Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary

Factoring Company Went Round in Circles Soliciting Structured Settlement Investors

by Structured Settlement Watchdog

Aggressive marketing of the opportunity to invest in other people's structured settlements surfaced during the 2008-2009 financial crisis as institutional financing was in short supply. These alternative investments in receivables were often (and in some cases still are) falsely promoted as annuities by companies and individuals with no insurance, financial advisory or securities licenses, operating in a gray area.More than a decade on, legal cases reveal a growing body of victims bubbling to the surface like coffins involuntraily exhumed in a flood.

I will continue to cover ongoing litigation in the public interest, while revisiting some of the false narratives and bogus advertising that led mom and pop investors and others to commit assets to what they may have been led to the mistaken belief were annuities (they weren't). 

Woodbridge Investments

My industry colleague Brian Loper from Birmingham Alabama, posts a solicitation and brochure, which shows how one now defunct company, Woodbridge Structured Funding LLC, was aggressively seeking financial advisors to sell the alternative investments promising substantial commissions:

• Flyer and March 2012 letter solicitation promising substantial commissions…” (PDF) as much as $20,000 on the sale of a $50,000 annuity” “Earn 6-8% investing in: Structured Settlements…”. Are they soliciting the sale of an annuity or an investment mechanism? You decide, asks Loper.

10 years ago,  5 years before Woodbridge filed for bankruptcy and was exposed as a Ponzi scheme, with its CEO Robert Shapiro was convicted and condemned to a 25 year prison sentence, Woodbridge demonstrated a perfect circle of illogic in soliciting investors.

Woodbridge asserted:

"A Structured Settlement is an annuity awarded to a plaintiff from a personal injury settlement that is paid out to the plaintiff over a period of time. The defendant often purchase an annuity through a highly rated insurance company based on an agreed structured settlement".

So from the plain reading of the words of the structured settlement factoring company that used the ad to solicit investors and financial advisors to sell to investors :

1. A structured settlement is an annuity  FALSE

A structured settlement is a form of settlement or compromise of legal claims.

2. A structured settlemnent is awarded  FALSE

A structured settlement is not awarded. That's why it's called a settlement.

3. A structured settlement is an annuity awarded FALSE

See #1 and #2

4. A Defendant often purchases an annuity based on an agreed structured settlement  FALSE

If a structured settlement were an annuity  (as Woodbridge asserted), why would a Defendant "often purchase an annuity" "based on an agreed annuity" ?  

Factoring Company Falsely Advertised it Offered Structured Settlement Annuities

Despite knowing that the structured settlmeent investments were in fact receivables not annuities, in the same brochure, Woodbridge falsely advertised "Woodbridge offers these annuities at a fixed rate of return to astute investors". In addition it stated Woodbridge Structured Funding LLC's experience and due diligence practices ensure the investment quality of the annuities offered for sale.

Woodbridge Were Predators of AIG Structured Settlement Annuitants During the 2008 Financial Crisis

In addition to misrepresentation directed at investor consumers and financial advisers that factored structured settlement receivables were annuities, Woodbridge grossly misrepresented that its purported "due diligence would ensure the investment quality of the annuities" (which were not annuities). None of Woodbridge's due dilience could ensure the investment quality of the receivables, given that Woodbridge did not have anything to do with the management of insurer portfolios, reserves, assets and liabilities of the insurers.

The Woodbridge brichure cited above includes a footnote  to a Moodys report "Life insurers Likely to Maintain Solid Balance sheets" that appeared in the June 4, 2008 Wall Street Journal. Yet on On September 18, 2008 Woodbridge Investments opportunistically and prematurely danced on the graves of "major insurance giants like AIG" in a Press Release which stated:

"Recent financial troubles and bankruptcy scare for insurance giant AIG has created opportunity for structured settlement factoring company Woodbridge. Woodbridge claimed it was "a leading structured settlement factoring company who has seen explosive growth in the purchasing of settlements backed by major insurance giants like AIG...

"...Our customers are dealing with an inherent fear, and anxiety that naturally comes when you are expecting to receive payments for the next twenty or thirty years from companies like AIG that are linked with unprecedented real and rumored cases of bankruptcy"

The Woodbridge predators on the one hand tried to scare the crap out of annuitants and unsettle them about the safety of insurance companies and on the other hand bragged about the financial security of the same companies to get investors to buy the deals on the same assets. To wit..."Each annuity is paid directly to the investor by a US based life insurance company with credit rating that is generally rated AAA to A by major rating agencies"

Ironically it was Woodbridge that filed for bankruptcy 9 years later after its Ponzi Scheme unraveled. AIG annuitants who didn't do business with Woodbridge and did not otherwise sell any paymnets to factoring companies would have received the payments contacted for when the structured settlement was established.  That is every penny instead of pennies on the dollar that Woodbridge would have given them after fanning their fears.

Astute means  "having or showing an ability to accurately assess situations or people and turn this to one's advantage" 

 

 

Pacific Life & Annuity Services Inc. Redomiciles from Colorado to Missouri

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Pacific Life Structured Settlements

Pacific Life & Annuity Services, Inc. has announced that it has redomiciled from Colorado to Missouri effective July 1, 2022. Pacific Life & Annuity Services, Inc., is the qualified assignment company for all Pacific Life branded structured settlements and include underwriting companies Pacific Life Insurance Company in all states but New York and Pacific Life & Annuity Company for all Pacific Life funded structured settlements where there are touch points to New York.  [e.g. New York litigants, litigation in New York Courts]  

Read What is a Qualified Assignment?

 

 

We Pay More Funding Issues Press Release Self-Describes as Something It's Not

by Structured Settlement Watchdog

We Pay More Funding claims to be one of the best customer-rated structured settlement companies. The statement that We Pay More Funding is an admission that the statement "We Pay More Funding is a structured settlement company" is a tall tale, a bit of a yam. It's from funda cheese".

The word "funding" is the tell folks. We Pay More Funding is a funding company, a pennies on the dollar merchant that will buy the rights to your structured settlement payments for a fraction of the present value. We Pay More Funding does not create or establish structured settlements, offer structured settlement annuities, or buy structured settlement annuities.

The second tell is the admission that they "put cash in their pockets fast by buying some or all of their future structured settlement payments".

Anyone interested in learning about structured settlements companies should avoid contacting a company whose only solution is buying their pauyments for pennies on the dollar.  "Their team understands the hassle of waiting for scheduled payments and helps people quickly access cash from their settlement by way of buying future payments.

Instead of all this"from funda cheese", why don't companies like this, just call call themselves what they are?

• A buyer of structured settlement payment rights
• A structured settlement payment factoring company
• A structured settlement factoring company
• A court supervised pawn shop

How Long Are State Legislatures Going to Tolerate Bribes for Structured Settlement Factoring Quotes?

by Structured Settlement Watchdog

Some "pennies on the dollar" merchants offer bribes just to induce potential customers with structured settlements to seek quotes from them.  Are these financial inducements improper?  Should they be illegal as a matter of public policy?  Are these financial inducements ethical?

What is a Bribe in this Context?

Bribe "something that serves to induce or influence.  e.g. offered the kid a bribe to finish his homework"   

Source: Aunt Merriam Webster

Here we are not speaking of inducing Fifi the Frenchie to give a high five by rewarding them with a treat.  Fifi is being rerwarded for good behavior. Pennies on the dollar is not a treat or reward for an annuitant's good behavior! It's an inducement to sell an asset at a discount, make a certain financial loss from a siginificant asset, possibly their only significant asset.

Consder this example, where Stone Street Capital, a purchaser of structured settlement payment rights and a member of the JG Wentworth family, offers a $100 inducement just to get you to seek a quote from them. Seen recently...

 *This offer is subject to you receiving a quote for the sale of qualifying payments, our verification that you are currently receiving those payments and that they are available for purchase. This offer is not for a loan or advance. The $100 for a quote will be fulfilled in the form of an e-gift card that will be emailed to the email address you provide".

The fine print includes a consent to be contacted by automatic dialers and so on. Oh joy! One more robocaller to pile on to the unabating debt elimination calls, cascading cable tv cacodemons,  wretched auto warranty wranglers, the vexatious assemblance of amazon spoofers, pinpricking solar panel peddlers, flabbergasting final expense flipperheads, senior benefits jive turkeys, and government agency spoofers who claim to have the dreaded but completely random "notice in your name". 

A Glaring Inequity Exists with the Potential to Distract and Harm Consumers

This type of conduct would be deemed illegal under state insurance laws in New York and Florida  (scroll down to see below, especially highlighted language).

