, solicitation and sale of various types of immediate 

and deferred American Investors and AmerUs Life annuity products to members of the general 

public — which include, as a subpart thereof, senior citizens — and constitutes an "enterprise" as 

that term is defined in 18 U.S.C. §1961(4) (2004): (a) the American Investors Defendants who 

underwrite and issue the annuities; and (b) the IMO's, brokerage firms and agents that the 

defendants have contractually engaged for the purpose of assisting, perfecting and furthering 

their wrongful scheme to market and sell American Investors and AmerUs Life annuity products 

to senior citizens. 

55. The AIAE is an ongoing organization which engages in, and whose activities 

affect, interstate commerce. 

56. While the defendants participate in and are members and part of the AIAE, they 

also have an existence separate and distinct from the enterprise, and each of the defendants are 

"persons" as defined by 18 U.S.C. §1961(3) (2004). 

57. To successfully market and sell unsuitable deferred annuities to senior citizens in 

the manner set forth above, defendants required a systematic means to control the substantive 

information provided to prospective purchasers at the point of sale, including concealing the 

inherent unsuitability of an investment vehicle that in all likelihood will not mature until long 

after the senior citizen purchaser has died. The AIAE provides defendants with such a system 

and ability, and their control of and participation in it is necessary for the successful operation of 

their scheme. The defendants control and operate the AIAE by: 

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a. Designing and issuing deferred annuity products with extended 

maturity dates, high surrender charges and steep commissions for sale 

to senior citizens; 

b. Developing themselves, and through Family First and the other IMO's 

controlled by the American Investors Defendants, programs for "lowcost" senior citizen estate and/or financial planning services to be 

performed by their IMO's and/or their affiliates as a means to facilitate 

the sale of defendants' unsuitable deferred annuity products to senior 

citizens, often including misrepresenting themselves as "paralegals," 

"estate planners" or "financial planners" to gain entry to seniors' homes 

and to learn their confidential financial information otherwise 

unavailable to them as "insurance agents;" 

c. Developing uniform marketing materials, standardized annuity 

contracts and scripted sales presentations, including but not limited to 

those materials developed at annual conventions and in programs such 

as "Annuity University" which focus on how to target seniors and 

other high pressure sales techniques, all of which extol the purported 

safety of deferred annuities for purchase by senior citizens while 

concealing their true unsuitability for use by the Company's sales force 

(principally through captive IMO's); 

d. Developing by themselves, and through IMO's directly owned and 

controlled by the American Investors Defendants, uniform sales 

techniques to "churn" senior citizens into purchasing deferred 

annuities from the American Investors Defendants, for example by 

recommending that instead of receiving low returns on CDs, the senior 

may wish to transfer their money into an annuity paying 8% without 

disclosing its associated penalties; 

e. Directing and controlling the Company's sales force's strict adherence 

to and use of uniform and standardized sales materials, techniques and 

presentations developed and authorized by defendants to market and 

sell unsuitable deferred annuities to senior citizens, frequently within 

90 days of the date of the trust sold via the "estate planning" services; 

f. Developing and implementing a comprehensive sales incentive 

program whereby the American Investors Defendants tracked and 

measured the success of their sales force's deferred annuity sales and 

lavishly rewarded their top sales producers with cash bonuses, exotic 

vacations and other substantial sales perks, and by paying high 

commission costs to independent agents for steering business to them, 

costs passed on to the annuitant and factored into the underwriting 

criteria; 

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g. Accepting applications for, and issuing deferred annuity products to, 

senior citizens even though the maturity dates for such products were 

beyond the actuarial life expectancy of the annuitant and, thus, were 

inherently unsuitable investments; and 

h. Imposing and/or collecting improper annuity charges from plaintiff 

and other class members upon their surrender of all or part of their 

annuity and/or in the event the annuitant dies within the annuity's 

surrender period. 

58. As set forth above, the AIAE has an ascertainable structure separate and apart 

from the pattern of racketeering activity in which the defendants engage. For example, the AIAE 

operations include the marketing, solicitation and sale of various types of American Investors 

and AmerUs Life annuity products to persons under age 65, as well as senior citizens. In 

addition to the unsuitable deferred annuities at issue, the products include immediate annuities 

that enable the annuitant to receive income distributions immediately upon purchase, as well as 

deferred annuities with maturity dates within the actuarial life expectancy of the annuitant. 

