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

The Structured Settlement Agreement Process | Annuity.Org Doesn't Get It Quite Right, As Usual

by Structured Settlement Watchdog

"She's a Jolly Good Farmer, of Untilled Fallow"

Despite spouting purported editorial standards, time has shown that no matter how hard they try, Annuity.org just can't get

Tendency to be wide of the target

structured settlements right. They can't even get out of their own way. Par for the course is Catherine Byerly's latest effort on the structured settlement process,which can best be described as "untilled fallow" in my opinion. The land may not even be arable. The rot contagion spores cross pollinate from Structuredsettlements.com, a publication of the same organization, the latest ineptitude of which I covered here on November 10, 2022  Structuredsettlements.com | Another Episode of What's Wrong Wit Dat? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) .

Annuity.org Process Step 2

The defendant and the plaintiff work with a qualified assignee to determine the terms of the structured settlement agreement — that is, how much the regular payments should be, how long they should continue for, whether they should increase or be supplemented by larger payouts at certain times, and so on. The defendant provides money for the qualified assignee to buy an annuity for the plaintiff.

What's Wrong Wit Dat Annuity.org?

1. The defendant and/or its insurer, through their lawyers, and the plaintiff(s), through their lawyers negotiate the terms of the settlement agreement.
2. Where a structured settlement is to be established, the plaintiff often works with a settlement planner or structured settlement consultant, who assists in the design of the future periodic payments. The qualified assignee is not involved in that process.
3. The settlement agreement will include a promise to pay future periodic payments to the plaintiff (or in some cases plaintiff's trust)

Annuity.org Process Step 3

The qualified assignee purchases an annuity from a life insurance company, setting up the annuity contract to match the settlement needs. Once the terms of the annuity are set, they cannot be changed. An immediate lump sum may also be set aside to cover attorney fees or to fund a specified trust.

What's Wrong Wit Dat Annuity.org?

1. A qualified assignnee does not set up an annuity contract.
2. A qualified assignment takes on a perodic payment obligation from a Defendant or its insurer, subject to IRC 130(c) and then buys an annuity to fund the periodic payment it has assumed, subject to IRC 130(d)
3. What is a Specified Trust?  According to Law Insider, "Specified Trust Agreements means those trust agreements entered into by USIC for the benefit of the cedents under the Specified Assumed Treaties".   Nothing to do with structured settlements.

Annuity.org and Structuredsettlements.com are unreliable sources of information about structured settlements 

One should never rely on a source of information which is shilling for a company (or recently companies) that buys people's structured settlement payment rights for pennies on the dollar.  I continue to document as I have time, and time again. for more than 5 years, that consumers can do far better. After 5 years it's clear that despite its  posted purported standards, the Annuity.org/Structuredsettlments.com ineptitude is rampant, laced through every figurative "corpuscle" of its publications about structured settlements and that its editorial standards concerning structured settlements are a farce. The company excels at SEO and that's about it.

 

 

Are Structured Settlements Tax-Free?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

 

Are Structured Settlements tax free?  That is the question.

 

One answer appearing on the Internet from a settlement planning firm states:

 

1. Income tax exemption: Structured settlement payments—including growth—are 100% income tax-free. 

 

Comment: TRUE, if the payments represent damages that qualify for an exclusion from gross income set forth in IRC 104(a)(1), IRC 104(a)(2) or IRC 139F. Generally, worker's compensation, personal physical injury or physical sickness, wrongful death and wrongful incarceration. It is not the structured settlement payments themselves that drives the tax treatment, it is what the parties agree the damages the structured settlement payments represent compensation for and how that is applied in the tax code.

 

2. While lump sum cash settlements are income tax-free for physical injury cases, if the money is placed in a traditional investment, then any growth is subject to income taxes.

 

Comment:  Not exactly. The answer fails to recognize capital investments that produce capital gains.

The term capital gain refers to the increase in the value of a capital asset when it is sold from what you paid for it.  A short term gain or loss is when the asset is disposed of in one year or less. A long term capital gain or loss occurs if an asset is sold after holding for more than one year. The asset must be disposed of (sold) in order to realize a capital gain or loss.  In other words, unrealized gains and losses that reflect an increase or decrease in the value of an investment are not considered a taxable capital gain.

