Structured Settlements 4Real: What's Real News in the Structured Settlements, Settlement Planning, Consulting and Lawsuit Recovery Space?

Settlement Planners Rebuffed in Attempt to Waste Tax Payers' Time at Treasury Hearing

As expected the Treasury Panel presiding over yesterday's IRC 104(a)(2 hearing) pushed back interlopers Jack Meligan and Dick Risk by informing them them that the hearing WAS NOT the forum to argue IRC 468B single claimant qualified settlement funds.

Meligan argues that the National Structured Settlements Trade Association (NSSTA) doesn't represent all structured settlement consultants and I agree. However based on a lamely thought out strategy (punctuated by the plaintiff wail of "why did you remove single claimant 468B from the Priority Guidance Plan"?) one could also say that Meligan does not represent all those who have an interest in the resolution of questions conerning single claimant 468B qualified settlement funds. In 2003 the guns were partners at Skadden Arps with notable histories at Treasury or IRS.  In 2010 is the best there is "Mack Jeligan" and "Ick Disk"?

While assigning an appropriate nod to the right to free speech, given the easily forseeable outcome one can't help but view that the left wing front of the settlement industry was simply wasting tax payers' money and time during a period of economic crisis. John McCulloch of IFS Corp deserves a hand for showing that there are those in the industry who desire to keep things on point.

Jeremy Babener does a nice job of summarizing the "voices" at the 104(a)(2) hearing on Beyond Structured Settlements. Still not sure what Babener's gig is after he threw his QSF white paper into the IRC 104(a)(2) comments mx lead up to the hearing. Perhaps only he really knows.

Why Is NYSTLA Dissing Partners for Justice? Have NYSTLA Members Considered the Potential Damage to The Partners Program?

Many members of the New York State Trial Lawyer Association Partnership For Justice are abuzz over a letter sent last week to NYSTLA members by outgoing NYSTLA President, Buffalo attorney Richard S. Binko, all but using his position as President to endorse Forge Consulting at the expense of other NYSTLA "Partners". 

Given the opportunity to promote the Partnership for Justice Program, Binko blew it in the opinion of this author.

Forge Consulting has done a masterful job of coming to the obvious conclusion that trial lawyer associations need money and routinely donates large sums of money to state trial lawyer associations such a NYSTLA as a marketing strategy. The company proudly speaks of its donations on its website and has historically done so in marketing materials disseminated to trial lawyers. 

Jar Jar "Binks' " letter follows on the heels of this story which we  published on September 25, 2009 an excerpt of which follows:

"This email  (Download NYSTLA List Serve-Forge) entitled "[Plaintiffs only ]structuring attorney fees" was circulated on September 25, 2009 using a NYSTLA forum/ list serve (copied via a dedicated email address at the New York State Trial Lawyers Association  "NYSTLA") to many others:

Attorney Robert J. Greenstein of Greenstein & Milbauer, LLP states:

"Below is a link to a very informative article written by tax attorney, Robert Wood, regarding structuring attorney fees.  If you’re interested in fee deferral, please contact (name of settlement firm) they are a partner...and we should support them – they contribute 60K+/yr to NYSTLA"  

Can one help but wondering how often an email tying the size of a insurance agency's financial contribution to the solicitation of insurance on behalf of a licensed agent or licensed agency with NYSTLA occurs? Bear in mind that both the consumers in the structured attorney fee insurance sale AND the beneficiaries of the insurance agency's financial contribution are the association's members".

Points for consideration

A. Following is an excerpt of a published opinion of  the Office of General Counsel New York State Insurance Department dated September 24, 2007:

"Turning to the question about advertising donations to certain not-for-profit organizations like association of trial lawyers, note as an initial matter that in Opinion of General Counsel No. 07-03-07 (March 12, 2007), the Department stated that “nothing precludes the agent or broker from making charitable contributions so long as the advertising of a charitable contribution as an incentive for new insurance business does not constitute an improper inducement in violation of Insurance Law § 2324.” This statement applies with equal force to life, accident and health insurance policies for which such an inducement would be a violation of Insurance Law § 4224.