Notwithstanding the availability of annuity products that are suitable for purchase by senior 

citizens, defendants have exerted control and dominance over the operations of AIAE for the 

purpose of furthering their unlawful scheme of targeting senior citizens specifically for the 

marketing and sale of unsuitable deferred annuity products. 

B. Predicate Acts

59. Section 1961(1)(B) (2004) of RICO provides that "racketeering activity" includes 

any act indictable under 18 U.S.C. §1341 (2002) (relating to mail fraud) and 18 U.S.C. §1343 

(2002) (relating to wire fraud). As set forth below, defendants have and continue to engage in 

conduct violating each of these laws to effectuate their scheme. 

60. In addition, to effectuate their scheme, each of the defendants sought to and did 

aid and abet the others in violating the above laws within the meaning of 18 U.S.C. §2 (2005). 

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As a result, their conduct is indictable under 18 U.S.C. §§1341 and 1343 (2002) on this 

additional basis. 

C. Violations of 18 U.S.C. §§1341 and 1343

61. For the purpose of executing and/or attempting to execute the above-described 

scheme to market and sell unsuitable deferred annuities to senior citizens by means of false 

pretenses, representations or promises, the defendants, in violation of 18 U.S.C. §1341 (2002), 

placed in post offices and/or in authorized repositories matter and things to be sent or delivered 

by the Postal Service, caused matter and things to be delivered by commercial interstate carriers, 

and received matter and things from the Postal Service or commercial interstate carriers, 

including, but not limited to, deferred annuity marketing brochures, performance illustrations, 

applications, contracts, sales presentation scripts, training manuals and video tapes, 

correspondence, annuitant leads lists, premium and commission payments, reports, data, 

summaries, statements, and other materials relating to the marketing and sale of defendants' 

deferred annuities. 

62. For the purpose of executing and/or attempting to execute the above-described 

scheme to defraud or obtain money by means of false pretenses, representations or promises, the 

defendants, also in violation of 18 U.S.C. §1343 (2002), transmitted and received by wire, matter 

and things, which include, but are not limited to, annuitant applications, sales presentation 

scripts, correspondence, annuitant leads lists, premium and commission payments, reports, data, 

summaries, oral and written statements, faxes, and other deferred annuity materials. 

63. The matter and things sent by defendants via the Postal Service, commercial 

carrier, wire or other interstate electronic media as identified above include, inter alia: 

a. False and fraudulent representations that defendants' deferred annuity 

products are safe and suitable for purchase by senior citizens; 

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b. Material omissions of fact concealing that defendants would and did 

use the fraudulent and unlawful sales techniques and presentations and 

the deceptive and misleading sales materials and annuity contracts 

described above to solicit and induce the plaintiff and other members 

of the Class into purchasing defendants' unsuitable deferred annuities, 

either as new stand alone purchases or through the surrender (in whole 

or part) of an existing permanent life insurance policy or annuity, or by 

borrowing against an existing permanent life insurance policy; 

c. False and deceptive representations concerning the purported 

"independence" of the IMO's and brokerage firms marketing and 

selling the defendants' deferred annuities to senior citizens when, in 

fact, many of those entities, are secretly owned, operated and 

controlled by defendants; and 

d. Material omissions of fact that the sales agents employed by the IMO's 

and brokerage firms are required (and highly incentivized) to adhere to 

defendants' scripted sales materials and thus are not providing 

prospective annuitants with "independent" estate and financial 

planning services or insurance advice as represented. 

64. The defendants' misrepresentations, acts of concealment and failures to disclose 

were knowing and intentional, and made for the purpose of deceiving the plaintiff and the Class 

and obtaining their monies and property for defendants' gain. 

65. The defendants either knew or recklessly disregarded the fact that the 

misrepresentations and omissions described above and incorporated herein were material, and 

plaintiff and the Class relied on the misrepresentations and omissions as set forth above. 

66. As a result, defendants have obtained money and property belonging to the 

plaintiff and Class Members, and plaintiff and the Class have been injured in their business or 

property by the defendants' overt acts of mail and wire fraud, and by their aiding and abetting 

each other's acts of mail and wire fraud. 

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D. Pattern of Racketeering Activity

67. The defendants have engaged in a "pattern of racketeering activity," as defined by 

18 U.S.C. §1961(5) (2004), by committing or aiding and abetting in the commission of at least 2 

acts of racketeering activity, i.e., indictable violations of 18 U.S.C. §§1341 and 1343 (2002) as 

described above, within the past 10 years. In fact, each of the defendants has committed or aided 

and abetted in the commission of thousands of acts of racketeering activity. Each racketeering 

act was related, had a similar purpose, involved the same or similar participants and method of 

commission, had similar results and impacted similar victims, including the plaintiff and other 

members of the Class. 