But for some reason there is a gaping hole in structured settlement protection laws, where there should be protection for consumers (structured settlement recipients) who rely on structured settlement annuity payments, that is long overdue to be addressed. States such as Louisiana, Maine, Maryland and Minnesota which require the registration of structured settlement transferees should continue to lead the way by clamping down and introduce measures to discourage and eliminate this potentially unhealthy business practice.

Equity is an prominent topic in the national discourse these days. But there's no equity between permissible conduct by structured settlement factoring companies (structured settlement transferees) and those who hold insurance licenses to solicit insurance, including structured settlement annuities.  Think about it, a licensed insurance agent (such as one who is a structured settlement broker or settlement planner) with few exceptions, cannot offer to pay someone $100 (or provide a gift card worth $100) as an inducement to request a quote.

New York

Opinion of General Counsel No. 04-08-03 (August 3, 2004) states, in relevant part, that:

Inasmuch as the gift certificate or the [gas] card being offered is not a "keepsake" within the meaning of the statute, but is expected to be used shortly after receipt and then be discarded, it would not fall under the "keepsake" exception of N.Y. Ins. Law § 2324 even if the agency name was placed upon it.

Therefore, despite the low value of the gift card as it is not an article of merchandise it is rather more similar to cash and thus it would not qualify for the exemption and it would be an illegal inducement pursuant to N.Y. Ins. Law § 2324(a) (McKinney Supp. 2005).

Florida

Referral fees – referral fees are either cash or an item given to the source of a referral provided for the referral of a prospective insurance customer. The fees are lawful provided they are given for every referral, not just those that result in insurance sales. Acceptable fees can be paid in cash, with a gift card, merchandise, lottery tickets, etc. There is NO limit on the amount of a cash referral fee or the value of merchandise.  For reference, DFS cites section 626.112(8), Florida Statutes.

Marketing/Advertising Gifts – these are items of merchandise given to prospective or current policyholders or to the public that market or advertise a licensee or agency. Acceptable items include coffee mugs, golf balls, golf towels, mouse pads, calendars, etc., and generally include the name of the agent or agency. Cash, gift cards, lottery tickets, etc., are not acceptable advertising gifts. Effective July 1, 2018, new legislation substantially expanded Section 626.9541(1)(m), Florida Statutes, by allowing insurers and agents to give advertising and promotional gifts having a total value of not more than $100 per insured or prospective insured in any calendar year.

Unlawful Inducements – the definition of an unlawful inducement in its simplest terms is to give a prospective customer, existing customer OR ANY OTHER PERSON a “thing of value” in exchange for something of value to the licensee. An example is giving any person or entity cash, a gift card, merchandise, lottery tickets, tickets to a sporting event, etc. in exchange for the ability to produce an insurance quote or sell insurance. If another agent or agency sells the same product for the same price, the consumer may choose to work with the licensee that offers a gift card. According to DFS, the law was created in part to deter unfair competition among licensees.  DFS refers licensees to section 626.9541(1)(h) which is titled "Unfair methods of competition and unfair or deceptive acts or practices defined".

Gaps in Regulation of Structured Settlement Transferees

Why does this longstanding inequity exist?

Given that neither of these states require any sort of licensing or registration of structured settlement transferees, state legislature in these and other states should perhaps address the following two questions:

1. What if an employee of a Florida structured settlement factoring company, or a factoring company in another state were to engage in this activity with a structured settlement annuitant?
2. What if an employee of a Florida structured settlement factoring company, or a factoring company in another state were to engage in this activity with an individual or individuals with access to non public personal identifiable information concerning structured settlement annuitants?

 

 

Sell Any Annuity Claims It Has "75+Years of Experience" in Gross Misrepresentation

by Structured Settlement Watchdog

Queen Elizabeth II of England celebrated her Platinum Jubilee in June 2022, having ascended to throne on June 2, 1953. Six years earlier, in 1947, then Princess Elizabeth married her late husband Phillip, the Duke of Edinburgh at Westminster Abbey in London. The post war year saw the births of Reginald Kenneth Dwight (Elton John), Lew Alcindor (Kareem Abdul-Jabbar) and the CIA.

CBC Settlement Funding, a "pennies on the dollar for your structured settlement merchant" out of Conshochocken Pennsylvania has a penchant for quantity over quality in its choices of partners for lead generation. Today CBC Settlement Funding deserves an absolute roasting for their continued use of Sell Any Annuity (sellanyannuity(dot)com), which shuns "stack formation" and makes the grossly misleading claims that it has 75+ years of experience, implausibly putting its establishment back to a time before Rock N Roll and Motown,  the Korean War, the Vietnam War, the Yom Kippur War, in the year 1947, when a loaf of bread cost 13 cents, a gallon of gas cost 15 cents, when Jackie Robinson first took the field for the Brooklyn Dodgers and Miracle on 34th Street was one of the year's hit movies.

The first Private Letter Rulings related to structured settlements did not appear for 30 years and the Periodic Payment Settlement Act of 1982 was 35 years later. 54 years later came 9/11/2001 and the Victims of Terrorism Tax Relief Act of 2001, which (among other things) established IRC 5891 (a watershed moment in structured settlement factoring) and 62 years later, in 2009 was when CBC Settlement funding was established. But Sell Any Annuity wanst you to believe 75+ years of experience, ROFLMAO!

In this context, stack formation is a "fake it 'til you make it" marketing deception in which a company "stacks" years of experience of multiple individuals to create an illusion that a young company has been around for a long time. A more honest and ethical approach to consumers, in my opinion, would be to use average years of experience.

Unethical and Implausible "Stack Formation" 

9 employees each with 7.5 years of experience and one employee with 10 years of experience =75+ years of experience

Ethical (and Believable)

A company states that its employees average 7.5 years of experience.

 

 

 

 

 

What is The California "Structured Settlement Attorney" Talking About?

by Structured Settlement Watchdog

It's so disappointing when so-called experts providing independent professional advice, can't articulate the fundamentals of the business upon which they are providing inedependent professional advice?  How can any consumer feel confident in such advice when you consider the following, from an adviser in a state that permits a fee of up to $1,500 to be paid by the purchaser of structured settlement payment rights?

Let's examine a series of statements from a solicitation by a so-called structured settlement attorney based in California:

A. "If you are receiving a settlement over time and are in need of a lump-sum payment that is possible.  That is what is referred to as selling your annuity in the secondary market".

Structured Settlement Watchdog Commentary: This is a case of SNAFU.  No structured settlement annuitant owns the structured settlement annuity that funds the obligation to make payments to them.  The structured settlement cannot sell the annuity since they do not own the annuity. What they can sell, if the transaction complies with relevant state and federal law are structured settelment paymnet rights.

B. "Most of the time you agreed to take a larger settlement over time, but what you may or may not know is that the original cash offer or a portion of it was used to purchased annuity that you are receiving in payments. These payment streams have a present-day discounted value in the secondary market. The IRS has come up with a number that it feels a dollar today is worth in say 10 years, and vice a versa. That number is then used to calculate what your payments are worth. This allows the purchaser to cover their costs in making the transfer happen. 

Structured Settlement Watchdog Commentary: Actually, that's not a proper articulation. It's unlikely that any structured settlement factoring company would do a deal for present value by simply the Applicable Federal Rate. The Applicable Federal Rate does NOT allow the purchaser to cover their costs and account for their profit margin!

According to the IRS Excise Tax on Factored Structured Settlement Payments Audit Technique Guide 3/2019 rev. p4

"The transferee – that is, the factoring company – is required to make a series of disclosures designed to highlight the value of transferred payments and to contrast that value with the net amount that a payee stands to receive in exchange for thetransferred payments. In most states, the transferee is required to disclose the discounted present value of the transferred payments, as determined by using the “Applicable Federal Rate” most recently published by the Internal Revenue Service for purposes of valuing annuities.

C. The payment stream when setup was set up with a probable rate of 2 % return, and now your payment is being purchased at a minimum of 10 % return. Each transfer is unique so do quote exact numbers is impossible, but what you can expect to be to lose a large portion of the “face” value of your payments.

Structured Settlement Watchdog Commentary:  Tritely inarticulate balderdash.  Where do I start? 

1. "...probable 2% return, and now your payment is being purchased at a minimum 10% return". Aren't we speaking about discounted present value? Ergo, the latter reference is an effective discount rate?