The inquiry references an “affinity program” of an association representing trial lawyers. To participate in the program, a business must sign an agreement that provides for certain advertising-related services by the not-for-profit in exchange for a contribution from the participating business. The member businesses are responsible for providing all advertising content. The association urges its members to make purchases from any business that has joined the affinity program.

If this form of arrangement were strictly an exchange of compensation by an agent or broker for advertising services, the Department would regard the contributions as fees paid for permissible advertising, and not donations to a not-for-profit. In that circumstance, the contributions would not constitute an inducement in violation of Insurance Law § 4224.

However, where, as here, an agent or broker advertises that the agent or broker makes contributions to a not-for-profit organization of concern and interest to potential purchasers of insurance or annuities, such conduct constitutes an illegal inducement to purchase insurance that runs afoul of Insurance Law § 4224. Nor may an agent or broker evade the prohibition set forth in the Insurance Law by enlisting the aid of the not-for-profit organization to do what the agent or broker cannot do lawfully".

B. Richard S. Binko's letter is incredibly shortsighted, in the opinion of this author. The encapsulation of his "love affair "with Forge would have been far more "romantic" had it been penned on his own law firm's letterhead with a dab of their favorite cologne behind the "dog ear".

C. NYSTLA and any other trial lawyers association for that matter should assess how it dispenses written praise under the moniker of the association, or whether it  is even advisable,. NYSTLA should be more sensitive to others who support their mission, those from who they (or their members) solicit donations, participation in political fundraisers,  advertising,  sponsorships, auction prizes and other financial consideration to support NYSTLA and its causes.

D  Consider the embarrassment that a number of partners in the settlement section are lawyer members of NYSTLA. They received the Forge endorsement letter directly from Binko. Ooopss!

E. If NYSTLA has a prohibition on using its home domain list serves for solicitation of business then by all means enforce it. Otherwise eventually someone who someone was trying to hide it from is going to find out about it

F. If NYSTLA members think this is matter of sour grapes, think again. Whatever good Forge Consulting does, and they do some good things, this author reminds NYSTLA that in 2005 and 2006 Forge Consulting solicited NYSTLA members on the basis that it was plaintiff exclusive while at the same time its President and CEO and two other principals attested under penalty of perjury about their SUBSTANTIAL defense work in the preceding 3 years so that those individuals could get on the list of brokers who meet the qualifications to do work for the United States Department of Justice. The Forge President ALSO stated that he was plaintiff exclusive to the MATA President on the Legal Talk Network only 3 months after signing one of his two attestations!

Download 2005 Bair DOJ 50.24 Declaration

Download 2006 Bair DOJ 50.24 Declaration

Download Charlie Schell DOJ Declaration 3-1-2005

Download Spooner Phillips DOJ Declaration 3-3-2005

You legal scholars can argue over a beer or glass of wine, whether the mutually exclusive statements made by Forge Consulting and /or its principals constituted false advertising or perjury, and/or which is the most desirable trait in a business partner. Written on behalf of NYSTLA, doesn't Binko's letter simply communicate to other members of the  NYSTLA Partnership for Justice that your transgressions can be papered over by a series of $60,000 contributions?  

Structured Settlement Industry Urban Legends-1

This is the first part in an ongoing series about the Urban Legends of Structured Settlement primary and secondary markets.

CLAIM: "My credentials...

• Certified Structured Settlement Consultant (CSSC) specializing in designing safe and secure investment vehicles for injury victims who win multi-million dollar settlements. (one of less than 100 people in the world who have qualified for and earned this designation)"--Jack Meligan, SPI as one of the reasons why you should trust him  (Structured Sale website as of 2/22/2010 450 PM EST)
  

FACT: The NSSTA website states that "nearly 550 structured settlement consultants" have qualified and earned the CSSC professional designation. Time to update the website. You're not so unique any more are ya laddie?