68. The multiple acts of racketeering activity which defendants committed and/or 

conspired to, or aided and abetted in the commission of, were related to each other and amount to 

and pose a threat of continued racketeering activity, and therefore constitute a "pattern of 

racketeering activity" as defined in 18 U.S.C. §1961(5) (2004). 

E. RICO Violations

69. Defendants, through the conduct described above, acquired, maintained and 

exercised control over the AIAE enterprise, which was engaged in or affected interstate or 

foreign commerce. Therefore, defendants have violated 18 U.S.C. §1961(1)(B) (2004). 

70. As a direct and indirect result of defendants' conduct as described above, 

substantial income was generated and received by and came under the control of defendants. 

Defendants used that income to establish and/or operate the AIAE enterprise described herein, 

which was engaged in interstate or foreign commerce. Therefore, defendants have violated 18 

U.S.C. §1962(a) (2005). 

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71. Section 1962(c) of RICO provides that it "shall be unlawful for any person 

employed by or associated with any enterprise engaged in, or the activities of which affect, 

interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of 

such enterprise's affairs through a pattern of racketeering activity...." Through the patterns of 

racketeering activities outlined above, the defendants have conducted and participated in the 

affairs of the AIAE. 

72. Each of the defendants willfully agreed to, and did, materially participate, directly 

or indirectly, in the conduct of the affairs of the AIAE through a pattern of racketeering activity 

comprised of numerous acts of mail fraud and wire fraud, and each defendant so participated in 

violation of 18 U.S.C. §1962(c) (2005). 

73. Additionally, Section 1962(d) of RICO makes it unlawful "for any person to 

conspire to violate any of the provisions of subsection (a), (b), or (c) of this section." 

Defendants' conspiracy to defraud the plaintiff and other class members of their money and 

property from the sale of unsuitable deferred annuities pursuant to the scheme described above 

violates 18 U.S.C. §1962(d) (2005). 

VIII. CLASS ACTION ALLEGATIONS

74. Plaintiff brings this action for himself and on behalf of all persons in the Market 

States, or such states as the Court may determine to be appropriate for class certification 

treatment, pursuant to Federal Rules of Civil Procedure 23(a) and 23(b). The class of persons 

which plaintiff seeks to represent is defined as: 

All persons who within the applicable statute of limitations of the date of the 

commencement of this action, and while 65 years of age or older, purchased 

one or more American Investors or AmerUs Life deferred annuities either 

directly, or through the surrender (in whole or part) of an existing permanent 

life insurance policy or annuity, or by borrowing against an existing 

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permanent life insurance policy, which annuity had a maturity date beyond the 

annuitant's actuarial life expectancy (the "Class" or "Class Members"). 

75. Excluded from the Class are the defendants, any parent, subsidiary or affiliate of 

the defendant, any entity in which the defendants have a controlling interest, and the respective 

officers, directors, employees, agents, legal representatives, heirs, predecessors, successors and 

assigns of such excluded persons or entities. 

76. This Class seeks certification of claims for damages pursuant to 18 U.S.C. 

§1962(d) (2005), for conspiracy to violate 18 U.S.C. §2 (2005), and for aiding and abetting in 

violation of 18 U.S.C. §1962(c) (2005). The Class also seeks certification of claims for 

injunctive relief, restitution, disgorgement and monetary and exemplary damages under the 

consumer protection statutes of the Commonwealth of Pennsylvania and similar statutory 

enactments of the Market States. 

77. Plaintiff and the members of the Class are so numerous that joinder of all 

members individually, in one action or otherwise, is impractical. Specifically, the American 

Investors Defendants' 2004 Form 10-K filing with the SEC reveals that American Investors had 

over 272,977 deferred annuities in force as of December 31, 2004. Plaintiff alleges on the basis 

of information and belief that the vast majority of those annuitants are senior citizens who can be 

readily identified through defendants' records. Therefore, class notice easily can be mailed to all 

class members in the event the Class is certified by this Court. 