2. Where does the random "probable 2% return" come from?  If an annuitant is in their late 20s and has a structured settlement established when they were  a child, that could have had a considerably higher Internal Rate of Return.  Consider that in 2002, the 10 year United States Treasury ranged from 5.04% in January to 4.03% in December. the 20 Year Treasury yield ranged from 5.43 in January 2002 to 5.63% in December 2002.  See How Structured Settlements Compare to Alternative Investments

D. "Structured settlement has to be underwritten & approved by a court. The underwriter is responsible for making sure that the payments can be sold and transferred without liens or liabilities. The court is responsible to ensure the seller has the right to sell the payments, and that it is in the best interest of the person receiving the payments to sell".

Structured Settlement Watchdog Commentary:  

1. No structured settlement are underwritten by a court.

2. No structured settlements have to be underwritten by a court

3. Courts are not underwriters

4. Some structured settlements have to be approved by a court, such as where the settlement is on behalf of a minor, an incompetent, or the matter is subject to probate.

 

Pacific Life A+ Superior Financial Strength Rating is Affirmed by A.M. Best

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Pacific Life is a Leading Issuer of Structured Settlement Annuities

On June 22, 2022, rating agency A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of Pacific Life Insurance Company and Pacific Life & Annuity Company (collectively referred to as Pacific Life Group). The companies are leading issuers of structured settlement annuities, the latter company being Pacific Life’s structured settlement annuity issuer in the state of New York. Both companies are headquartered in Newport Beach, CA.

Additionally, AM Best has affirmed the Long-Term ICR of “a” (Excellent) of the group’s intermediate holding company, Pacific LifeCorp (Wilmington, DE). AM Best also has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of Pacific LifeCorp. PacificLife Corp serves as the guarantor of Pacific Life and Annuity Services, Inc., the Missouri domiciled company that serves as the qualified assignee for periodic payment obligations under qualified assignments pursuant to IRC §130(c)and which purchases and owns Pacific Life structured settlement annuities as qualified funding assets pursuant to IRC §130(d)

The A.M. Best outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Pacific Life Group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM). Pacific Life’s balance sheet is supported by a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and its history of positive earnings trends, which are supported by being one of the industry’s leading sales organizations in its key product lines. The favorable business profile assessment reflects its prominence as a leader in the affluent market segment.

Pacific Life offers competitively priced fixed structured settlement annuities, medically underwritten life contingent structured settlement annuities,  index linked structured settlement annuities (ILAPA) and has a variable structured settlement annuity in development. Pacific Life & Annuity Company also issues structured judgment annuities in New York cases.

Pacific Life has been named one of the 2022 World’s Most Ethical Companies^®

2022 marks the fifth consecutive year Pacific Life has been recognized by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices. Pacific Life was evaluated on five categories, including its ethics and compliance program; culture of ethics; environmental and societal impact; corporate governance; and leadership and reputation. The Ethisphere Institute, which honors companies demonstrating exceptional ethics-focused programs and practices. Pacific Life was one of 11 insurance and financial service industry honorees.

USAA Celebrates 100 Years in Business

by John Darer CLU ChFC MSSC CeFT RSP CLTC

We're pleased to have a business relationship with USAA Life Insurance Company . The San Antonio based USAA was founded June
20,1922 by a group of soldiers to take care of their own. Over the years the USAA customer base has explanded.

USAA Structured Settlement Annuity Issuer

Today the A++(Superior) A.M. Best rated insurer has become a highly respected issuer of structured settlement annuities for a wide spectrum of claimants, particularly competitive for use as a qualified funding asset to fund long duration cash flows as payment of damages in on personal physical injury, physical sickness and wrongful death in medical malpractice, aviation, trucking, maritime and other types of legal settlements.

USAA ranks 25th on Fortune’s 2022 list of the world’s most admired companies. The ranking is based on the magazine’s poll of about 3,700 corporate executives, corporate directors, and business analysts. 

USAA ranks 96th in the 2022 US Fortune 500 and 330th in the Global Fortune 500.

USAA is one of the Wards 50 Life & Health Insurers for 2021 (29 years).

Watch a short video about the history of USAA

Read more about

What is a Structured Settlement?

What is Settlement Planning?

Structured Settlements for Minors

Structured Settlements for Seniors

USAA Life Insurance Company does not write structured settlement annuities in taxable damage cases or where litigation is in the State of New York.

Last updated July 1, 2022

 

 

 

Milestone/Bair Withdraw Structured Settlement Insurer Appointments

by Structured Settlement Watchdog

Milestone's John T. Bair, the managing member and principal owner of Buffalo based structured settlement factoring company CrowFly, LLC  [Milestone Wealth Form ADV Part 2 Section 10 IAPD - Investment Adviser Public Disclosure - Homepage (sec.gov) ] has apparently recently terminated his appointments, and the sublicensee appointments with life insurers issuing structured settlement annuities. According to New York Department of Financial Services publicly available published records at time of publishing, Bair/Milestone no longer hold appointments with Berkshire Hathaway, Pacific Life & Annuity Company, Metropolitan Tower Life Insurance Company, New York Life Insurance Company and The Prudential Insurance Company of America effective May 31, 2022, according to the New York Department of Financial Services,  Upon information and belief Bair/Milestone are not appointed with structured settlement annuity issuers USAA LIfe, American General and United of Omaha.

What About Milestone Fee Master Option 2?

In addition, it is evident that the Bair/Milestone's Massachusetts Mutual Life Insurance Company appointment was terminated as of May 31, 2022. Bair/Milestone solicited trial lawyers for several years with this dubious chuckler "Keep more of your total contingency fee and work within an existing financial framework that can return historical dividends as high as 6% or greater.  What a neat party trick by "Marty McBair" it would be to take a time machine and get historical dividends in the future. Without MassMutual, whose appointment Bair has dropped, and with Northwestern  Mutual a no-brokerage company, is Option 2, deep-sixed?

What About Milestone Fee Master Option 3?

"A more tried-and-true strategy, this approach has been allowable since 2008 but has been cost prohibitive until now. No longer limited to the eight basic structured annuity options, this platform relies on the inherent advantages in the marketplace of
annuities. All annuities are available to back the obligations of this feeMaster option". Can MIlestone and Bair seriously and accurately represent to trial lawyers and disabled plaintiffs that ALL annuities are available when they are now not, now that the appointments have terminated by Milestone/Bair?

In its most recent still published form ADV Part 2, in Section 10 (Conflict of Interest), Milestone Wealth indicates that it "may recommend an annuity listed by CrowFly to a Milestone client". To the extent what Milestone is selling to an investor, or a trust, is a factored structured settlement payment stream. It is NOT an annuity. Plaintiffs and their attorneys should be mindful that when another person's structured settlement payments are being sold to them or their clients  it is a factored structured settlement payment stream, or receivable that does not meet the definition of annuity under the laws of many states.

Factored structured settlement payment streams are not annuities and not a qualified funding asset for a structured settlement. 

He was not the first, but for 4-5 years, John Bair was the only structured settlement annuity general agent who was also cofounder, managing member and principal owner of a structured settlement factoring operation, CrowFly, LLC. [ see Milestone Wealth Form ADV Part 2, page 10 regarding Conflict of Interest]

On April 20, 2020 Bair sent a missive to trial lawyers to get their clients out of annuities while soliciting clients to buy factored structured settlement payment rights inappropriately billed as "annuities" from CrowFly, LLC.  At the time of the solicitation it was known that the 2017 Revisions to NAIC LIfe & Health Guaranty Association Model Act (#520) expressly excluded structured settlement investors from the insolvency scheme. Today 37 states have adopted the revisions and as a result provide no protection to structured settlement investors in the event of insolvency. The 2017 revisions included a retro clause that affects people who have bought such investments prior to the effective date of the adoption of the revisions.  Expect the 2017 Revisions to eventually be adopted in all 50 states.

  

 

We Pay More Funding is Latest Beneficiary of Structured Settlement Illiteracy

by Structured Settlement Watchdog

One of the reasons I write my own articles about structured settlements is that I've found that most paid gig writers don't know jack about structured settlements. It's important that consumers have a clear path to accurate information about structured settlements.

Rhett Wadsworth is the "Major Domo" of We Pay More Funding, but the Fort Lauderdale outfit gets a "3-alarm fire hydrant pirouetting leg lift" from the Structured Settlement Watchdog, for the choice of social media promoting the company that makes We Pay More Funding look like "Major Dumb-o". Bear in mind that the best that Rhett Wadsworth and We Pay More Funding have to offer consumers is nothing more than pennies on the dollar. There is nothing unique about pennies on the dollar regardless of whether you "roll 'em or stack 'em".

