Trusts & Estates

Florida lawyer lied to hundreds of disabled trust clients, SEC says

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The U.S. Securities and Exchange Commission headquarters.

The U.S. Securities and Exchange Commission is accusing a Florida attorney of defrauding at least 380 clients, most of whom have disabilities and are recipients of Medicaid or Social Security Supplemental Security Income benefits.

In its complaint, filed Monday in the Middle District of Florida, the SEC accused Jason D. Lazarus, the CEO of Synergy Settlement Services Inc., of marketing, selling investments in and operating two pooled investment trusts that were purportedly established and managed by the nonprofit Foundation for Those With Special Needs Inc. That nonprofit, the SEC said, was a shell corporation with no operations or employees.

The defendants, which include Anthony F. Prieto Jr., an investment adviser and president of Synergy Settlement Services, “have installed the foundation as a nominee trustee to attempt to hide the fact that” they “perform all the trustee functions and profit from the trusts’ operations by collecting all fees and other funds stemming from operating the trusts,” according to the SEC’s complaint.

The SEC explained that the Social Security Act permits recipients of Medicaid and SSI benefits to remain eligible for those benefits even if they received assets that would otherwise disqualify them from government assistance. They must place those assets, which could include awards or settlements from personal injury lawsuits, in an irrevocable trust that is established and managed by a nonprofit association.

Lazarus and the other defendants violated federal securities laws by lying to potential trust beneficiaries, telling them that they would be joining a trust managed by a nonprofit association and still be eligible for their benefits, the SEC said. They have instead jeopardized their clients’ benefits by operating and managing the trusts for their profit.

The SEC said Lazarus and the defendants have also lied to the Internal Revenue Service and Social Security Administration, as well as diverted all trustee fees to Synergy Settlement Services. According to the agency, they earned more than $675,000 in trustee fees and more than $100,000 from the joinder fee from 2015 to 2019.

“These defendants also improperly used funds from deceased beneficiaries’ accounts to reimburse themselves for employee salaries and other expenses, as well as to make donations to trial lawyers’ and other organizations that violated their representations to the IRS and beneficiaries that they would only use such funds to further the trusts’ mission to help the disabled,” the SEC added.

Reuters, which has coverage of the lawsuit, said Lazarus, Prieto and Synergy Settlement Services did not reply to its requests for comment.

On Wednesday, Synergy Settlement Services provided this statement to the ABA Journal via email: Synergy Settlement Services, its principals and the Foundation for Those With Special Needs Inc., “are disappointed that the Securities and Exchange Commission has opted to file a lawsuit. We strongly believe this government action is unwarranted under the law and facts, we adamantly deny that any trust beneficiary or retained funds were improperly used, and intend to vigorously defend this case in court.

“As an example, the SEC’s press release mentioned ‘beach parties’ thrown by Synergy; that allegation is related to a contribution by the foundation to a state ‘civil justice foundation’ that is a 501(c)(3). The mission of this organization, like others the foundation has supported, is to keep the civil justice system accessible. Since its inception, the foundation has donated hundreds of thousands of dollars to a variety of nonprofit organizations across the country.

“We remain steadfast in our dedication to the work of improving the lives of injury victims,” according to the statement.

Updated May 4 at 2:30 p.m. to add the statement from Synergy Settlement Services.

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