78. This action involves questions of law and fact common to plaintiff and all 

members of the Class concerning violations of RICO, state consumer protection and elder abuse 

statutes. These common questions predominate over any issues affecting individual members of 

the Class and include: 

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a. Whether defendants deployed a scheme or artifice to deceive and 

engaged in a common course of business conduct which deceived or 

misled the plaintiff and members of the Class into purchasing a 

deferred annuity with a maturity date beyond their actuarial life 

expectancy at the time of sale; 

b. Whether defendants failed to disclose to the plaintiff and other 

members of the Class material information concerning suitability, 

impact of and detriments from using some or all of the cash value of 

an existing life insurance policy or annuity to purchase a new 

American Investors or AmerUs Life deferred annuity by means of a 

lapse, surrender or withdrawal/partial surrender of a life insurance 

policy or annuity, or a life insurance policy loan; 

c. Whether defendants churned or twisted plaintiff and other members of 

the Class in connection with their purchase of the Company's 

annuities; 

d. Whether defendants developed, encouraged and engaged in a scheme 

designed to sell deferred annuities to their existing policyholders and 

annuitants through the concealment of material facts; 

e. Whether defendants utilized a common scheme employing common 

standardized misleading marketing materials and other deceptive sales 

practices in order to sell unsuitable deferred annuities to senior 

citizens; 

f. Whether defendants breached their duty of good faith and fair dealing 

with plaintiff and members of the Class or otherwise engaged in 

unfair, fraudulent or wrongful business practices during the relevant 

time period in connection with the marketing and sale of their deferred 

annuity products to senior citizens; 

g. Whether the plaintiff and members of the Class are entitled to 

damages, specific performance, injunctive relief, restitution, 

disgorgement or other equitable relief from the defendants; and 

h. Whether plaintiff and members of the Class have sustained damages as 

a result of defendants' wrongful conduct and, if so, what is the proper 

measure of such damages. 

79. The amount of restitution and damages awardable to plaintiff and each member of 

the Class readily can be determined from defendants' computer records and data. There is no 

need for any manual computation of these amounts because, among other things, the precise 

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amount of money unreasonably, unlawfully, unfairly and wrongfully taken from plaintiff and 

each Class Member can be calculated through defendants' data processing system. 

80. Judicial determination of the common legal and factual issues essential to this 

case would be far more efficient and economical as a class action than in piecemeal individual 

determinations. 

81. There is no plain, speedy or adequate remedy other than by maintenance of this 

lawsuit as a class action because individual damages are relatively small, making it economically 

infeasible for Class Members to pursue remedies individually. The prosecution of separate 

actions by individual members of the Class, even if theoretically possible, would create a risk of 

inconsistent or varying adjudications with respect to individual class members against defendants 

and would establish incompatible standards of conduct for defendants. 

82. The named plaintiff's claim is typical of those of the absent Class Members. The 

named plaintiff is a member of the class of victims described herein. Specifically, the Plaintiff is 

a senior citizen who was induced to purchase an unsuitable American Investors Life Insurance 

Company, Inc. deferred annuity based upon the deceptive and wrongful sales practices described 

herein and in contravention of the American Investors Defendants' age exemption protocols and 

procedures. Therefore, the plaintiff's claim against defendants are typical of those of other 

members of the Class. 

83. The named plaintiff is willing and prepared to serve the Court and proposed Class 

in a representative capacity with all of the obligations and duties material thereto. Plaintiff will 

fairly and adequately protect the interests of the Class and has no interests adverse to or which 

directly and irrevocably conflict with, the interests of other members of the Class. 

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84. The self-interests of the named class representative is co-extensive with, and not 

antagonistic to, those of the absent Class Members. The proposed representative will undertake 

to represent and protect the interests of the absent class members. 

85. The named plaintiff has engaged the services of counsel indicated below. Said 

counsel are experienced in complex class litigation, will adequately prosecute this action, and 

will assert and protect the rights of, and otherwise will represent the named class representative 

and absent Class Members. 

86. A class action is superior to other available methods for the fair and efficient 

adjudication of the controversies herein in that: (a) individual claims by the plaintiff or Class 

Members are impractical as the costs of pursuit far exceed what plaintiff or any one Class 

Member has at stake; (b) as a result, although some class actions have been filed, there has been 

very little individual litigation over the controversies herein, and individual members of the Class 

have no interest in prosecuting and controlling separate actions; (c) it is desirable to concentrate 

litigation of the claims herein in this forum; and (d) the proposed class action is manageable. 

COUNT ONE

(Civil RICO)

87. Plaintiff refers to and realleges each and every preceding paragraph and 

incorporate those paragraphs as though set forth in full in this cause of action. 

