Moukawsher and Walsh, LLC is filing a class-action lawsuit against CJA and Associates and Fidelity Security Life Insurance Company on behalf of small business owners.
According to the lawsuit, CJA, a Chicago-based employee benefits company and Fidelity Security, a Kansas City Mo.-based insurance firm, allegedly duped small business owners into investing millions of dollars in their companies’ retirement funds. CJA and Fidelity Security then siphoned 95 percent of that money into their own commissions and fees. According to a complaint filed by Moukawsher and Walsh, the industry standard for commissions is 5-6 percent.
The lawsuit alleges both companies knew the plans were flawed and that the companies promised tax write-offs that the IRS later didn’t approve. The lawsuit further alleges that by offering 95 percent commissions, FSL encouraged its employees to sell poor plans.
“The Plaintiffs are small businesses without the internal resources to make the many intricate decisions needed to establish, administer and invest in employee benefit plans on their own,” according to the complaint. Therefore, they must “place themselves in the hands of experts in the field.”
According to the release, FSL told clients they could be trusted because of their “Midwestern values.”
As an employee benefits company, CJA packaged the programs specifically for small businesses. According to the complaint, the “company repeatedly touted that the plan permits employers to design a retirement plan while enjoying large immediate income tax deductions.”
But CJA never told small business owners about the 95-percent fees and commissions, according to the complaint, nor did the company provide other pension options.
“CJA promises its clients that it will take the worry out of retirement planning,” according to the complaint. “The Plaintiffs relied to their detriment on CJA’s superior knowledge and skill in choosing the Plans’ investments, their structure and their ongoing administration.”
Neither CJA or Fidelity were available for immediate comment.