Choi v. Sagemark Consulting

by
The Chois consulted in 2003 with defendants, who advised the Chois that an IRC 412(i) Plan retirement account would provide tax advantages, asset protection, and steady income. It required several steps including the purchase of “whole life” insurance for eventual exchange for American General Universal Life “Platinum” policies. The initial purchase was $1,275,000; a second purchase cost $439,000. The policies comprised 70-75 percent of the Plan portfolio. The IRS audited the Chois in 2006. Defendants changed their advice. Plaintiffs sued, alleging cash losses attributable to loss in value and that they were required to pay $440,000 in back taxes and interest, plus $60,000 in penalties, and faced future payments to the Franchise Tax Board of California and anticipated IRS penalties of $600,000. Defendants cross-complained for indemnity and comparative fault against American General. The trial court found the claims time-barred. The court of appeal affirmed, upholding a determination that the limitations period began to run in September 2007, when plaintiffs were “on notice” that the IRS would impose penalties, not in 2010 when penalties were assessed; the court declining to consider any tolling effect created by the ongoing fiduciary relationship; and application of the 2007 “notice” date as a bar to all claims. View "Choi v. Sagemark Consulting" on Justia Law