88. This claim for relief arises under 18 U.S.C. §1964(c) (2005). 

89. In violation of 18 U.S.C. §1962(c) (2005), defendants have, as set forth above, 

conspired to violate 18 U.S.C. §1962(c) (2005) by conducting or participating in the conduct of, 

the affairs of the AIAE through a pattern of racketeering. 

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90. As a result and by reason of the foregoing, plaintiff and Class Members have been 

injured, suffered irreparable harm and sustained damage to their business and property, and are 

therefore entitled to recover actual and treble damages, and their costs of suit, including 

reasonable attorney fees, pursuant to 18 U.S.C. §1964(c) (2005). 

91. In addition, as set forth above, defendants have violated 18 U.S.C. §§1962(c) and 

(d) (2005), and will continue to do so in the future. Enjoining the defendants from committing 

these RICO violations in the future and or declaring their invalidity is appropriate pursuant to 18 

U.S.C. §1964(a) (2005), which authorizes the district courts to enjoin violations of 18 U.S.C. 

§1962 (2005). 

WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

COUNT TWO

(Violation of the Consumer Protection Laws at Each State)

92. Plaintiff refers to and realleges each and every preceding paragraph and 

incorporate those paragraphs as though set forth in full in this cause of action. 

93. In marketing and selling deferred annuities to the plaintiff and members of the 

Class as described above, defendants engaged in unlawful, deceptive and unfair business acts 

and deceptive and misleading advertising within the meaning of 73 P.S. §§201-1 (West 2005), et 

seq., and the similar statutory enactments of the other Market States, including consumer 

protection and consumer sales practices acts prohibiting unlawful, deceptive and unfair business 

practices and acts of unfair competition. See, e.g., Cal. Bus. & Prof. Code §§17200 (2005), et 

seq.; Fla. Stat. Ann. §§501.201 (West 2005), et seq.; Ohio Rev. Code Ann. §1345 (West 2004); 

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Tex. Bus. & Com. Code §§17.41 (West 2005), et seq.; Wash. Rev. Code Ann. §§19.86 (West 

2005), et. seq.

94. Defendants' acts of unfair competition and unlawful practices include violations 

of, inter alia, federal civil RICO and similar statutory enactments in the other Market States by: 

a. Selling the plaintiff and Class Members deferred annuities that were 

unsuitable for their estate planning, insurance and/or financial needs; 

b. Issuing age exemptions without performing a full and complete 

investigation regarding whether an exemption was appropriate for the 

annuitant; 

c. Ignoring Company protocols and practices regarding the sale of 

deferred annuities to senior citizens to further defendants' financial 

interests; 

d. Failing to fully and accurately perform underwriting duties; and 

e. Maintaining an illegal marketing scheme to sell annuity policies to 

senior citizens. 

95. Accordingly, defendants have violated 73 P.S. §§201-1, et seq. proscriptions and 

similar statutory enactments in the other Market States, and the plaintiff and Class Members are 

entitled to injunctive and equitable relief in the form of restitution and disgorgement of all 

earnings, profits, compensation and benefits defendants obtained as a result of such unfair and 

unlawful business practices. 

96. By reason of Defendants' unlawful, deceptive, willful and wanton misconduct, 

plaintiff and Class Members demand treble damages as allowed by law in 73 P.S. §201-1-9.2(a) 

and by the Consumer Protection Laws ("CPL") of each other state. Further, by reason of the 

fraudulent, reckless, malicious, willful, wanton misconduct of defendants and each of them, 

which were intentional and deliberate, plaintiff and the class demand punitive damages. 

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97. As a result of the conduct described above, defendants have been and will be 

unjustly enriched at the expense of the plaintiff and Class Members. Specifically, defendants 

have been unjustly enriched by receiving substantial monies and profits from the sale of their 

deferred annuity products which were promoted and sold through advertisements which 

affirmatively misrepresent, either directly or by implication, the true suitability of such products 

for purchase by senior citizen class members. Further, both plaintiff and other Class Members 

have been deprived of money or property as a result of defendants' wrongful conduct and 

unlawful acts and practices and, therefore, have sustained injury in fact. 

98. Additionally, Defendants' uniform sales materials and standardized annuity 

contract forms deceived and misled the plaintiff and other members of the Class as to the 

suitability of the deferred annuities they purchased from defendants and thus also constitute 

unfair or deceptive acts or practices in violation of 73 P.S. §§201-1, et seq. and similar statutory 

enactments prohibiting unfair, deceptive and misleading advertising in other Market States. 

