Two sisters from Delaware who were co-trustees and beneficiaries of their octogenarian father’s trust are suing two Tennessee-based financial advisors and their firms for allegedly carrying out a fraud that caused them to lose more than $730,000.
The sisters—Jane Trice and Laura McCullar—met advisors Kerry Morris and Donald Thomas, who were working at Redhawk Wealth Advisors, a Minnesota-based investment firm with a branch in Franklin, Tenn., in the summer of 2013. The women were looking for a safe, risk-free investment for the assets of their father’s trust, the James F. Trice Trust.
The advisors, who also traded securities under the business name of Assurance Financial Partners, convinced the sisters that they could handle those assets in the most conservative way possible, the lawsuit alleges.
According to the suit, filed in the circuit court of Davidson County, Tenn., the defendants persuaded the plaintiffs to put their investable assets in a “Fractional Life Settlements Trust” issued by an entity called Conestoga. The assets, they were told, would be pooled with other investors’ assets to pay the premiums on life insurance policies payable on the deaths of unrelated third parties. This was said to be risk-free, according to the lawsuit.
After nine or 10 years, the plaintiff were allegedly told they would double their investment and gain an annualized return of about 9%. They were also told they would only be charged 1% of the value of their assets annually, but no commissions, according to the lawsuit
Jane Trice invested $213,137 of her own money, or roughly a third of her life’s savings, and she and her sister together decided to put in $175,000 of their father’s trust, which represented more than 10% of the trust’s assets, according to the lawsuit.
The suit alleges that the sisters were deceived and that the life settlements trust was in fact speculative and illiquid, and therefore completely inappropriate for their stated preferences and goals.
In 2017, the plaintiffs began receiving requests from the life settlements trust for extra capital to continue the viability of the investment “due to the failure of the underlying life insurance policies to mature as expected,” the lawsuit says.
The requests kept coming for the next five years and, each time, Morris and Thomas insisted that there was nothing to worry about, the lawsuit alleges.
Even when the sisters became aware of previous litigation against Conestoga Life Settlements, the defendants reassured them that all was well, according to the lawsuit.
Finally, in September 2022, the plaintiffs demanded their money back, the defendants refused to comply, the lawsuit says.
The sisters are accusing the advisors and their former and present firms with five counts of fraud, negligence, and misrepresentation. They claim to have sustained damages of at least $737,000, exclusive of costs, interest and punitive damages.
According to Finra's Broker Check, Morris left Redhawk in 2014 to join Horter Investment Management and, after five years there, started at APO Financial Services. He also remains with Assurance Financial Partners, which he started in 2008, according to LinkedIn. He is also listed on LinkedIn as founder in 2019 of HonorShield, a retirement planning firm, though it’s not listed with Finra. There is no record for Thomas.
None of the parties involved responded to requests for comment.