So it would be inaccurate to say that "if the money is placed in a traditional investment, then any growth is subject to income taxes".

 

 

 

 

Access Funding's Boghosian and Lawyers Charles E Smith and Anuj Sud Convicted of Theft Scheme

by Structured Settlement Watchdog

Slammer Time for Structured Settlement Factoring Schemers?

Maryland Attorney General Brian E. Frosh announced the convictions of former Access Funding Chief Operating Officer a lawyer and a now disbarred lawyer, for headline grabbing theft from 94 victims.  The convictions of 43 year olds Raffi Michael Boghosian, lawyer Charles Edward Smith Jr, and disbarred lawyer Anuj Sud, relating to their involvement with the structured settlement factoring company Access Funding between 2013 and 2015. Each was found guilty of Theft Scheme Over $100,000 and Conspiracy to Commit Theft Scheme Over $100,000 after a trial in the Circuit Court for Baltimore City. Sentencing will be set in Baltimore City Circuit Court. 

The shenanigans of Access Funding and the three amigos was aptly chronicled by Terrence McCoy in the Washington Post in 2015. They were in a world of poop. Lawsuits by the victims, the Maryland AG and the Consumer Finance Protection Bureau (CFPB) ensued.

Access Funding’s offices and principal place of business were located in Montgomery County. The charges relate to Access Funding’s acquisition of structured settlement payment rights belonging to 94 individuals, primarily lead poisoning victims in Baltimore City. Many victims were people of color. The payment rights had a total present value of over $21million. In exchange for the payment rights, Access Funding gave the owners cash lump sums totaling less than $7 million, and in some cases as little as 8 cents on the dollar of the payments’ discounted present value.

“These individuals preyed upon vulnerable victims of lead paint poisoning in Baltimore City,” said Attorney General Frosh in a press release. “The victims received a small fraction of the actual value of their structured settlements, depriving them of a much-needed lifeline meant to support them long term.”

Boghosian was an executive and ultimately the Chief Operating Officer of Access Funding. According to his Linkedin profile at time of posting Boghosian is the  Executive Vice-President of Reliance Funding, an entity that arose from the burning embers of Access Funding. Smith was Boghosian’s best friend and an attorney who purported to provide independent advice to every customer of Access Funding in Maryland for almost a two-year period. Sud was Access Funding’s attorney who filed petitions in court to obtain court orders transferring the victim’s structured settelment p ayment rights.

"Boghosian, Smith, and Sud prevented the 94 owners of structured settlement payment rights from receiving the
independent professional advice without which transfers of structured settlement payment rights cannot occur. Smith pretended to provide the required independent advice when in fact he was secretly receiving kickbacks through Sud when Access Funding successfully obtained Smith’s clients’ payment rights. The defendants also made or caused to be made false statements to the
court regarding the owners’ receipt of independent professional advice to induce the issuance of court orders transferring the owners’ payment rights" said Frosh.

Related Matters

CFPB Stipulated Financial Judgment Against Charles E, Smith 12-2021

CFPB Stipulated Financial Judgment Against Access Funding 12-2021

Journalist Wins Award of Distinction For Exposing Baltimore Structured Settlement Cash Now Fraud - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

How Maryland Structured Settlement Protection Act Failed Mary Alice Rose - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Maryland Class Action Slams Structured Settlement Buyers and Lawyers Who Victimized Baltimore City Blacks - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Former Maryland liquor board commissioner sentenced in bribery scheme - The Washington Post (relates to Anuj Sud being disabarred in 2018)

 

 

House Ways And Means Commitee Requests Lump Sum Dissipation Study

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Smucker "Pumps Up the Jam" on Lump Sum Dissipation with Murphy

The American Association of Settlement Consultants (AASC) announced November 10, 2022, that members of the House Ways and

Perhaps the dictionary is trying to tell us something!