B. CLAIM:  " The first major new firm in the structured settlement industry in more than a decade"- Forge Consulting, LLC, on its website and in various paid advertisements with state trial lawyer associations (as of 2/22/2010  455PM EST)

FACT: This Forge Consulting falsehood assigns a high value to this lie which has been perpetuated for years. It has been blogged numerous times that Atlas Settlements Group was founded AFTER Forge Consulting, LLC. Moreover, IFS Corp's founding post dates Forge Consulting, LLC by a mile. It's amazing that a company which uses the Celtic symbol of justice and strength in its logo allows it to be weakened by its perpetuating an easily provable falsehood on such a wide scale.

C. CLAIM: "IRC 5891 made factoring Legal" Rhonda Bentzen, Bentzen Funding Solutions and various structured settlement brokers and settlement planners

FACT: IRC 5891 simply deals with the imposition on the purchaser of structured settlement payment rights, of an excise tax on the "factoring discount" that applies to the sale by annuitants of the rights. IRC 5891 also sets forth exceptions to the tax.

D. CLAIM: "FAST CASH NOW", "CASH NOW" for your structured settlements-made by many cash now pushers

FACT: The court approval process requirement in most state structured settlement protection acts assures that one will not receive the full value of the transaction today, or even tomorrow. Some companies offer a modest bonus or gift to help tide you over and others advance a modest amount. Don't be fooled.

E. CLAIM: (Name) earned their Certified Structured Settlement Consultant (CSSC) from University of Notre Dame

FACT: The professional certification is actually conferred by the National Structured Settlement Trade Association. A portion of the education program and the final exam is hosted at the University of Notre Dame.  The specifics of the CSSC program are discussed on the NSSTA website. See John Darer's video on Credential Puffery in the Structured Settlement Industry

The structured settlement watchdog adopts the motto of the mother of the Verizon saleman in the Optimum TV advertisement ("If It's Not Optimum It's Not Right),  THE TRUTH IS IMPORTANT!

Ex-Manager's Effort to Shake Down Peachtree Doesn't Bear Fruit

The Palm Beach County "financial cess pool" has churned out a new piece of notoriety. This time  former Peachtree Settlement Funding "manager", Christian Palombi, 40, of 3-D West Gate Lane, Boynton Beach, was arrested and charged with one count of extortion.

Peachtree ``caters to people seeking to sell structured settlement payments, annuity payments, life insurance policies, lottery prize payments, sweepstakes awards, and sports contract payments'' and provides ``cash advances to people with pending personal injury claims.''. They have been a frequent target of the structured settlement watchdog for false advertising associated with "Cash now".

Palombi made a $10 million demand on Jan. 21 through Peachtree's attorneys.  He also sought an apology and the termination of his non-compete agreement. He threatened to share information about the company and its customers with the Internal Revenue Service if his demands were not met and gave the attorneys a Feb. 18 deadline to comply, according to the arrest affidavit.

Palombi apparently had symptoms of  "Shaken Tree Syndrome" when he appeared at the Greenberg Traurig offices in Miami with two boxes of documents and a laptop computer to meet with the two attorneys. There he encountered Miami-Dade investigators, who arrested him and took Palombi for questioning..

Financial Literacy Moments of 2010-3 Federal Tax Rules Concering Structured Settlements and Qualified Assignments

The following question appears in a page of frequently asked questions about structured settlements on a major structured settlement industry website. Unfortunately the answer is incomplete.

THE QUESTION:  "What OTHER federal tax rules govern the use of structured settlements and qualified assignments?