In Discussing the Pros and Cons of Settling For a Structured Settlement

"Pros:

You will receive your money promptly from the insurance company. That can be beneficial because it prevents you from running out of money during this time, which could lead to financial distress". (LAME)

"Cons:

The amount you receive may not be as much as what you are entitled to under the terms of your original agreement or lawsuit ruling. If this happens, seeking advice from a reputable structured settlement company can help towards resolving this issue. Understanding the worth of your structured settlement is crucial for this reason. We Pay More Funding will help you get more cash faster if you ever want to sell your future payments."

Commentary

Rhett Wadsworth's company is tied to a misleading mountain of chicken turd.

The publisher is Shiv Kaushik, of Faridabad Haryana in India, according to Whois Records for thebusinessthought.com, where the chicken turd was published.

Let's analyze the statement " The amount you receive may not be as much as what you are entitled to under the terms of your original agreement or lawsuit ruling".  It's a classic disturbing thought intended to unsettle consumers based on a false pretense to generate leads for a factoring company. 

When a structured settlement is established it is part of a settlement  (which is a compromise). The terms of the settlement, including the structured settlement, are negotiated by the parties. Generally a structured settlement recipient was represented by a lawyer who prosecuted the legal claim or lawsuit, if one was filed. In personal injury settlements, the terms of the structured settlement are set forth in a Settlement Agreement and Release as well as a Qualified Assignment Release and Pledge Agreement  {or a Qualified Assignment and Release). The terms of the settlement will include an obligation to make periodic payments in the amount and at the times that the parties negotiated. The obligation is transferred to the Qualified Assignment Company and an annuity (in some case more than one) is purchased to fund the future payment obligation. Unlike Rhett Wadsworth's company and other structured settlement factoring companies, life insurance companies are regulated in all states. 

If you have a structured settlement and you have not previously sold any payments (and its not being serviced by a third party servicer as a result), your payments are coming directly from the annuity issuer and you should not have much to worry about about.  If you have any questions contact the structured settlement consultant or settlement planner who originally worked with you and your lawyer to establish the structured settlement, or you can contact the annuity issuer directly.  Here is a list of phone nubers for structured settlement annuity issuers.

It is not advisable to seek help from structured settlement factoring companies. Think about this! The promotion of Rhett Wadsworth's company We Pay More Funding appears in the Cons section of the piece, seen as capitalizing on a falsehood. Well done Rhett! You get what you pay for.  

Another statement promoting Wadsworth's company makes this falsehood about selling your structured settelment payments "You might be able to take advantage of tax deductions when selling specific insurance policies, like annuities, because some states allow exemptions from capital gains taxes when people sell investments. However, it’s only valid if you meet certain conditions, such as being at least 55 years old before taking possession of items purchased through investment money over ten years or longer.* However rules and regulations will vary, you’ll want to consult with a tax pro".   This statement promoting We Pay More Funding is total rubbish and simply showcases the lack of relevant knowledge of the writer who is promoting the Fort Lauderdale company.

 

 

Client First Settlement Funding Collapse is Causing Servicing Delays for Investors

by Structured Settlement Watchdog

The apparent collapse of structured settlement factoring company Client First Settlement Funding has left structured settlement investors scrambling, with some having faced delays in receiving due to the apparent failure to timely employ a back up servicing company.

A trio of lawsuits were found on the Palm Beach County docket

(1) for breach of lease at its long time headquarters on Yamato Road in Boca Raton Download 502022CA001869XXXXMB_16 (1) Client First Default on Office Lease

Default granted against Client First Settelment Funding 

(2) a breach of contract claim filed by Lexis/Nexis aginst Client First for breach of contract, unjust unrichment for a balance of $101,482.68 plus accruing interest from July 1, 2020. File 502022CA995359XXXXMB. Filed June 6, 2022

(3) a lottery investor who is missing a payment, was granted motion for default against Client First. Download 502022CA004362XXXXMB3  Filed May 2022 Cleaks Default Notice Against Client First 6-28-2022 Download 502022CA004362XXXXMB_11 Client First Settlement Funding Clerk's Default 6-28-2022

Investors Caught in the Back Wash

Then there are investors in structured settlement payment rights who had not received payments due them. Several payments were past due. In one of the cases an 80-something investor had, in 2009, invested in life contingent payment rights from a Symetra funded structured settlement.  Monthly payments had not been received for several months and the hold up was due to failure by the servicer to obtain proof that the original annuitant was still living. Symetra was apparently holding up payments absent this proof.Eventually the problem was resolved, but it certainly wasn't smooth. I understand from the investor that there is an effort afoot to get another servicer to handle the adminstrative tasks. The investor is a retiree in his upper 80s.  Twice a year now, a notary must go out and get proof of living from the original annuitant and provide to the Symetra, the annuity issuer.

Bankruptcy of Payment Servicer Was An Issue I Raised in 2009

In October 2009 I did a couple of podcasts for Legal Broadcast Network on the subject of how the bankruptcy of a payment servicing company would impact an investor in structured settlement payments rights.  The podcasts featured Bruce Akerly, a bankruptcy attorney from Dallas , Texas who conceded that even though things might turn out OK for the investor in the end, that there might be a delay and possibly legal expense to enforce/protect their rights. One month later the topic I raised was the subject of a presentation at the annual meeting of the National Association of Settlement Purchasers. A number of my sources in the secondary market claimed in the following months that they had servicers and back up servicers.

Burt Kroner is fighting an eight figure smackdown by the IRS in the 11th Circuit Court of Appeals. On February 28, 2022, Kroner filed a legal action in Plam Beach County Florida against the law firm that advised him on the deal that it is alleged gave rise to the IRS action. Burt Kroner, inidividually v Foley & Lardner LLP and Robert J. Bernstein,Esq., individually 502022 CA 001866XXXXMB. 

 

 

Black Square Financial Bogus Claims That You Can "Take Control Of" and "Structure Your Policy"

by Structured Settlement Watchdog

Why does Black Square Financial target African Americans with the lie that you can can "take control of your policy", the annuity policy that funds their structured settlement?  (middle image below)

Pre-Marked for the trash collector

Despite touting all the value that merely pennies on the dollar will buy, Coral Springs Florida based Black Square Financial promotes the following falsehoods

1. Implication that you can restructure an existing structured settlement.
2. Statement that you can take control of a policy (that you do not own). 
3. " Structure your policy"

Given that a settlement agreement and qualified assignment would expressly state that the annuitant has no rights of ownership in the annuity policy, Black Square Financial is invited to post proof it has actually purchased a structured settlement annuity policy or helped a client purchase a structured settlement annuity policy. 

More bogus claims by Black Square Financial of working with "all sizes of policies" can be found in this Black Square Financial ad 2017 ad discovered on the web at the time of posting.

The misleading Black Square Financial ad, shows a solicitation by Black Square Financial to unsophisticated structured settlement annuitants to take the proceeds of Black Square Financial's "pennies on the dollar" offer and use it to buy a depreciating asset such as a BMW.  Here's what a BMW would cost at the time of the Black Square ad (retrieved June 13, 2022). The lack of credible justification for Black Square Financial's use of the advert, is compounded by the fact that no BMW of any size is an insurance policy, or a structured settlement. Silly boys.

Definition of Policy Under Florida Law

Florida 2021 Statutes 627.402(3) “Policy” means a written contract of insurance or written agreement for or effecting insurance, or the certificate thereof, by whatever name called, and includes all clauses, riders, endorsements, and papers that are a part thereof. The term “certificate” as used in this subsection does not include certificates as to group life or health insurance or as to group annuities issued to individual insureds.

 

No exculpation from "Aunt Merriam Webster" either, which states " Definition of insurance policy : a document that contains the agreement that an insurance company and a person have made : a writing whereby a contract of insurance is made in which the rights and duties of the insurer and the insured are set out

 

Neither Jarrod Freeborn, nor Jordan Freeborn, hold Florida Insurance licenses according to Florida DFS records

Download Licensee Search Jordan Freeborn Florida 6-12-2022

Download Licensee Search Jarrod Freeborn Florida 6-12-2022

"Stack Formation"

Black Square Financial claims "20 years of combined experience",  yet can't talk the talk on their web page. I've got almost double that alone and if we ran a stack formation of the experience of my colleagues in the primary market who are members of NSSTA, AASC and SSP,  who know what they are talking about, we might "muster a cluster" of up 10,000-12,000 years of combined experience. In case you were wondering, What Life Was Like 10,000 Years Ago?

Disclaimer: The use of any marks herein does not suggest any sponsorship, affiliation or relationship with owners of such marks. Any marks that may appear in commentary are in the context of fair use to discuss newsworthy topics presented herein.