Means Committee, led by Lloyd Smucker of Pennsylvania and Gregory F. Murphy of North Carolina have formally requested a government-funded study assessing the long-term economic and lifestyle impact of premature lump-sum settlement dissipation. The task will be assigned to Honorable Gene Dodaro, the Comptroller General of the United States and head of the Government Accountability Office (GAO), who will assess the feasibility of conducting the study and respond accordingly.

In their request, the Congressmen strongly stated the need for authoritative data on the troubling incidence of premature dissipation associated with lump-sum cash settlements, “For low-income Americans and or disabled individuals, settlement income is depended upon to cover essential costs such as mortgage payments, accident-related medical expenses, and other basic living expenses." 

"We are deeply concerned by historical data showing legal settlements made in the form of lump sum payments to injured parties and their families quickly dissipate, leaving victims without income when they need it most.” they said, according to the AASC release,

In addition to analyzing the incidence and impact of premature dissipation on injured parties, the request also asks that the study assess the long-term impact on mortgage foreclosures, medical debt, and other personal debt. With the availability of data that paints a complete picture of premature dissipation’s negative impact, injured parties will be able to make a more educated decision and fully assess the risk associated with cash versus annuitization of payments.

Structuredsettlements.com | Another Episode of What's Wrong Wit Dat?

by Structured Settlement Watchdog

“Do I have to pay taxes on my structured settlement?” asks the Orlando company behind Structuredsettlements.com 

The short answer is typically no.

StructuredSettlements.com's scantily furnished support immediately follows

"The tax status of your structured settlement payments is set when your settlement issuing company structures the settlement and rarely changes".

What's Wrong Wit Dat?

1. Settlements are a form of compromise
2. Settlements aren't issued, they're negotiated.
3. Structured Settlements arent' issued, they're negotiated
4. Life insurance companies issue annuities
5. Life Insurance companies issue structured settlement annuities
6. Structured settlement annuties are a qualified funding asset used to fund structured settlement obligations
7. Annuities are are a regulated insurance product
8. Settlements are not a regulated insurance product.
9. Life insurance companies do not issue settlements
10. Life insurance companies do not structure settlements
11. The taxation of structured settlement payments is based on the damages that the payments represent, as set forth the settlement agreement between the parties and the qualified assignment. 

Structured settlements.com then becomes further unmoored

"Money you receive from a personal injury or medical event isn’t considered income and so it isn’t taxed like income, according to Section 104(a)(2) of the Internal Revenue Service’s code."

What's Wrong Wit Dat?

1. The term "medical event" does not appear anywhere in IRC 104(a)(2). An accumulation of gas in the alimentary canal is a medical event. Wine and cheese will be served.
2. The Internal Revenue Service does not have a code. The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is enacted by Congress and amended from time to time. It is the  dometic part of federal statutory tax law in the United States, published as Title 26 of the Unied States Code. The Internal Reveneue Service is the federal agency that implements the Internal Revenue Code

Structuredsettlements.com is a shill for CBC Settlement Funding, a structured settlement factoring company in Conshocken, PA. It and its sister website Annuity.org continue to pump out inaccurate content, is and has been prone to unreliable in my opinion.  They mess up the basics and dont seem to care about accuracy depite posting ediatorial standards. For more accirate resources check with people who are Certified Structured Settlement Consultants, Master Structured Settlement Consultants or Registered Settlement Planners.

Can You Do a 1035 Exchange Into or Out of a "Secondary Market Annuity"?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is a 1035 Exchange?

A 1035 exchange is the tax-free exchange of one type of annuity or life insurance contract for another, with the policyholder and insured remaining the same.   1035 Exchange refers to 26 U.S. Code § 1035 - Certain exchanges of policies (emphasis added)

 

Under IRC 1035(a) 

No gain or loss shall be recognized on the exchange of—

(1) a contract of life insurance for another contract of life insurance or for an endowment or annuity contract or for a qualified long-term care insurance contract;

(2)a contract of endowment insurance (A) for another contract of endowment insurance which provides for regular payments beginning at a date not later than the date payments would have begun under the contract exchanged, or (B) for an annuity contract, or (C) for a qualified long-term care insurance contract;

(3) an annuity contract for an annuity contract or for a qualified long-term care insurance contract; or

(4) a qualified long-term care insurance contract for a qualified long-term care insurance contract.

