I always tell them to take complaint boards, BBB complaints, etc. with a grain of salt as there is context they don’t know (volume of transactions in particular) and this appears to also be another good lesson in that vein.

Thanks for your note. I run a small one person business. I was one of many organizations that promoted this strategy 4 years ago. Ironically I was the least tax aggressive in that I advised a relatively modest tax discount whereas competing organizations advocated a mush larger tax discount. To my dismay, the IRS came after me, the smallest and least tax agressive of the group.

To the IRS’s credit they went our their business amicably and then terminated the audit.

I encourage peoplel to read what Ed has posted and take it into serious consideration when reading the USDOJ release.

In other words apparently what is a bit misleading is that the release says it “halts” the activity in question even though according to Ed it had already “ceased” FOUR YEARS AGO.

That’s an incredibly important distinction and definitely worth noting.

In 2004 we were marketing the PAT and FROCO programs. The PAT program involved the purchase of a three pay second to die life policy inside a retirement plan with the subsequent distribution of the policy at the end of year 3 at the market value (usually midway between the account value and surrender value).

The FROCO program involved the purchase of an indexed annuity inside an IRA with the subsequent distribution of the policy at the end of year 2 at the market value (between the account and surrender value).

The IRS initiated an audit of all those organizations marketing this program (including GSL) and upon notice of the audit we stopped promoting as of 2004. The audit concluded in 2004 with no penalties or fees just a warning
from the IRS to cease promoting these programs (officially called an injunction).

The IRS sat on the paperwork necessary to conclude the case for 4 years until late 2008. Hence the recent press.

GSL and Ed Lichtig have not engaged in marketing this program since 2004 and immediately ceased such activity upon notice (even though the strategy was a widely accepted industry norm at the time). Since then we have engaged
solely in the distribution of primarily indexed annuities without any tax strategy.

This is a “non event” from our perspective in that this is activity that had ceased 4 years ago even though it is being publically released recently. In conclusion, we have complied with all the IRS requests and both the IRS and
GSL consider this matter as closed.

Ed Lichtig, MBA