Carting company=junk lugger  

 

 

Confiscated Structured Settlement Payments from Investors Arizona Litigation Update

by Structured Settlement Watchdog

Maricopa County Arizona judge Danielle J. Viola has issued an under advisement order in important litigation concerning investments in structured settlement payment rights. Genex Capital Corporation et al. v Seeley Capital Management Inc, et al  Superior Court Maricopa County  CV 2020-004958.

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Side Bar

The Maricopa docket CV 2020-004958, consolidates the original action brought by Genex Capital in April 2020, the counterclaims of Defendants in May 2020, investor lawsuits against Genex Capital CV2020-013796 commenced October 2020, additional investor lawsuits against Genex Capital amending the same case number December 2020 and additional investor lawsuits against Genex Capital, CV 2022-002266 commenced February 2022, with associated counterclaims.  Other legal actions beteen Genex Capital and some of the same parties remain pending in other states, as well as an action by Genex Capital against another investor, octogenarian Geraldine Yeisley, a retired school teacher from Oklahoma which has also associated counterclaims [ see Genex Capital Corporation v Provident Trust Group Geraldine Yeisley Pottawatomie County OK CJ-2021-00115]

_______________________________________________________________________

Genex Capital Corporation Lawsuit Update v New England Annuity Associates et al. v Genex Capital Corporation et al.

The Court declined to enter a partial summary judgment against Genex Capital Corporation in its lawsuit against New England Annuity Associates, Bulbrook-Drislane, Seeley Capital Management Inc., Income Stream Funding Partners, LLC, John Bulbrook/Jane Doe Bulbrook, and Christopher Seeley (collectively, “Defendants”) The Court found that Genex Capital presented sufficient evidence demonstrating that factual disputes remain as to what damages Genex may have suffered. As a result, the Court declined to enter summary judgment on the issue of damages. The Court found that Defendants have not shown an absence of any genuine issue of material fact regarding causation. Based on its conclusions, the Court declined to enter summary judgment on the issue of damages or causation of damages.

Keefer Investor Lawsuit Update v Genex Capital Corporation

Keefer was the first investor lawsuit filed. Between 2011 and 2013, Plaintiffs Richard L. Keefer and Vicki L. Keefer (the “Keefers”) purchased the right to collect future structured settlement payments (“Payment Streams”) from Defendant Genex Capital Corporation (“Genex”) including rights to the Lessa Perdun payments (“Perdun Payments”) and Leigh Laura Duran payments (the “Duran Payments”). Genex executed an Assignment consistent with the applicable Receivable Purchase Agreement. Genex designated Security Title Agency, Inc. as the Servicing Company.

In September 2019, the Keefers executed documents entitled “Assignment of Sale and Assignment Agreement” to effectuate the sale and reassignment of some of the Payment Streams to New England Annuity Associates (“NEAA”). NEAA then reassigned the Payment Streams to other third-party investors and Security Title began remitting payments to the investors. Before providing notice to the Keefers of their alleged default, Genex directed Security Title to remit payments from the reassigned Payment Streams to Genex. Later, payments related to reassigned Payment Streams were held by Security Title  [ Judge Viola Under Advisement Ruling 6/7/2022 p 5 ]

On February 24, 2020 and April 3, 2020, Genex provided notice to the Keefers of the alleged default resulting from the reassignments of Payment Streams to NEAA without Genex’s consent. The notices required proof that the reassignments had been reversed within twenty days. In order to avoid a dispute, the Keefers and NEAA revoked the reassignments. Genex asserts that the Keefers did not respond to the notices of default. Genex alleges that it terminated the RPAs, repossessed the rights to the Perdun Payments and Duran Payments, and reassigned them to new investors.

Plaintiffs seek partial summary judgment that (1) they are the owners of and have the right to receive payments arising from the Payment Streams; (2) Genex has no right, title, or interest in the Keefers’ Payment Streams; and (3) Genex had and has no right to withhold, sell, or reassign the Keefers’ Payment Streams. Genex seeks summary judgment that (1) the Keefers did not have the power or the right to reassign the receivables; (2) Genex had the right to terminate and/or void the RPAs; and (3) Genex had the right to withhold and reassign future Receivables payments from the Keefers.

The parties’ motions for partial summary judgment are summed up in the following questions:

(1) What are the Keefers and Genex’s rights and interest in the Payment Streams?

(2) Did the Keefers have the power or right to reassign the Receivables?

(3) Did Genex have the right to terminate the RPAs?

(4) Can Genex withhold Receivables payments from the Keefers?        [6/7/2022 Viola Order p6]

Rights and Interest in the Payment Streams

The Court granted Plaintiffs Richard L. Keefer’s and Vicki L. Keefer’s Motion for Partial Summary Judgment in Case No. CV2020-013796 filed November 23, 2021 that (1) the Keefers are the owners of and have the right to receive payments arising from the Payment Streams; (2) Genex has no right, title, or interest in the Keefers’ Payment Streams; and (3) Genex had and has no right to withhold, sell, or reassign the Keefers’ Payment Streams. Genex had the opposite motion.

The Court reasoned that plain language of Section 3.1 of the Genex RPA and Schedule E are clear that Genex transferred all of its right and interest in the Receivables. The Court found that the Keefers are entitled to a declaration that they are the owners of and have the right to receive payments arising from the Payment Streams and that Genex has no material right, title, or interest in the Keefers’ Payment Streams.

The Court further reasoned that although the RPA is clear regarding the Keefers’ interest in the Payment Streams, the RPA is equally clear regarding restrictions on reassignment. Section 3.4 of the RPAs states: “Buyer shall not have the right to further assign or sell the Receivable and must keep the Receivable for the balance of its term unless otherwise expressly approved by Genex.” SOF, Ex. 1, RPA § 3.4. The Court found that Genex is entitled to a declaration that the RPA does not permit reassignment of the Receivables without Genex’s consent, but denied all other relief.

Furthermore, the Court reasoned

• The parties argued regarding the distinction between the right to assign and the power to assign.
• The Keefers argue that a breach of a promise not to assign does not render the assignment void or invalid.
• The Keefers also argue that the distinction between the right to assign and the power to assign does not change the fact that Genex does not obtain rights to the Payment Streams or have the ability to resell them based on an unauthorized assignment—either the reassignment was void or the reassignment constituted a breach. Neither would result in the Keefers forfeiting the Payment Streams back to Genex, said the Judge in her Order

 

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Side Bar

I've previously reported about the 2020 amplification of paragraph 3.4 of the Genex Capital Receivables Purchase Agreement, which appears to be an attempt by Genex Capital to address the reassignment issues that gave rise to the litigation and makes clear the potential consequences to investors in block capitals.

A prospective investor would have to agree to such terms (as well as the rest of the terms) of the latest version of the RPA, if entering into an RPA with Genex to buy receivables  (e.g. structured settlement payment rights).

________________________________________________________________________

It is undisputed that the Keefers reassigned the Payment Streams to NEAA. However, the Keefers assert that disputed issues of material fact remain that preclude summary judgment on the issue of whether there was an uncured material breach. The Keefers assert that Security Title approved the assignments. Genex also asserts that the Keefers did not respond to the Notices of Default. The Keefers assert that they revoked the reassignments and informed Genex of the revocations.  

Based on the disputed facts, the Court declines to enter summary judgment in favor of Genex declaring it had the right to terminate and/or void the RPAs.

Even if the Court concluded a material breach occurred, Genex’s remedies are limited to those set out in the RPA. Genex may have a claim for breach, but Genex does not obtain any right, title, or interest in the Payment Streams or the right to withhold, sell, or reassign the Payment Streams as a result of the Keefers’ breach and default. Genex’s remedies in the event of the Keefers’ default are as follows:
(a) terminate the Agreement in respect of the Receivable Transaction in question by Notice delivered to the Buyer on or before Closing. In such case Genex shall be entitled to keep any funds deposited by Buyer by way of liquidated damages and not as a penalty; and/or
(b) enforce specific performance of Buyer’s obligations under this Agreement; and/or
(c) terminate the Agreement generally; and/or
(d) bring an action in law or equity to recover damages for the default, including Genex’s reasonable costs and attorney’s fees. Genex shall have the right, but not the obligation, to mitigate its damages.   [Under Advisement Order 6/7/2022 p9]

Final Thoughts

Obviously there is more to come in this litigation which continues to be instructive of the transactional risks of investing in structured settlement payment rights, or subsets of those rights. 