 

Why would the holder of an annuity contract want to do a 1035 Exchange?

 

Without a 1035 exchange, the holder of a nonqualified annuity contract would owe ordinary income tax on any annual returns from the nonqualified annuity, plus a 10% penalty for those under age 59½ (in addition to any surrender fees) for an early surrender.

Under the 1035 exchange rules, however, the holder can avoid the ordinary income taxes if they find an annuity contract with better terms or if they’re nearing the end of their guaranteed term.

 

A 1035 Exchange is Not Eligible Into or out of an SMA

 

Secondary Market Annuity is term that shrouds the truth in a veil of expertise, that began to be used by merchants of structured settlement payment rights in the late 2000s, as a marketing hook to capture investors in acquired structured settlement receivables. The term SMA is misleading to consumers because it is not an annuity. No investor in these receivables is buying an annuity. They are not applying for or buying a product from an insurance company. 

 

In fact, when it comes to a structured settlement, the original annuitant has no ownership in the annuity contract funding the periodic payment obligation as a qualified funding asset under the Settlement Agreement and Qualified Assignment. The owner of that annuity, as set forth in the settlement papers, is the qualified assignment company. What is sold/transferred is structured settelment payment rights established under a Settlemnent Agreement. This is what the investor is purchasing, not an annuity.

 

 

 

 

 

3 Reasons to KEEP Your Structured Settlement and NOT Sell According to Factoring Company

by  Structured Settlement Watchdog

American Annuity Funding of Boca Raton Florida is run by Anthony Cioppa, 32, who is attempting to build a

A Minimum Standard

presence on social media in the stuctured settlement secondary market. I know nothing of the rates his company offers, but I would like to offer some encouragement for part of a short video posting where the structured settlement factoring company President opines on "3 Reasons You Should Keep Your Structured Settlement"

1. You have a disability and are unable to work
2. You're a senior citizen and dependent on the income
3. You depend on the fixed income from the structured settlement to pay your living expenses

Wouldn't it be nice if structured settlement factoring companies lived up to these standards and did not take cases that fell into these categories?

If American Annuity Funding is truly living up to those standards and the majority of the structured settlement secondary market could center their conduct and messaging to, at a minimum, refrain from submitting petitions for payees fitting these criteria we might be getting somewhere.

Unfortunately the structured settlement secondary market has a lot of baggage

Here are some examples from cases I've covered:

1. When another Boca Raton company, now defunct Client First Funding approached A.D. in 2013, he was an unemployable 29 year old father of two toddlers whose structured settlement was paying $60,000/year tax-free, with a COLA, for the rest of his life. In a wholy unsuitable tranaction, Client First paid A.D. $577,000 in exchange for his tax free millions in lifetime support, that also had to also help him support his children. Fortunately A.D. contacted me right away, the money was paid back to Client First in a negotiated settlement which saw the order vacated.  A.D.'s payments were restored. He was one of the lucky ones.

2. Client First Funding was also one of the companies in the chain of 10 transactions in 2 years involving Terrence Taylor. Client First however, settled early and did not drag the litigation out by making use of lawyers in the Virginia legislature, whose rampant exercise of legislative privilege, collectively delayed the case for almost 7 years. Fortunately things are back on track, regardless of what any final resolution may bring.

3. Texas Case  "Victim of Rising Capital affiliate -"cannot live independently, and requires assistance with the most basic elements of daily life, such as bathing, changing his clothes and handling money". Alleged impact of  loss of government benefits

