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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA - page 5 / 18

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15.

From at least 1999 until approximately 2003, Pension Fund served as the issuer

of and adviser to its investment plans. It also hired, trained and compensated its network of sales

agents. In 2002, Cornide and de la Riva formed PFA Assurance, a Cayman Islands shell

company with no employees, that became the issuer of the insurance component of Pension

Fund’s retirement trust plans in early 2003.

16.

Currently, Pension Fund and PFA Assurance offer two retirement trust plans:

The Liberty Trust, which is a monthly or annual contribution plan, and The Capital Trust, which

is a one-time contribution plan. Approximately 85 percent of all investors choose The Liberty

Trust. The Liberty Trust requires annual contributions of between $1,000 and $20,000 for ten to

fifteen years, and imposes significant early withdrawal penalties – for example, 100 percent for

the first two years and declining thereafter for the entire term of the plan. The Capital Trust is a

ten-year

plan

that

requires

a

minimum

one-time

contribution

of

$10,000.

The

investment

component of both plans provides investors with a choice of eight mutual funds offered by well-

known U.S. mutual fund companies, such as Fidelity, Legg Mason, Janus and Goldman Sachs.

17.

Pension Fund and PFA Assurance, at the direction of Cornide and de la Riva,

select the mutual funds used in the investment plans. They provide minimal information to

prospective investors about the mutual funds, and no information about fund costs or load fees.

Neither the two companies nor the financial institutions and broker-dealers with which they have

been affiliated provide investors with fund prospectuses.

18.

Both plans also include a minimum of $15,000 of fixed-term life insurance for a

fifteen-year term. Until the incorporation of PFA Assurance, Pension Fund used several offshore

companies to issue the life insurance that was bundled with the investments. Beginning in 2003,

PFA Assurance has been the sole insurance issuer.

5

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