Premier Financial Alliance Lawsuit: $50M Settlement and Appeal

The Premier Financial Alliance lawsuit was a consolidated federal class action in California accusing the insurance marketing company of operating as an illegal pyramid scheme, and it ended in February 2024 with final approval of a settlement worth up to nearly $50 million and a series of forced changes to how PFA recruits and markets.¹² An appeal to the Ninth Circuit followed a month later and remained pending as of October 2025.³

What PFA Was Accused of Doing

PFA recruited associates to sell an indexed universal life insurance product called “Living Life,” issued exclusively by Life Insurance Company of the Southwest (LSW) and available only through PFA associates.⁴⁵ New associates paid a $125 “technology fee” and were expected to recruit others, with advancement in the hierarchy tied to building a “downline” more than to insurance sales.⁶

The complaints alleged this structure violated California’s endless chain scheme statute, Penal Code § 327. Associates were pressured to recruit six people and submit sales within their first 30 days, and compensation flowed “infinite levels deep” up the recruitment chain. According to the plaintiffs, over 95% of PFA associates suffered net financial losses.⁷⁶

Recruitment materials, the plaintiffs said, promised extraordinary earnings. Ads cited figures like “$2,459,093” from a single sale or “$60,360 per month” in total income and featured luxury cars, homes, and vacation destinations. The opportunity was described as “risk-free” and requiring “no major investment.” The complaints alleged the pitch particularly targeted immigrant communities.⁷⁴

Named defendants included PFA, its parent The Consortium Group, LLC, founder and CEO David Carroll, Executive Chairman Jack Wu (identified in filings as the alleged “ringleader”), several top-ranked field directors, and LSW itself.⁸ Plaintiffs argued LSW was not a passive product provider but a “driving force,” pointing to LSW CEO Mehran Assadi’s direct promotional work with PFA at conferences.⁵

How the Case Moved Through Court

The first suit, Chen v. Premier Financial Alliance, was filed June 25, 2018, in the U.S. District Court for the Northern District of California.⁶ A second suit, Wang v. Life Insurance Company of the Southwest, followed in February 2019.⁹ In April 2020 the cases were consolidated as In Re PFA Insurance Marketing Litigation, Case No. 4:18-cv-03771-YGR, before Judge Yvonne Gonzalez Rogers.¹⁰

On November 3, 2021, the court certified a California subclass under Federal Rule of Civil Procedure 23(b)(3), covering people who enrolled as PFA associates and bought Living Life policies in California from January 1, 2014 through the date of the order. Certification applied to claims under the unlawful and unfair prongs of California’s Unfair Competition Law.⁴

The pivotal ruling came on June 15, 2022, when the court issued a 49-page order on cross-motions for summary judgment. The central legal question was whether PFA satisfied the two-part Koscot test, which defines a pyramid scheme as a business requiring participants to pay for the right to sell a product and to receive rewards for recruiting others that are unrelated to actual sales to end consumers.⁴

The court denied PFA’s motion on the core pyramid claim. It found a jury could conclude the $125 fee functioned as payment for the right to sell, and that buying a Living Life policy was a “practical requirement” for full benefits within the program, including commission percentages, promotion points, and “Fast Track” status, even though no written rule required it. The court drew on FTC v. Vemma Nutrition Co. in reaching that conclusion.⁴ The ruling cleared the way for trial or settlement.

What the Settlement Requires

The court preliminarily approved a settlement in July 2023 and granted final approval on February 5, 2024, the same day the district court case was terminated.¹⁰¹

The Money

Maximum payout under the deal reaches nearly $50 million. Payments to class members were calculated by taking premiums paid, subtracting the cost of insurance and similar charges, then applying a one-third discount to the remainder. The named plaintiffs who initiated the litigation each received an additional $10,000. Defendants agreed not to oppose attorneys’ fees up to $6 million or litigation expenses up to $371,000.¹

Who Qualified

The settlement class covered anyone who enrolled as a PFA associate between January 1, 2014 and March 17, 2023 and bought at least one Living Life policy in California during that period. Both former and current policyholders were eligible. Excluded were high-level PFA associates at the rank of Provisional Field Director or above, the named defendants and their affiliates, specific individuals (Jack Wu, Aggie Wu, Rex Wu, Hermie Bacus, Bill Hong, Lan Zhang, and their immediate families), judicial officers involved in the case, anyone who had already released related claims, and anyone who opted out.¹

Changes to PFA’s Business

The settlement barred PFA from using income claims and lifestyle imagery in its marketing, including photos of luxury cars, homes, and vacation destinations, and it prohibited promotional phrases like “passive income,” “unlimited income potential,” “get rich,” and “get wealthy.” PFA has to publish an annual Associate Compensation Summary and post its compensation plan on its website. Marketing materials must state clearly that the business involves selling insurance and requires a license.¹

Upline associates can no longer encourage recruits to take on debt, quit jobs or school, or buy policies for anything other than a death benefit. New policyholders must sign a standalone disclosure certifying they aren’t purchasing a policy at an upline’s request to hit sales goals.¹

The Pending Appeal

On March 6, 2024, about a month after final approval, three individuals filed a notice of appeal to the Ninth Circuit: Evan Chan, Rui Chen, and Wenjian Gonzalez. The appeal was assigned case number 24-1484. Chen and Gonzalez were the original named plaintiffs from the 2018 Chen complaint, indicating some of the people who started the case were unhappy with how it ended. A motion to depose objector and appellant Evan Chan was filed in the district court on March 28, 2024.³ The appeal remained pending as of October 2025.²

A Separate PFA Case

A different lawsuit against PFA, Rafique v. Premier Financial Alliance, Inc. (Case No. 4:23-cv-00732), was filed in the Northern District of California on February 17, 2023. It is not part of the pyramid scheme class action. The Rafique case focused on employment-related claims and named PFA, David Carroll, and Jack Wu. On February 5, 2024, Judge Jon S. Tigar granted the defendants’ motion to compel arbitration and administratively closed the case. Plaintiffs moved to lift the stay in August 2024.¹¹ Anything happening in Rafique does not affect the class settlement or its payments.

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BehindMLM. Premier Financial Alliance Settles Pyramid Scheme Class Action
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CourtListener. In Re PFA Insurance Marketing Litigation Docket
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CourtListener. In Re PFA Insurance Marketing Litigation Docket – Page 3
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FindLaw. In Re PFA Insurance Marketing Litigation
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ClassAction.org. Wang v. Life Insurance Company of the Southwest Complaint
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ClassAction.org. Chen v. Premier Financial Alliance Class Action Complaint
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Truth in Advertising. Chen v. Premier Financial Second Amended Complaint
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Truth in Advertising. In Re PFA Insurance Marketing Litigation Consolidated Class Action Complaint
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CourtListener. Wang v. Life Insurance Company of the Southwest Docket
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Truth in Advertising. Premier Financial Alliance Pyramid Scheme Claims
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CourtListener. Rafique v. Premier Financial Alliance Docket