I, for one, continue to be grateful for Mr. Proctor's introduction of the term "subset" to refer to portions of structured settlement payment rights acquired by investors that are being serviced. [Proctor Declaration of 1/3/2022]

The RPA defines “Annuity” as “a payment or set of payments paid over a fixed term by an insurance company arising from a structured settlement, lottery prize winning payment or other annuity.” SOF, Ex. 1, RFP at 3. “Receivable” is defined as “all or such part of the payments from an Annuity which Buyer has agreed purchase [sic] under this Agreement as set out in a Request.” Id. Other language from the RPA also supports the conclusion that the distinction between “Receivable” and “Annuity” is immaterial.  [ Under Advisement Order p 7]

While the judge references a defined term "annuity" in the RPA and that the distinction between annuity and recevable is immaterial, acquired structured settlement payment rights are not considered annuities or insurance products  [ NAIC Statutory Issue paper No. 160, finalized April 6, 2019] and the definition of annuity under the insurance laws of many states is inconistent with what Genex Capital or similar companies are selling to investors. For example,

Oklahoma  

Annuity | Oklahoma Insurance Department |  An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid to the insurance company. Annuities are often purchased for future retirement income. 

 

Connecticut

 

An Annuity |  CT Insurance Department | is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid. Annuities are most often bought for future retirement income, and can pay an income that can be guaranteed to last as long as you live.

 

California

ARTICLE 9. Suitability Requirements for Annuity Transactions

10509.913 (a) “Annuity” means an annuity that is an insurance product under California law that is individually solicited, regardless of whether or not the product is classified as an individual or group annuity.

 

 

 

 

 

 

Why States Now Exclude SMA Investors From Annuity and Insurance Insolvency Schemes?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Investors in Secondary Market "Annuities" have been hoodwinked. Years after investing perhaps tens or hundreds of thousands in investments marketed to them as annuities, some are learning that they aren't in fact annuities and that the investors do not enjoy the protections they may have thought they had (or some case, may have been sold).

37 states in all have adopted the 2017 revisions to the Life & Health Guaranty Association Model Act.  According to the NAIC and states I canvassed, these states presently include AK, AR, AZ, CT, DE, FL, IA, ID, IL, IN, KY, LA, MD, ME, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NV, OH, OK, PA, SC, SD, TN, TX, UT, VA, WA, WV, and WY.  

The Hammer is Coming Down

The hammer is coming down on the possibility of any investors in factored structured settlement payment rights, deriving any benefit from insolvency protections designed to protect buyers of annuities and life insurance. For many years it was not unusual to see the companies market investments in factored structured settlements using the false flag of "secondary market annuity". Some even made reference to state guaranty associations as through what they were selling to investors was actually an annuity. It wasn't, and had these companies (and/or their representatives) actually held licenses, the mere mention of the fund's existence in sales presentation might violate state law.

Companies that Sell Structured Settlement Payment Rights to Investors Do Not Contribute in the Event of Insurer Insolvency

According to the National Association of Life and Health Guaranty Associations  (NOLHGA), "When an insurer fails and there is a shortfall of funds needed to meet the obligations to policyholders, state guaranty associations are activated. Guaranty associations have two main sources of funding when providing coverage to policyholders. First, guaranty associations have subrogation rights to a proportionate share of the assets remaining in the failed insurer. Those assets, which can be substantial, may be used by the guaranty associations to pay covered claims. Second, insurers doing business in that state are assessed a share of the amount required to meet the portion of the guaranty associations’ covered claims not otherwise funded with estate assets. The amount insurers are assessed is based on the amount of premiums that they collect in that state.

 Insurance Consumers Indirectly Contribute to State Insolvency Schemes, Investors Do Not

Arguably insurance consumers (including buyers of legitimate annuities) are also contributing to the insolvency schemes by virtue of the initial and/or ongoing payment of premiums for their insurance or annuities to the insurers that issue those products. However an investor who acquires structured settlement payment rights in the secondary or tertiary market is arguably, not contributing anything. The investor is buying a receivable, not an annuity or an insurance product. It's possible that the investor is buying a subset of rights to payments.

While the "pennies on the dollar" merchants may provide a service, history has shown that unethical business practices are rampant. With exceptions in a few states, these companies are essentially unregulated. In any case, neither factoring companies nor tertiary market companies contribute to the insolvency pot in the event there is an insolvency. Investors do not contribute to the pot either since they are not paying insurance premiums.

It's may not end well for investors. History has shown that many structured settlement factoring companies are very poor bartenders. Theye just keep pouring and pouring even after someone is obviously drunk. They often "bite off the head" the head of the victim's annuity first, figuratively speaking. That is to say they encourage the sale of guaranteed payments, sometimes leaving the annuitant with just life contingent payments way out into the future. Where does that leave a structured settlement annuitant?  Possibly needing public assistance.  Now the public sector (i.e. tax payers ) are affected.

Where does that leave the investor? 

Observations

States Where Factoring Companies are Located

It's an interesting observation that the states where many structured settlement factoring companies are located have such exclusions [FL, DE, PA, NJ], having adopted the 2017 revisions to the Life & Health Guaranty Associations Model Act (#520).

States Where There Have Been Allegations of Significant Cases of Reported Abuse of Annuitants

One can further observe that states which have had some of the worst cases of annuitant abuse by structured settlement factoring companies have adopted the 2017 revisions [MN, FL, VA, IL, TX, NC, SC, MD, WA]. It's notable that several of what were for many years the leading purveyors of scam labeled "secondary market annuities" are/were based in Oregon, a state that has not yet adopted the 2017 revisions. It's a pity for investors that Oregon could not do a better job of regulating SMA Hub distributed payments to investors originated from from Advanced Funding and Access Funding as well as purported cash flows from professional athletes where things didn't go so well for investors. What is Oregon waiting for?

States Where Senior Investors Are Located

According to the US Census Bureau 2020 population estimates, 52 million Americans are 65 years or older, according to the U.S. Census Bureau, and a quarter of them live in just three states: California, Florida, and Texas**. While Florida and Texas have adopted the 2017 revisions, California had not done so at time of publication. Seniors with retirement accounts have been targeted for investment in factored structured settlement payment streams marketed under the false flag "secondary market annuity". What is California waiting for?

In response to my query, the Life Insurance Company Guaranty Association of New York responded June 9, 2022 that at present, there is no factored structured settlement exclusion under the New York insolvency statute.  

Georgia, Illinois, Michigan, New York, North Carolina, Ohio, and Pennsylvania—account for roughly another quarter of the 65+ population. Maine has the the highest senior population as a percentage of its total population. What are Georgia, New York and Michigan waiting for?  It seems a bit odd that Georgia requires registration of structured settlement factoring companies (good) but at time of publication had not adopted the 2017 revisions to the Life and Health Guaranty Association Model Act (#520)

Gullible and vulnerable New Yorker's have been preyed upon by Florida structured settlement factoring companies for years. New Yorkers are lured to Florida and other states under false pretenses inveigled in fraud to "establish residence" to circumvent the structured settlement protection laws of their own state, so they can get pennies on the dollar deals approved in Broward County, Palm Beach, Dade County Florida, Middlesex County New Jersey and even New Haven County Connecticut, when they had less chance of getting approved in New York. Despite the inducments to commit fraud, when called out in a legal dispute, the standard procedure is to attack the seller for being complicit in the fraud.  [ see, for example Philip Lape v 123 Lump Sum NY Sup. Monroe Cty E2020003377]

Investors in New York, Massachusetts, Oregon and Oklahoma, among others, have been victimized by frauds perpetuated by Dan Cevallos and the Advanced Funding. 

ADVANCE FUNDING LLC, Petitioner, For Judicial Approval of a Transfer Agreement with JEREMY ALCANTARA. In accordance with New York General Obligations Law § 5-1701 et seq., v JEREMY ALCANTARA, METROPOLITAN LIFE INSURANCE GROUP, and METLIFE TOWER RESOURCES GROUP, INC. Index 20842/2014E Orders Vacated in Bronx Structured Settlement Cash Now Scam by Convicted Felon | Bad News For Investors

MELISSA DIEGO Plaintiff, v. ADVANCE FUNDING LLC, ALLSTATE SETTLEMENT CORPORATION, ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK, and HABITUS FUNDING 808043/2022E Filed May 26, 2022  Download 2022.05.26 1 Diego v Advance Funding Summons and Complaint 808043_2022E [originally plead as Melissa Diego, Plaintiff v Advance Funding LLC, Defendant New York State Supreme Court, Bronx County Index 25376/2020E] Described in the Complaint against Advanced Funding as a "Madoff like Ponzi scheme". 