99. Defendants used various forms of media to advertise, call attention to, and 

otherwise publicize their deferred annuities by, inter alia, misleadingly and deceptively 

representing that their annuity products are suitable for purchase by senior citizens even when 

the annuity's maturity date is beyond the purchaser's actuarial life expectancy. Such promotions 

and advertisements constitute unfair methods of competition and unfair or deceptive acts or 

practices within the meaning of 73 P.S. §§201-1, et seq. and similar statutory enactments in other 

Market States, which advertisements are likely to have deceived and continue to deceive the 

consuming public. Defendants either knew or recklessly disregarded that such advertising was 

deceptive, misleading or otherwise inadequate. Such conduct also constitutes a violation of 73 

P.S. §§201-1, et seq. and similar statutory enactments in other Market States. 

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100. The above-described unfair, unlawful, deceptive and misleading advertising and 

business acts conducted by defendants still continues to this day and presents a threat to Class 

Members and the general public in that defendants have failed to publicly acknowledge their 

wrongdoing or publicly issue adequate corrective notices and advertising to purchasers of 

defendants' annuity products and to the public generally. 

101. The advertising/marketing brochures, along with the sales techniques utilized by 

defendants are, in fact, false and misleading in that defendants made repeated express 

representations that: 

a. The American Investors and AmerUs Life deferred annuity products 

were a smart choice for the plaintiff's and other Class Members' 

financial future; 

b. The defendants' deferred annuity products offered access to money, 

including free withdrawals; 

c. The defendants' deferred annuity products offered special access to 

money for emergencies; 

d. The defendants' deferred annuity products are appropriate and suitable 

for senior citizens; 

e. The defendants' deferred annuity products satisfy estate and financial 

planning requirements; and 

f. The defendants' deferred annuity products will provide peace of mind. 

102. These representations were made by defendants with the intent to induce and did, 

in fact, reasonably induce plaintiff and other Class Members to purchase the defendants' annuity 

products and thus deprived them of monies and property as a result of defendants' acts and 

practices. Had plaintiff and the Class Members known the actual facts, they would not have 

purchased the annuities. 

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103. As a result of the conduct described above, defendants have been and will be 

unjustly enriched at the expense of the plaintiff and Class Members. Specifically, defendants 

have been unjustly enriched by receiving substantial monies and profits from the sale of their 

deferred annuity products which were promoted and sold through advertisements which 

affirmatively misrepresent, either directly or by implication, the true suitability of such products 

for purchase by senior citizens. 

WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

COUNT THREE

(Breach of Fiduciary Duty) 

104. Plaintiff repeats and realleges the allegations set forth in the foregoing paragraphs 

as if fully set forth herein. 

105. By virtue of their purported positions as financial advisors, estate planning 

specialists, and because of their superior knowledge and ability to manipulate and control senior 

citizens' finances and legal status, defendants assumed fiduciary duties to plaintiff and the Class. 

106. Defendants owed to plaintiff and members of the Class the highest duties of 

loyalty, honesty, fidelity, trust, and due care in their fiduciary obligations, and were and are 

required to use their utmost ability to provide estate planning and investment advice in a fair, just 

and equitable manner, and to act in furtherance of the best interests of the plaintiff and the Class 

so as to benefit their clients, and not themselves. 

107. As set forth above, defendants each breached their obligations and fiduciary 

duties of care, loyalty, reasonable inquiry, oversight, good faith and supervision by, inter alia: 

a. Unreasonably and in bad faith, refusing to give sufficient consideration 

to plaintiff's welfare rather than their own financial interests; 

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b. Unreasonably and in bad faith issuing an age exception without 

performing a full and complete investigation of whether or not such an 

exception would be suitable for their customer; 

c. Ignoring company protocols and standards in order to further their own 

financial interests; 

d. Failing to competently supervise and monitor their employees; 

e. Failing to fully disclose the true characteristics of the deferred 

annuities sold to senior citizens, instead making false and fraudulent 

representations that defendants' deferred annuities are safe and suitable 

for purchase by senior citizens; 

f. Making material omissions of fact that the IMO's and brokerage firms 

marketing and selling defendants' deferred annuities were 

"independent;" and 

g. Maintaining an illegal marketing scheme and conspiracy in violation 

of §1961(1)(B) of RICO to sell annuity insurance to senior citizens. 

