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Chartered Representatives were people or entities that had
the right to represent SSI in specific geographic areas. To
become an SSI Chartered Representative, a person or entity had to
pay $14,500 for a computer and operating software, and $18,500
for the “SSI System” which included use of financial planning
software. The Chartered Representative also had the option to
buy the financial planning software program from SSI for a
$152,000 promissory note. Under the standard agreement, each
Chartered Representative was required to earn $100,000 in gross
volume, net of any fees to SSI, during the first year of the
agreement, and to maintain that volume of business. If a
Chartered Representative did not meet that requirement, then SSI
reserved the right to terminate the agreement and refund the
original cash investment. Other amounts that Chartered
Representatives paid to SSI included (1) “set-up” fees that
Chartered Representatives charged their clients for putting those
clients into the computer system, (2) “options” fees that
Chartered Representatives paid in order to reserve office
locations, (3) “due-diligence” fees that the Chartered
Representatives’ clients paid, as a percentage of a client’s
investment in a tax shelter, for SSI’s efforts in investigating
that shelter, and (4) “management” fees that were charged to the
Chartered Representatives' clients for managing the tax shelters
in which those clients invested. Hereinafter, the term Chartered
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Last modified: May 25, 2011