First Trinity Life Ins. Co. v Advance Funding LLC | Insurer Was Victim of Secondary Market Lottery Receivable Scam

TRINITY LIFE INSURANCE COMPANY, Plaintiff v ADVANCE FUNDING LLC, Dan Cevallos, Monica L. Ray and Citibank, N.A., Defendants. Supreme Court of New York New York County No. 652780/2020  This matter involves an Oklahoma bank that invested in a number of investment in structured settlement payment rights with Advance Funding. It didn't go well.

Again, what is New York waiting for?  

What If You Are An Investor?

If you were sold the rights to someone else's structured settlement directly, or as a subset of payment rights, and the financial advisor or settlement planner solicited your purchase using the term "annuity" or "annuities", I am interested in hearing from you.

**Which U.S. States Have the Oldest Populations? | PRB

 

 

 

 

 

TRINITY LIFE INSURANCE COMPANY, Plaintiff v ADVANCE FUNDING LLC, Dan Cevallos, Monica L. Ray and Citibank, N.A., Defendants. Supreme Court of New York New York County No. 652780/2020  This matter involves an Oklahoma bank that invested in a number of investment in structured settlement payment rights with Advance Funding. It didn't go well.

Again, what is New York waiting for?  

What If You Are An Investor?

If you were sold the rights to someone else's structured settlement directly, or as a subset of payment rights, and the financial advisor or settlement planner solicited your purchase using the term "annuity" or "annuities", I am interested in hearing from you.

**Which U.S. States Have the Oldest Populations? | PRB

 

NJ , WA and OH Legislate Secondary Market "Annuity" Investors Have No Insolvency Protection

by John Darer CLU ChFC MSSC CeFT RSP CLTC

New Jersey, Washington and Ohio are the latest US states to adopt the 2017 revisions to the Life & Health Guaranty Association Model Act (#520). This is great for vulnerable targeted class of structured settlement annuitants in that it reduces incentives for a vulnerable class of investors to invest in factored structured settlement payment rights in New Jersey, Ohio and Washington state.  It's terrible news for the vulnerable class of investors in structured settlement payment rights. 

Structured settlement investors  (people who invest in other people's structured settlement payment rights) are often sold investments scam labeled secondary market annuities. However investing in other people's structured settlements is not the same as investing in legitimate annuities,most notably the fact that, in adopted states, there is now an exclusion for structured settlement payments to which a payee, or beneficiary if the payee is deceased, has transferred their structured settlement payment rights in a structured settlement factoring transaction. The "buzz kill" for people who are already invested in other people's structured settlement payment rights is that the exclusion is applied retroactively and they have no protection in the event of insolvency of the underlying annuity issuer or bankruptcy of the qualified assignment company.

Shouldn't any individual or company that is offering other people's structured settlement payment rights to investors include this as part of the disclaimers to any investor.  It seems to me that any indivdual or company that has sold investors other people's structured settlement payment rights in the past, should update its investors about the new developments.

37 states in all have adopted the 2017 Life & Health Guaranty Association revisions, with the retro insolvency exclusion detrimental to investors, leaving a bakers dozen of states to go.  According to a March 2022 publication by the NAIC with a few states added in the interim, these presently include AK, AR, AZ, CT, DE, FL, IA, ID, IL, IN, KY, LA, MD, ME, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NV, OH, OK, PA, SC, SD, TN, TX, UT, VA, WA, WV, and WY.  

Invest wisely. The friendly faces could be your financial adviser or settlement planner. Their E&O insurance likely contains an exclusion for insolvencies.

 

Have You Been Solicited by a Structured Settlement Buyer Soon After the Annuity Was Issued?

by Structured Settlement Watchdog

• Do you own a "virgin structured settlement"?  A virgin structured settlement is a structured settlement whose payments have never been defiled by a structured settlement buyer.
• Have you been solicited by a structured settlement buyer, seeking to buy your structured settlement payments before the structured settlement annuity was even issued?
• Have you been solicited by a structured settlement buyer, seeking to buy your structured settlement payments, soon after the structured settlement annuity was issued?
• Have you been offered any form of consideration by a structured settlement buyer to provide non public information about someone's structured settlement annuity such as gift cards, cash, checks, bitcoin or other cryptocurrency?
• Have you accepted any form of consideration from a structured settlement factoring company to provide non public information about someone's structured settlement annuity such as quid pro quo, gift cards, cash, checks, bitcoin or other cryptocurrency?

If you have received one or ore of these types of solicitation, or someone in your family has, please contact the Structured Settlement Watchdog.

Please save all solicitations in whatever form  (postcards, texts, mailers, Facebook messenger, Instagram, Whatsapp screenshots etc). Take notes of all conversations including names, date and times and the specifics.

What Do Structured Settlements Do for People?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What are structured settlements and what do structured settlements do for people?  Here's the simple answer.

Sustainable income is income which is consistent and steady over time. Sustainable income provides a level of calm and clarity while things are in flux. 

Thinking About Your Child's Settlement

Sustainable income post high school and/or college graduation to give them the improved options for independent living and a wider choice of career opportunities. Your child can explore career choices with greater long-term potential that may not pay as much on the apprenctice or training program level.

Thinking About Starting a Business?

Sustainable income means you can move forward with confidence, knowing you have money to pay your bills.

Over age 65 with medical expenses and want to age in place, but don't want to do a charitable pooled special needs trust?

Senior Living Senior Fears Study published March 28, 2022

• Nearly 1 in 2 older adults' biggest financial fear was not having enough money saved for retirement, and this ring truer for those between the ages of 55 and 64.
• 1 in 4 older adults fears they'll never pay off their existing debt.
• Forty-five percent of people between 55 and 64 fear having high medical bills, while 39 percent of those over 65, including many on Medicare, have the same fear.

Sustainable income, what does that mean to you?  What does it look like

 

 

Is an Investment in Structured Settlement Payment Rights Suitable for Injury Victims?

by Structured Settlement Watchdog

The market for structured settlement payment rights and other cash flows and receivables, like lotteries) became available to

Are factored structured settlements of a risk profile suitable for injury victims?

individual investors as the result of the 2008-2009 financial crisis and grabbed the attention of individual investors (including plaintiff attorneys!) and their financial advisers, as alternatives for their IRAs and Pension Plans. Then some settlement planners began offering them to tort victims, including minors, one even swearing in an affidavit to a California court that there was "no change in funding asset". Another has used it in an Arizona case, a state that does not protect investments in other people's structured settlements in the event of insolvency, since Arizona adopted the Life & Health Guaranty Association Model Act (#520). The question is "are they suitable investments for tort victims"? 

An Attractive Nuisance?

I submit to you that not every lawsuit plaintiff is unsophisticated. But, in the words of Elvis Costello "accidents do happen". When they do, the victims are the poor and the rich, young and old, the unsophisticated and sophisticated, the financially adept and the financially inept, as well as the risk averse and those with some appetite for risk. And there are those who have no business being in such investments.

What are Risks of Investing in Structured Settlement Payments Rights?

1. Health of Insurer The security of the structured settlement investment is related to the financial health of the life insurance company that issued the underlying annuity and the insurer's ability to pay on its contracts and the terms of the court order that is a prerequisite to each structured settlement factoring transaction. The purchaser of the structured settlement derivative is buying the payment rights, or a subset of the payment rights being transferred.
2. Not Deposits Structured settlement payment rights are not deposits and thus not insured by the FDIC.
3. Not Annuities The National Association of Insurance Commissioners has expressly stated in its Statutory Issue Paper No. 160 (finalized April 6, 2019), that acquired structured settlement payment rights are not annuities or an insurance product. Furthermore, acquired structured settlement payment rights  (factored structured settlement payments) are not annuities as defined under the insurance law of many states. Nevertheless you may be solicited by lawyers, settlement planners, accountants and even licensed insurance agents and financial advisers calling them annuities. Don't be fooled!
4. Not a Qualified Funding Asset for use with legitimate structured settlements. If you're a plaintiff attorney or guardian ad litem, keep an eye out for this sort of conjuration from settlement planners.

