Plaintiff's counsel Ralph Canada said, "We relish the chance to conduct fact discovery and to proceed with the plaintiffs' case. This decision allows us the chance to pursue damages not just for our clients but for the whole class of persons misled by Defendants, who vigorously recommended Benistar 419 Plans as tax-deductible welfare benefit plans, despite knowing that the IRS had already labeled them as 'abusive tax shelters.'" Canada further said, "Our clients and other class members were subject to IRS audits, penalties, and interest, as well as large losses in the insurance premiums paid, because of the advice and assurances provided by John Hancock and its agents, and in reliance on the opinions offered by Edwards Angell attesting to the plans' legality."
The 6th Circuit reversed the lower court's ruling dismissing the claims, finding that the Plaintiffs had sufficient grounds to pursue a claim under the Racketeer Influenced and Corrupt Organization Act (RICO) as well as claims under state law. The Court remanded the case to the Western District of Michigan, Grand Rapids Division, for discovery and further proceedings. Efforts by the Defendant-Appellees to have the appeal reheard by the Panel and by the entire Sixth Circuit en banc were denied on November 5, 2012.
Canada also said, “We hope this ruling will help us continue to pursue recoveries for those harmed by the sale of these and similar tax shelters. The insurance industry has become adept at selling welfare benefit plans, captive insurance arrangements and other ideas already ‘under fire’ by the IRS and then hiding behind a mountain of paperwork containing releases and disclaimers to try and protect itself when the clients are audited and suffer damages. Based on the Sixth Circuit’s ruling, we are hopeful that we can get our ‘day in court’ for our clients subject to such unlawful and deceptive activities.”
Canada was assisted on the appeal by Canada Ridley associate K. Adam Rothey and Jeven Sloan of the firm of Loewinsohn Flegle Deary, LLP. Canada has since 2003 represented plaintiffs in numerous tax shelter matters, in courts and arbitration tribunals throughout the country, and has spoken at ABA Tax Section Meetings on civil litigation involving tax shelters. He graduated cum laude from Harvard Law School in 1979, where he was the Editor-in-Chief of the Harvard Environmental Law Review. Previously, he was a partner in and the litigation head of the Dallas offices of two different national law firms.
Canada is admitted to practice law in the State of Texas; the U.S. District Court for the Northern, Southern, Eastern, and Western Districts of Texas, the Western District of Michigan, and the Northern District of Illinois; and the U.S. Courts of Appeal for the Second, Fifth, Sixth, Seventh, and Ninth Circuits. He has previously been licensed by the NASD (now FINRA) as a registered representative and a registered principal.
Rothey’s practice experience includes a broad variety of commercial disputes including tax shelter litigation. He was selected by attorney peers for inclusion in Texas Rising Stars 2009 and 2010. Prior to joining Canada Ridley, LLP, Rothey practiced commercial litigation at a prominent Dallas law firm and was a law clerk to a United States Magistrate Judge in the Southern District of Texas. He obtained his law degree from The University of Texas School of Law in 2005 where he served as Executive Editor of the Texas International Law Journal. He is admitted to practice law in the State of Texas and the U.S. District Courts for the Eastern, Northern, and Southern Districts of Texas, as well as the Western District of Michigan, Northern District of Illinois, and U.S. Court of Appeals for the Sixth Circuit.
Contact: W. Ralph Canada, Partner
Linda Hazelton, Hazelton Marketing & Management