Annuity investors defrauded says Cueto class action suit

By Steve Gonzalez | Jun 11, 2008

A class action complaint has been filed in Madison County Circuit Court against Morgan Keegan & Company, MetLife, and Regions Financial Corporation alleging the defendants violated the Illinois Consumer Fraud and Deceptive Practices Act.

According to lead plaintiff Georgia Layloff, defendants induced customers to invest in a variable annuity contract based upon the guarantee that investors had a 10-day "free-look" period to cancel with full refund.

"Contrary to the representations made by the Defendants, customers who decide to cancel the contract during the 'free-look' period do not have all of their money returned," states the complaint filed June 10.

Layloff claims that employees of defendants "fraudulently represented" that she could invest in a MetLife variable annuity with the condition she had a 10-day free-look to cancel and have all of her principal returned. She was a customer at Regions Bank at 2400 Pontoon Road in Granite City.

Regions Bank and Morgan Keegan are wholly owned subsidiaries of Regions Financial.

The complaint states that Layloff's lawyers are experienced in complex and class action litigation.

She is represented by Lloyd M. Cueto of the Law Office of Lloyd M. Cueto and Christopher Cueto of the Law Office of Christopher Cueto.

According to the ARDC website, Lloyd M. Cueto was admitted to practice law in November 2007. He is the son of St. Clair County Circuit Judge Lloyd A. Cueto.

Christopher Cueto has been practicing law for more than 20 years and has been the lead class counsel on numerous class action suits.

Layloff claims that before the 10-day period was up on Aug. 24, 2007, she cancelled her annuity but only a portion of her original investment was given back even after the agent for Morgan Keegan guaranteed her total investment principal would be returned.

She initially committed $30,000 to the annuity on Aug. 16, 2007.

She claims that on Sept. 7, 2007, she received a statement from MetLife which confirmed the cancellation of the variable annuity contract and three days later on Sept. 10, 2007, an amount less than the full value of her invested principal was deposited into her account at Regions.

Layloff claims she received a letter on Sept. 12, 2007, from Morgan Keegan advising her that the agent had misrepresented that she would receive the full investment should she cancel the contract during the free-look.

According to Layloff, the letter also stated that Illinois is on a list of select states in which the cancellation of a variable annuity contract only provides for return of the investment principal at current market value.

"As of the date of filing this complaint, none of the Defendants have provided Plaintiff with the money which was deducted from her original investment principal," the complaint states.

Layloff claims the Defendants violated the Illinois Consumer Fraud Act by:

  • Knowingly, intentionally and recklessly deceiving customers by representing that upon cancelling the investment agreement within the guaranteed free-look period, the invested principal would be returned at the full value held at the time the investment was entered into;

  • Intending customers to rely on the representations that upon canceling the investment agreement within the guaranteed free-look period, the invested principal would be returned at the full value held at the time the investment was entered into; and

  • Intentionally and recklessly omitting, concealing, suppressing and deceiving customers by failing to inform them that upon cancelling the investment agreement within the free-look period, the invested principal would actually be returned at a decreased value.

    Layloff claims she relied on the Defendants "fraudulent and deceptive representations" when entering into the investment agreement.

    She also claims the Defendants engaged in a civil conspiracy by agreeing to engage in deceptive acts and practices by concealing material facts related to the return of invested principal.

    "Defendants acted in concert, aided and abetted each other, and conspired to engage in the common course of misconduct for the purpose of enriching themselves at the expense of Plaintiff and the class," the complaint states.

    Layloff claims that had she known of the alleged conspiracy, she and the class would not have invested principal.

    "The withholding of any amount of Plaintiff's original investment principal upon cancellation of the contract during the ten day free-look period directly contradicts the representations made by agents of (the Defendants)," the complaint states.

    She claims she and the class were caused to suffer actual damages from expending consideration and value for the loss of money following the devaluation of the returned investment principal.

    Layloff also claims she and the class sustained actual damages in that they were deprived of informed consent regarding their investment of principal and were deprived of any choice upon which they could have made a risk/benefit assessment.

    According to Layloff, she will fairly and adequately protect the interests of the class and her interests are consistent with the members of the class.

    The complaint states that the exact number of class members is currently unknown, but is generally ascertainable by appropriate discovery and is believed that the class included "tens of thousands of members."

    It also states that class action is an appropriate method for the "fair and efficient adjudication" of the case because the controversy affects a large number of people where joinder is impracticable.

    "The class action device provides an appropriate and effective method whereby the enforcement of the rights of Plaintiff and Class members can be fairly managed without unnecessary expense or duplication," the complaint states.

    "Individual litigation of all claims, which might be asserted by all Class members, would produce a multiplicity of cases that would congest the judicial system for years," the complaint also states. "Concentrating this litigation in one forum would not only aid judicial economy and efficiency but also promote parity among the claims of individual Class members."

    All persons within Illinois who have entered into a contract with Morgan Keegan, Regions Bank and/or MetLife in conjunction with the representation that a period of time existed in which said persons could cancel their contract and receive a full refund of the investment principal, but who received a deducted amount of the investment principal following the termination of the contract within the specified time frame are eligible to join the class.

    Layloff is seeking an order certifying the case as a class action, that the acts of the Defendants be adjudged unfair and an award for damages, attorney's fees, costs of the suit and pre-judgment interest in an amount the Court deems reasonable.

    Madison County Chief Judge Ann Callis has yet to assign the case.

    08 L 504

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