This author has had the opportunity to review an excerpt of a " Qualified Assignment and Release prepared by a settlement planning firm or one of its related entities. The Assignor was a qualfied settlement fund  (QSF), believed to be administered by a related company to a settlement planning firm that heavily promotes QSFs. The Assignee was an assignment company, related to the settlement planner.  The Qualified Assignment and Release lists the " Qualfied Funding Asset" as " Annuity" and the "Issuer of Qualfied Funding Asset" as Metropolitan Life Insurance Company. Paragraph 12 of the QAR states " In exchange for "legal paymnet rights" pursuant to 5891 of the IRC, to the Periodic payments specified in Paragraph 15, Claimant hereby forever discharges the defendants and.or Respondents with regard to the Periodic Payments, and agrees to only look to (settlement planning firm's related assignment company) for satisfaction of the obligation to pay periodic payments. Paragraph 13 of the QAR prepared by the settlement planner's related firm states " In the event of notice of an application to any court for the transfer of structured settlement payment rights established under this agreement, (settlement planner's related assignment company)  reserves the right to  transfer the ownership of the  "Qualified Funding Asset(s)". Upon the transfer of ownership to Claimant and/or Payee this contract shall terminate".  This author has confirmed with MetLife that it does not sell structured settlement annuities to anyone other than a self-insured defendant, an insurer that wants to buy-and-hold, or it's own qualified assignment company.

    5. May not be any coverage under statutory insolvency schemes Structured settlement payments rights are not covered under the statutory insolvency streams in a majority of the United State, whereas they might apply to legitimate insurance products. As of March 2022, 34 states had an express prohibition, 2 states were considering it and the NAIC is pushing to have all 50 states fall in line to adopt the 2017 Revisions to the Life & Health Guaranty Associations Model Act (#520) which introduced the exclusion. The scary thing for any investor in structured settlement payment rights is that the Model Act, adopted by 34 states so far, has a retroactive application, so you're not safe if you bought the investment before the eventual effective date of the adoption of the 2017 Revisions (#520) in your state. Most states have a prohibition on advertising the existence of said funds in sales presentations. However, some of the actors soliciting investors in structured settlement payments are not licensed to sell annuties and operate in no-man's land, promoting the investments as annuities, which they are not, while "violating" a law that would apply to them if they were licensed to sell legitimate annuities, which many are not.

  6. Exposure to interest rate risk. If market interest rates rise, the rate of return on the structured settlement derivative is locked-in. Longer term purchases are more sensitive, similar to long bonds or traditional structured settlement annuities. This can be mitigated somewhat by hedging through an "structured settlement derivative ladder" by making several purchases over an extended period of time.

  7. Transactional Risk There is originator risk (think Access Funding, Barry Cooper among those whose payments were scheduled to begin and never did. They were suspended due to competing claims),  forgery (happened in 200 cases in New York and Florida, forgery by a law firm paralegal in New York and by a lawyer in Florida) and imposters (Wall case-retirees lost $152,000). In 2018, a whole slew of investors in "secondary market annuities" were noticed as creditors in the Woodbridge Structured Funding/Woodbridge Wealth bankruptcy (2018). The Barber case in Allegheny County PA, involved a raid on a minor's structured settlement and forum shopping by the originator.  One of the investors was a California settlement planner with retirement funds who found himself competing with an 18 year old for the payments when they came due.  Very unfortunate and it could have been any retiree. The deal in which the California settlement planner invested was originated by a company controlled by the current President of the National Association of Settlement Purchasers.

 8. Fraud Dan Cevallos and Advance Funding

 9. Currency Rate Risk (To Foreign Investors) Payments are made in US dollars.

10. Liquidity Structured settlement derivative investments may need to be held to term and are not liquid.  Complex litigation between a structured settlement factoring company, investors and an intermediary pending since 2020 in Maricopa County Arizona and branching out into other states provides an illustration of what can happen. Genex Capital is litigating against multiple investors who it alleged breached its Receivables Purchase Agreement(RPA) when they sold their receivables and did not obtain Genex's consent or go through Genex. According to a Motion filed by Genex in Castro County Texas

" When Genex discovered that the Leonard IRA had wrongfully attempted to reassign payments to NEAA it issued a default notice, which went unresponded. It is uncontroverted that Genex confiscated the payments and reassigned them to other investors as it was expressly permitted under the Leonard IRA RPA"  In Re: Juan Oltivero  In the District Court of Castro County Texas Cause No. B9545-1211 Genex's Motion to Strike, Motion in Limine...Filed May 23, 2022 441pm

Some of the above risks are similar to the purchase of most fixed income annuities. However, most purchases of fixed annuities do not require a court order to be concluded, have such an exposure to transactional risk.

So is an investment in structured settlement payment rights appropriate for tort victims?  In rare circumstances, and then only after very careful deliberation.

Bought Life Contingent "Secondary Market Annuities" From Client First That Haven't Arrived?

by Structured Settlement Watchdog

It seems that there may be a few people who are missing a due payment/payments from structured settlement investments sold  

Client First unresponsive to clients who are missing payment

to them by Client First Settlement Funding, just from Symetra!

As I wrote May 19, 2022, structured settlement factoring company Client First Funding is shown as permanently closed   

Client First Funding | Business Listing Says Permanently Closed | What If You Have Payments? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Its CEO, Burt Kroner is mired in an appeal over a $24.7M tax hit from the IRS. After Kroner did not return calls by its client to the number provided by Brian Dear, General Counsel to NASP, I provided the name and contact information to Kroner's attorney found in Court filed documents related to Kroner's tax case. The investor in question spoke to Kroner's attorney but all he has received from Kroner is zilch.  

Apparently, Client First is supposed to provide the proof that the measuring life (original annuitant) is living to Symetra, and has not done so in order for the investor to receive the life contingent payment. Apparently other Client First originated investors in structured settlement payment rights are in same boat.

I guess its Burt First and Client Second. A far cry from the Burt Kroner who contacted me when he founded Client First and told me he wanted to do things right and stay out of this blog.

That was before the Diaz case (where Client First got a 29-year-old unemployable father of 2 toddlers to sell his $60,000/year income lifeline (with 3% COLA) from Allstate, for under $600,000), at a discount rate worse than Allstate's AFEN rate, so he could invest the proceeds with Jeff Eglow at "8%" in 2013. 

Client First provided projections to prospective sellers even though they did not have a securities license. Kroner's attorney tried to bully me into a confidentiality agreement as a non-party in an attempt to cover up the bullshit. In the end the Court Order was vacated, Client First was made whole and the annuitant got his structure back after the transfer order was vacated, the structure that never should have been targeted for factoring given the person's profile.  Thankfully there was a Structured Settlement Watchdog for Mr. Diaz to call.

1. Did Client First have a backup servicer for these cases?
2. Are there any other readers who are due payments from a structured settlement factoring deal originated by Client First Funding, and from payment rights from Symetra or another annuity issuer?

 

 

 

 

 

Annuity.Org's Structured Settlement Misinformed Strike Again

by Structured Settlement Watchdog

A "Night Ranger" might say "Sister Christian your time has come, abject nonsense you're not the only one".

Here is what Rachel Christian of Annuity.org says are Key Takeaways about "When You Can Cash Out an Annuity?

1. "There aren't any surrender charges or early withdrawal tax penalties for selling structured settlement payments". 

Comment: When you're only getting mere pennies on the dollar from the structured settlement factoring company that Annuity.org's shilling for, who's counting? 

2. "Both withdrawing annuity funds and selling structured settlement payments result in paying taxes on the money received".

Comment: Weak effort (a/k/a Bollocks Bolognese) by Rachel Christian and Annuity.org. On June 10, 1999, the IRS issued guidance on the tax treatment to the payee in a structured settlement factoring transacton.  In Private Letter Ruling PLR-119273-97 the IRS concluded that the lump sum received from the sale of structured settlement payment rights retained the same tax treatment that it was accorded prior to the structured settlement factoring transaction.Download IRS PLR PLR-119273-97 on Tax Treatment of Structured Settlement Factoring Lump Sum to Payee.

The typical Written, Edited and Financially Reviewed Notation at Annuity.Org is cast into doubt yet again.   Here's what Annuity.org claims

• Written By Rachel Christian
• Edited By Kim Borwick
• Financially Reviewed by Rubina K Hossain CFP
• Updated: April 25, 2022

Apparently quality control did not verify the facts! So very sad that three people are unable to screw in the proverbial light bulb of accurate information.  Annuity.org shills for Conshohocken PA based CBC Settlement Funding, a leading patron of the content barfing of structured settlement misinformation. See Annuity.org Nonsense.

Annuty.org claimed two Cited Research articles and this is how Annuty.org puffs up their "editorial standards"

"Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information (Apparently an on-point IRS Private Letter Ruling is not deemed credible), including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts"

"...Motoring
Why can't you get it right?
Cut out the frickin' blight!
No more blight tonight"

Parody of Sister Christian by Night Ranger (2011)

Part of my ongoing mission as Structured Settlement Watchdog is to see that consumers have the clearest path to accurate information about structured settlements.