THEIR ANSWER: "In order to protect the public, Congress specified in Section 130 the requirements to establish a qualified assignment:

• The assignee assumes the liability from the defendant;
• Both the victim (and his/her attorney) and the defendant agree that the payment schedule cannot be "accelerated, deferred, increased or decreased";
• The payment stream may be excluded from the recipient`s gross income for tax purposes;
• The injury must be a physical sickness or injury; and
• A highly secure funding asset (such as an annuity or U.S. Government obligation) must be used to fund the payments".

Comments

Unfortunately the aforementioned answer is incomplete because it completely ignores the FACT that the terms of Rev Proc 93-34 provide assurance that a designated settlement fund or qualified settlement fund will satisfy the "part to the suit or agreement" requirement set forth in IRC 130(c)(1).

To wit, please find the relevant text of Rev Proc 93-34 

"Section 4
.01 A designated settlement fund or a qualified settlement fund will be treated as "a
party to the suit or agreement" within the meaning of section 130(c)(1) of the Code if
each of the following requirements is satisfied:
(1) the claimant agrees in writing to the assignee's assumption of the designated
or qualified settlement fund's obligation to make periodic payments to the claimant;
(2) the assignment is made with respect to a claim on account of personal injury
or sickness (in a case involving physical injury or physical sickness) that is either:
(a) a claim described in section 2.04(1) in the case of a designated settlement
fund, or
(b) a claim described in section 2.05(2) in the case of a qualified settlement
fund;
(3) each qualified funding asset purchased by the assignee in connection with
the assignment by the designated or qualified settlement fund relates to a liability to a
single claimant to make periodic payments for damages;
(4) the assignee is not related to the transferor (or transferors) to the designated
or qualified settlement fund within the meaning of sections 267(b) or 707(b)(1); and
(5) the assignee is neither controlled by, nor controls, directly or indirectly, the
designated or qualified settlement fund. For purposes of this section 4.01(5), examples
of control include an assignee that is a corporation the stock of which is owned by the
fund or an assignee that is a trust the trustee of which is the administrator of the fund.
.02 If an assignment by a designated or qualified settlement fund satisfies the
requirements of section 4.01 of this revenue procedure and all the other applicable
requirements of section 130 of the Code, the assignment is a qualified assignment within the meaning of section 130 and the transferor to the designated or qualified settlementfund will not be treated as receiving a deemed distribution described"

Recap of The Structured Settlement Process, including a helpful Structured Settlement Flow Chart

What is a Revenue Procedure?

A Revenue Procedure or Rev. Proc., such as Rev. Proc 93-34 is a statement from the IRS or state tax authority intended to provide guidance to taxpayers with regard to the administration of laws and regulations.

20 US Bank Failures in 2010

Federal regulators closed 4 more banks on February 19, 2010 bringing the year's total to 20.

There were 140 bank failures last year, the highest annual number of failures since 1992, when the country was at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. As a comparison there were 25 bank failures in 2008 and only  three in 2007.

Depositors' money is insured up to $250,000 per account through 2014. The FDIC's expectations are a $100B outflow over the next 4 years. Banks are assessed premiums each year and in 2009 were mandated by the FDIC to prepay premiums for 2010-2012 to help replenish the withered coffers of the bank insurance fund.

That being said it is worth pointing out that during the same time period of this financial crisis no structured settlement annuity issuer has been taken over by state insurance regulators and ALL of the structured annuity issuers writing structured settlements have made their payments to annuitants.

Beware EPTL 5-4.6 Wrongful Death Legal Malpractice Trap in New York

The New York State legislature amended EPTL 5-4.6 in 2005, to create a mechanism pursuant to which the lawyer representing a plaintiff in a wrongful death case may have the Supreme Court order the settlement sum be paid into the escrow account AFTER the settlement has been reached in the trial court BUT BEFORE the Surrogate has reviewed the settlement for proper allocation an distribution. In this video Registered Settlement Planner John Darer discusses the potential legal malpractice trap.

What's Going on With S2KM Limited?

Where in the world is S2KM? Does the alter ego of Patrick Hindert still exist?