108. As described herein, defendants recklessly or knowingly breached their fiduciary 

duties by orchestrating, devising, carrying out, participating in, and/or failing to prevent, 

terminate, or timely correct the wrongdoing alleged herein. 

109. Each of these violations was achieved because defendants willingly, knowingly, 

and/or with recklessness sought to gain their own financial advantage to the disadvantage of the 

plaintiff and the Class. 

110. As a direct and proximate result of defendants' violations of their fiduciary duties, 

the plaintiff and the Class have been injured, and suffered and continue to suffer economic and 

non-economic losses, all in an amount to be determined according to proof at trial. 

111. In light of the foregoing, the plaintiff and the Class request that the Court deem 

this a constructive fraud, and require defendants to immediately rescind the annuity contracts to 

which plaintiff and the Class are subject as their fiduciary obligations so require. 

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WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

COUNT FOUR

(Aiding and Abetting Breach of Fiduciary Duty) 

112. Plaintiff repeats and realleges the allegations set forth in the foregoing paragraphs 

as if fully set forth herein. 

113. Defendants aided and abetted, encouraged, and rendered substantial assistance to 

one another in order to accomplish the wrongful acts complained of herein. In aiding and 

abetting and substantially assisting the commission of the acts complained of, defendants acted 

with an awareness of their wrongdoing and realized that their conduct would substantially assist 

the accomplishment of the wrongful conduct and scheme alleged herein. In performing these 

acts, each defendant either acted as agents of the Company, or the Company ratified such acts, or 

both, and benefited financially from their scheme. 

114. As a result of the wrongful conduct of defendants, and each of them, plaintiff and 

the Class have suffered and continue to suffer economic and non-economic losses, all in an 

amount to be determined according to proof at trial. 

WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

COUNT FIVE

(Unjust Enrichment and Imposition of Constructive Trust)

115. Plaintiff repeats and realleges the allegations set forth in the foregoing paragraphs 

as if fully set forth herein. 

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116. By engaging in the unsuitable deferred annuity sales scheme, the American 

Investors Defendants obtained payments from the plaintiff and the Class Members in the form of 

annuity premiums, commissions, service charges, surrender charges, and other fees, expenses 

and charges based upon misleading and fraudulent uniform sales presentations, marketing 

materials, and annuity illustrations, all as detailed more fully above. 

117. As a result of the relationships between the parties and the facts stated above, 

defendants will be unjustly enriched if they are permitted to retain such funds and therefore a 

constructive trust should be established over the monies plaintiff and the class members paid to 

the American Investors Defendants, including annuity premiums, commissions, service charges 

and other fees, expenses and charges imposed by defendants. These monies are traceable to The 

American Investors Defendants firms owned, operated and/or controlled by the American 

Investors Defendants. 

118. The victims of the unsuitable deferred annuity sales scheme described above have 

no adequate remedy at law and have been damaged in an amount to be determined at the trial of 

this action. 

119. By reason of defendants' unlawful, deceptive, willful and wanton misconduct, 

plaintiff and the Class demand treble damages as allowed by law in 73 P.S. §201-9.2(a). Further, 

by reason of the fraudulent, reckless, malicious, willful, wanton misconduct of defendants, and 

each of them, which were intentional and deliberate, plaintiff and the Class demand punitive 

damages. 

WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

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COUNT SIX

(Bad Faith)

120. Plaintiff repeats and realleges the allegations set forth in the foregoing paragraphs 

as if fully set forth herein. 

121. By issuing and underwriting said inappropriate annuity policies, the defendants 

acted in bad faith by violating the laws and regulations of the Commonwealth of Pennsylvania, 

including but not limited to, the Unfair Insurance Practices Act, 40 P.S. §§1171.1, et seq., and 

Unfair Financial Planning Practices Act, 40 P.S. §§625-1, et seq.

122. As a proximate result and direct consequence of the wrongful conduct of the 

defendants, plaintiff and members of the Class suffered financial and other injuries, damages and 

losses in an amount not yet fully ascertainable. 

WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

COUNT SEVEN

(Fraudulent Misrepresentations) 

123. Plaintiff repeats and realleges the allegations set forth in the foregoing paragraphs 

as if fully set forth herein. 

