- Nationally renowned business litigation and trial firm Reid
Collins & Tsai LLP leads prosecution of legal malpractice
action against Atlanta-based law
firm Morris, Manning & Martin, LLP.
- Court ruled that matter will proceed against Morris Manning.
- Reid Collins is one of the
nation's leaders in legal malpractice claims, with significant
experience successfully prosecuting major national and regional law
firms for claims related to a variety of professional misconduct
and negligent advice.
GREENVILLE, S.C., May 8, 2024 /PRNewswire/ -- National trial firm
Reid Collins & Tsai LLP ("Reid
Collins") today announces a major victory obtained in a
legal malpractice action related to a $310
million nationwide Ponzi scheme that exploited military
veterans in desperate financial straits and targeted elderly
investors seeking a safe retirement investment. The lawsuit arises
from allegedly flawed legal advice provided to Future
Income Payments LLC (f/k/a Pensions, Annuities, and Settlements,
LLC) ("FIP") by Atlanta-based law
firm Morris, Manning & Martin, LLP ("Morris Manning"). The action
alleges that errors in the legal analysis of
Morris Manning's lead partner and
ongoing conflicts of interest in the firm's representation
materially contributed to the collapse of FIP and hastened the
descent of its business model from a viable financial platform
assisting retirees and military veterans to a Ponzi scheme seeking
to avoid collapse.
On April 30, 2024, the
South Carolina federal court
denied Morris Manning's motion to
dismiss based on a statute of limitations defense, ruling that the
case should proceed to discovery.
Background
FIP was a fast-growing company in a controversial but
potentially profitable space. Founded in 2011, FIP provided
lump-sum cash advance payments to seniors and military veterans in
exchange for future pension payments. The business model held
risks: characterized as loans, the financial transactions might
violate state usury laws against excessive interest rates (as had
happened to a competitor firm in California); characterized as assignments or
transfers, they might violate federal laws against assigning or
alienating pensions.
As alleged in the action, FIP sought to accelerate
its growth and avoid legal setbacks, considering changes to its
business model to instead connect pensioners with investors who
would acquire those future pension payments. FIP would act as a
middleman receiving fees for servicing and administrating those
transactions. FIP retained James
Maxson, a Morris Manning
partner, to, among other things, evaluate and opine on FIP's
proposed structure change and identify any potential issues. Maxson
delivered a memo on Morris Manning
letterhead presenting a conclusion that it was "unlikely" a court
would deem the proposed investment transactions to be "investment
contracts" requiring registration or exemption under the federal
securities laws and failing to identify fundamental flaws in FIP's
structure.
In addition, Maxson and Morris
Manning went on to represent FIP despite a substantial
ongoing conflict of interest in their representation of various
entities controlled by Maxson's client Benjamin Geber which stood to profit through FIP
commissions only if Morris Manning
blessed FIP's new business model. As FIP's outside general counsel
from 2012 through its collapse in 2018, Maxson knew the business
intimately and drafted and reviewed FIP legal documents and
marketing materials which were used to secure investors, but failed
to disclose the regulatory risk FIP faced, the conflicts of
interest in its structure, and other material issues.
The deficient and conflicted legal advice propelled FIP toward
numerous enforcement actions by state agencies and attorneys
general, and ultimately, company-destroying liability for mail,
wire, and securities fraud. Maxson departed
Morris Manning in January 2015 but continued representing FIP until
it ceased operations in April 2018,
leaving investors victimized by the scheme owed approximately
$310 million. Though FIP collapsed
under massive civil and criminal liability, Morris Manning kept its legal fees.
Reid Collins represents
Beattie B. Ashmore, the
court-appointed Federal Receiver for the FIP Receivership Entities.
The case is captioned Beattie B.
Ashmore, a Receiver for the FIP Receivership Entities v.
Morris, Manning & Martin, LLP, Civil Action No.
6:23-cv-04592-BHH (U.S.D.C. District of South Carolina).
About Reid Collins
Reid Collins & Tsai LLP is
one of the nation's leading plaintiffs' trial firms, litigating
complex business disputes and achieving billions of dollars in
settlements and judgments for its clients. Its team is comprised of
accomplished trial lawyers who have extensive experience
prosecuting financial fraud, corporate wrongdoing,
bankruptcy and insolvency related litigation, employment and
partnership disputes, professional liability claims, and
cross-border disputes. The firm represents fund managers, investor
groups, trustees, receivers, liquidators, international banks,
companies, governmental entities, and individuals in federal and
state courts across the country.
For more information visit www.reidcollins.com
Austin | Dallas | New
York | Washington D.C. |
Wilmington
Contact: Alexander Coxe |
212.365.4792 | acoxe@reidcollins.com
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