Hindert's blog "Beyond Structured Settlements" still has occasional posts although in recent times those have been authored by NYU 3L Jeremy Babener as contributing author.

Patrick Hindert's LinkedIn Profile lists S2KM Limited as a past employment ending in October 2009.

Bearon Von Wikitoven

Then "von Wikitoven's" Structured Settlement Wiki states:

"Welcome to the structured settlement wiki co-sponsored by S2KM Limited (a dead link) and The Settlement Services Group (TSSG). S2KM first published this "read only" public wiki March 24, 2008. S2KM and TSSG will continue to develop, edit and improve its content".

So to recap:

1. S2KM listed as past employment ending 5 months ago
2. Dead link to S2KM website

Are we talking "rudderless ship"?  Focus on Indonesia where BSS is still tearing it up?

Herr Wikitoven please explain!

Do Meligan and Babener Actions Now Reveal a level of Panic Over Single Claimant 468B?

This author submits that certain settlement planners thought that Treasury guidance on the Single Claimant 468B qualified settlement fund was a forgone conclusion given that it was on the Priority Guidance plan for so many years. Then it was inexplicably omitted from the 2009-2010 Priority Guidance Plan. The settlement planners panicked and obviously came up with a strategy that includes an attempt to hijack a hearing on proposed regulations relating to the exclusion from gross income for amounts received on account of personal physical injuries or physical sickness, with the non sequitur. However noble their cause may be it IS a non sequitur with respect to the hearing.

Humming a few bars to the tune of "Panic" by The Smiths

Panic on the streets of Portland  Panic on the streets of Washington

They wonder to themselves
Could life ever be sane again ?
The Priority Guidance Plan let them down
They wonder to themselves
Hopes may rise on the 23rd
468B, not safe yet
So they run down
To the safety of the town
But there's Panic on the streets of Tulsa
Austin, Denver, Jacksonville  They wonder to themselves...

On September 15, 2009 The IRS issued notice of proposed rulemaking. The notice stated that the agency sought comments, to wit

"Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations, consideration will be given to any
written (either a signed paper original with eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and the Treasury Department specifically requests comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying.

A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time and place for the hearing will be published in the Federal Register". Note that Dick Risk requested a hearing in his comments submitted October 2009.

What I want to know is WHY,  just one day after doing a fantastic job of keeping people focused on what is actually on the table, Jeremy Babener is throwing his QSF paper into the "kitchen sink"?

(1) Can't these people stay on point? (2) Why not let the QSF issue stand on its own, with its own hearing? Why swim around like male salmon reaching the end of their lives at breeding pond desperate to seal their legacy?

Bears will be required to check their unicycles OUTSIDE the Internal Revenue Building in D.C. on Tuesday February 23rd.

"Voulez Vous Fac-Tor Avec Moi Ce Soir?"

It's a fine day in the blogosphere, the "whinge meter" is whirring up and it's a good day for a song to needle Rhonda Bentzen for defiling the settlement industry with 16 links to steamy Japanese porn sites  (as of 2/19/2010 11:52am and appearing since 1/25/2010):

LADY BONAFIDE (to the Moulin Rouge version of  the tune of "Lady Marmalade")

 

Hey Sista Cash Sista Flow Sista

Hey Sista Cash Sista Flow Sista Blow Sista

He met Rhonda B. at the Grand Ole "Opree"

Struttin' her stuff for SSP

She said "Hello Hey Bro', got an annuity to go?"

Guiche, Guiche Dollahs ya ya dada

"5891 Made It Legal" Hee Yah

Structcha Factoring ya ya

Ben Fun Lady Bonafide

Voulez Vous Fac-Tor avec moi ce soir?

Voulez Vous Fac-Tor avec moi?

Ironically the Rhonda Bentzen's porn links are associated with a post in which she implies a distaste for being referred to as a "factoring madam".

Way to go Rhonda!