124. Defendants made uniform, material, false and misleading statements to, and/or 

withheld material facts from, plaintiff and members of the Class, including that long-term 

deferred annuities plaintiff and members of the Class purchased from defendants were suitable 

investments for plaintiff and members of the Class, when defendants knew or should have 

known that the long-term, deferred annuities were per se wholly unsuitable for plaintiff and 

members of the Class. As a direct and proximate result of the wrongful conduct of defendants as 

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Case 2:05-cv-05878-MAM Document 1 Filed 11/08/05 Page 40 of 44
described herein, plaintiff and each of the members of the Class were damaged in an amount to 

be determined at trial. 

125. As a further direct and proximate result of the wrongful conduct of defendants, as 

described herein, plaintiff and the Class were and continue to be damaged in an amount of 

professional fees, including accounting and estate planning and attorney's fees and costs incurred 

and to be incurred by the plaintiff and members of the Class in determining and correcting the 

numerous estate planning errors resulting from defendants' wrongful conduct, and also in 

pursuing action to recover their assets. 

126. By reason of the fraudulent, reckless, malicious, willful, wanton misconduct of 

defendants, and each of them, which were intentional and deliberate, plaintiff and the Class 

demand punitive damages. 

127. By reason of the fraudulent, reckless, misleading, malicious, willful, wanton 

misconduct of defendants and each of them was intentional and deliberate, plaintiff and the Class 

demand punitive damages. 

WHEREFORE, plaintiff and the Class demand judgment against defendants, 

individually, jointly and severally, in accordance with the Prayer for Relief, below. 

PRAYER

WHEREFORE, the plaintiff and the Class pray for judgment against defendants, and 

each of them, as appropriate to each cause of action alleged, as follows: 

A. An Order certifying this action as a plaintiff class action under Rule 23 of the 

Federal Rules of Civil Procedure as set forth herein; 

B. Compensatory damages in such amount as the Court deems just and proper; 

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C. Statutory, treble and/or punitive damages as to Counts for which they are 

available under the applicable law in such amount as the Court deems just and proper; 

D. Imposition of a constructive trust, an Order granting recessionary and injunctive 

relief, and/or such other equitable relief, including restitution, disgorgement of ill-gotten profits, 

and an Order requiring defendants to provide corrective notice to class members as set forth 

herein and as the Court deems just and proper; 

E. An appropriate claims resolution facility to administer the relief in this case; 

F. Attorney fees; 

G. Costs of litigation; 

H. Prejudgment interest; and 

I. Such other relief as this Court deems equitable and just. 

JURY DEMAND

Plaintiff and the Class hereby demand an expedited trial by jury due to their age. 

DATED: November 8, 2005 Respectfully submitted, 

 BARRACK, RODOS & BACINE 

 

 By: s/ DEB145 

 Leonard Barrack 

 Daniel E. Bacine 

 William J. Ban 

 3300 Two Commerce Square 

 2001 Market Street 

 Philadelphia, PA 19103 

 Telephone: (215) 963-0600 

 Facsimile: (215) 963-0838 

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Stephen R. Basser 

John L. Haeussler 

BARRACK, RODOS & BACINE 

402 West Broadway, Suite 850 

San Diego, CA 92101 

Telephone: (619) 230-0800 

Facsimile: (619) 230-1874 

Howard D. Finkelstein 

Mark L. Knutson 

FINKELSTEIN & KRINSK 

501 West Broadway, Suite 1250 

San Diego, CA 92101 

Telephone: (619) 238-1333 

Facsimile: (619) 238-5425 

Andrew S. Friedman 

Elaine A. Ryan 

Patricia N. Syverson 

BONNETT, FAIRBOURN, FRIEDMAN 

 & BALINT P.C. 

2901 North Central Avenue, Suite 1000 

Phoenix, AZ 85012-3311 

Telephone: (602) 274-1100 

Facsimile: (602) 274-1199 

William M. Shernoff 

Evangeline F. Garris 

Michael L. Cohen 

SHERNOFF BIDART DARRAS 

600 South Indian Hill Boulevard 

Claremont, CA 91711 

Telephone: (909) 621-4935 

Facsimile: (909) 625-6915 

Bernice J. Koplin 

SCHACHTEL, GERSTLEY, LEVINE 

 & KOPLIN 

123 South Broad Street, Suite 2170 

Philadelphia, PA 19109-1029 

Telephone: (215) 772-1700 

Facsimile: (215) 772-0312 

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Debra G. Speyer 

LAW OFFICES OF DEBRA G. SPEYER 

Two Bala Plaza, Suite 300 

Bala Cynwyd, PA 19004 

Telephone: (610) 949-9555 

Facsimile: (610) 949-9554 

Attorneys for Plaintiff and the Class

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