"Your responses seem reasonable but are not totally convincing."
To one who isn't looking at this objectively but has already bought into Reed's B.S.
"Reed may have failed in the specific asset protection situation you refer to, but do you know the entire story of his personal asset protection experiences?"
If his junk didn't work for him and even got him suspended, why should one suspect that it will work for somebody else?
"You seem to resent the idea of non-lawyers providing asset protection services. You refer to it as 'the unlicensed practice of law.' Where is it written that asset protection is the exclusive territory of attorneys."
Better ask the state attorney general's office that question, or Jay Mitton who was run out of Florida because he didn't have a Florida license (but, unlike Reed, he did have an active license, but in Utah).
"Reed forms corporations (no law license required for that service) and advises clients how to use them to establish financial privacy (a consulting service not a legal service). No legal documents such as trusts or partnership agreements are provided. No representation of clients is provided and no legal advice is given."
Then why would anybody use his services? If all they get is the naked entity, then they should just use http://incorporate.com
"So where is the practice of law taking place? You may not like or agree with his methods but I don't think you can rightfully accuse him or his consultants of doing anything illegal."
I'll let the state attorney general's decide that.
"If that were the case it seems they would have been stopped a long time ago. Some people, including many attorneys, believe all asset protection methods are unethical, including the solutions provided by attorneys. How is setting up an FLP (LLC) or an offshore trust more ethical than using corporations to shield assets? Seems to me that all these methods are designed to frustrate or defeat the efforts of potential creditors."
That why you need to be an attorney: To know the difference. Exhibit #1 why one not educated in the law cannot practice asset protection.
"Actually, the gradual return of the $10,000 is not the consultant's primary source of revenue. That's just a little added bonus as consultants bring in new clients. The primary revenue source is the difference between the fees paid by clients and the consultant's fees (wholesale price) paid to APG."
Why would the client pay any more than the minimal amount to form the corporation if that is all he is getting? Want a Nevada corporation? They are just a few hundred bucks online at http://incorporate.com
"A consultant can recover his entire $10,000 just by bringing in a handful of new clients."
How, by misleading them into paying an exorbitant sum for a Nevada corporation that anybody can form online for a couple of hundred bucks? How is this different that the network marketing companies that sell junk for 20x the street cost? It isn't.
"However, having clarified this issue, you still very well may be correct in suggesting that it's not a good business proposition to become an APG consultant. But the primary reason for this, I believe, would be the small size of the market and the consultants' lack of solid credentials with which to approach the market."
In addition to spending money to avoid prosecution for the unauthorized practice of law, and to avoid client lawsuits because the planner didn't comprehend the tax ramifications of the planning.
"Also, if sold properly and to appropriate prospects (those with no pending or threatened lawsuits), I believe the APG service is an effective method of asset protection."
Based on what? You've already admitted above that you don't know why asset protection in general isn't all a fraudulent transfer. Do you even realize that the fraudulent transfer laws can applies to creditors who arise after the planning as well as before it?
"Of course it's true that the protection could be defeated if the client is brought to a debtor's exam under oath, i.e. forced to acknowledge the existence of protected assets and to repatriate them."
In other words, it doesn't work.
"But in the vast majority of cases, it will never get that far. Frivolous suits will not proceed without easy identification of seizeable assets."
And what is this assertion based on? Most plaintiff's lawyers will "file first and ask questions later", since the filing costs are minimal (usually less than $200 in most states and in federal court).
"Less frivolous lawsuits might proceed but settlements in favor of the client are more likely without visible assets to seize. And in fairness, FLP's are not impregnable either."
Their record is excellent: After dozens of challenges there have been only a few cases where properly-structured limited partnerships have been invaded by creditors. Nothing is perfect, but it is insane to compare Reed's "will fail if they figure it out" planning with limited partnership planning that stands up more than 95% of the time.
"The assets are in full view to potential plaintiffs and their attorneys. And there is a growing body of precedent for courts to not limit a successful plaintiff's remedy to just a Charging Order."
So what? The creditor then just gets the limited interest itself, which is useless if the limited partnership agreement has been properly drafted.
"Finally, it's no surprise that the highly regarded estate planning attorneys mentioned would not recommend Reed. He's their competitor and offers a much more affordable alternative."
I doubt that any of the top planners think of Reed as a "competitor" as much as a carnival huckster selling his bearer-shares snake oil to the masses. The top planners want sophisticated businessmen for clients, and not rubes.