marketing materials, this publication is in English. Although more detailed than the Investor
Application, the only fee or commission disclosure the Guide makes is contained in a “Cost of
the Plan” subsection, which states:
The costs and expenses, designed to protect your investment and insure Participants’ life may be as high as ---% of contributions. They include the following items:
Costs of life insurance, permanent disability and accidental death, which include expenses allocated herein. Such expenses fluctuate depending on the age and health of the participant.
Administrative costs during the life of the Plan.
Sales commissions and brokerage fees.
Record keeping costs during the life of the Plan (“Record Keeping Costs”).
Trustee fees, expenses and certain indemnities to the Trustee (as provided in the Master Trust Agreement).
Costs of mutual funds units.
Reserves to keep your plan if you do not choose to make subsequent contributions.
Previous versions of this section state that the Defendants will use up to 80
percent of an investor’s initial contribution, depending upon the plan chosen, to purchase
insurance and to pay various plan expenses. However, none of the versions of the Guide
specifically disclose the excessive amount of commissions or the administrative expenses the
Defendants charge investors. Nor have any versions of the Guide provided a specific breakdown
of other costs.
The Defendants also deceive investors into making subsequent plan contributions
by creating and mailing false annual statements which purport to show an investor’s total
investment amount or final balance. While the annual statements show an investor’s “final
balance” or “total contribution,” these figures only reflect the total initial investment, without
subtracting the fees or commissions that the Defendants in fact never invested. By not disclosing
the deducted commissions, fees, and costs in the annual statements, the Defendants are vastly
overstating the actual amounts of investors’ holdings.