• Last year, PPLS had revenue of $304 million, and declared profits of $27.1 million
• 20% of its revenue (about $60.8 million) came from distributors' purchase of legal insurance
• Another $17.5 million came from distributors' purchases of "tools"
  The company kept $20 million in commissions that had been earned by a distributor who no longer qualified to receive them
• Nearly one-third of the company's total revenue came from its distributors
• Half of its customers cancel their policies after less than a year -- causing agents to be billed back for commissions already paid.

Pre-Paid's Legal Troubles

The company is no stranger to legal troubles. In March, a suit was filed in Oklahoma accusing the company of fraud and running an illegal pyramid scheme. Another suit claims the company deceived its agents about customer policy cancellations. Pre-Paid claims the suits are without merit.

In May, suits against PPLS were filed by consumers in Mississippi, alleging fraud. Consumer complaints and suits have been filed in other states as well.

Last November, PPLS reached an agreement with the State of Wyoming over misleading income claims.

In 2001, the company paid $1.5 million to settle suits claiming deception over its policies' coverage. More than 100 customers in Alabama have sued since then, alleging deceptive practices.

The SEC ordered the company to restate its earnings for 2000, because of questionable accounting practices. The restatement dropped the earnings by half.

Although not strictly a company problem, founder Harland Stonecipher's tax deductions for losses on his ranch -- amounting to $327,000 -- were disallowed by the IRS. Apparently Mr. Stonecipher didn't keep any records. . .