In The Court of Appeals Ninth District of Texas at Beaumont NO. 09-19-00306-CV FAIRLAWN ASSETS, LLC, JOHN FERRANTE, AND JARROD FREEBORN, Appellants V. BARBARA BOOKER, AS GUARDIAN OF THE PERSON AND ESTATE OF M.H., Appellee On Appeal from the 60th District Court Jefferson County, Texas Trial Cause No. B-202,429, Appellee Barbara Booker, the guardian of the person and estate of M.H., an incapacitated adult, sued appellants Fairlawn Assets, LLC (“Fairlawn”), John Ferrante, and Jarrod Freeborn, seeking to void a contract M.H. signed, in which M.H. sold to Fairlawn his right to receive annuity payments pursuant to a structured settlement agreement.  According to Booker’s petition, M.H. has several mental health conditions, has never been able to manage finances or live independently, and has minimal reading skills, poor memory, impaired judgment, and is “extremely suggestible and easily led.” Booker pleaded that Fairlawn “invoked and participated in the transaction” upon which her lawsuit is based, Ferrante is a member of Fairlawn, and Freeborn is an independent contractor that Fairlawn engaged to facilitate the transaction between Fairlawn and M.H. Booker asserted that Fairlawn was formed by one or more of the individual defendants “to effectuate the illicit exchange with M.H. with no intention to maintain Fairlawn Assets, LLC as a corporate entity conducting otherwise legitimate business.” 

 

 

 

 

 

 

 

 

Typepad Resolves Service Issues Encountered During Data Center Migration

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Readers may have encountered  difficulty in accessing the blog at times during  the latter part of October 2022 while the blogging service we use was migrating to a new data center, a process which was completed on Sunday October 30, 2022.

Here is an excerpt of the official announcement from Typepad to blog owners:

"Over the past few weeks, Typepad has experienced a number of complications that have compromised the level of service that we know you have come to expect. This started occurring as we prepared to move to a new data center. The migration was completed on Sunday, and Typepad is now in its new home. However, following the migration, we encountered a number of unexpected problems that took some time to address. We have had our team working around the clock to get service restored. Thankfully, we are seeing progress. Now that we are able to deliver consistent service, we will use the new resources to address any lingering issues that may be occurring".

I'm now into my 18th year of blogging with over 5,300 posts on this blog alone and more than 1,220,000 net page views. I appreciate you.  My readership is important and hope you will continue to enjoy my brand of commentary.

Better Than 5% Income Tax Free on Structured Settlements

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Now is the time to make good use of stuctured settlements and build enduring guaranteeed income streams

Compelling yields in Excess of 5% are possible on intermediate and long term cash flows.  On November 1, 2022 for example, I locked-in a 10 year certain plan with a 5.7% Internal Rate of Return with a  daily rate from United States Life Insurance Company in the City of New York. 

So what does 5.7% tax-free mean?

Taxable Equivalent Yields at Different  Hypothetical Tax Rates

15%        6.705%

18%        6.951%

28%        7.916%

31%        8.261%

33%        8.507%

40%        9.500%

50%      11.400%

See expanded taxable equivalent yield chart

What about investing in the Stock Market?

Well you're not going to put all your eggs in one basket are you?  But let's say you did and if you had the fortitude to stay in the S&P 500 from January 3, 2000 to December 31, 2021 you would have averaged 9.52%.

However, if you missed just the 20 biggest trading days in the S&P 500 from January 3, 2002 to December 31, 2021 you would have averaged only 2.6%. If you missed the 30 biggest trading days the averag would onl have been 0.43% (and it goes downhill from there), according to the J.P. Morgan Asset Mnaagement 2022 Retirement Guide published March 3, 2022 p 44. Read Structured Settlement Rate of Return Compared to Alternative Investments (4structures.com) for more details.

Note: Structured settlement rates vary by insurance company and other factors such as duration. Read more about structured settlement quotes

Tim Leonard's Copious Argle-Bargle on "Structured Settlement Annuity Companies"

by Structured Settlment Watchdog

How does a financial writer such as Tim Leonard, "with over 20 years’ experience in the financial services industry" produce such copious argle-bargle" about structured settlement annuity companies?  

_________________________________________________________________________________

Word of the Day

Argle-Bargle  copious but meaningless talk or writing; nonsense  Source: Oxford Languages

_________________________________________________________________________________

Excellent Knowledge of "Almost Areas of Personal Finance"?

Leonard's bio states that "Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors". None of Tim's stated experience has any bearing or bona fides when it comes to structured settlements. Let someone who doesn't dabble in "almost areas" and has legitimate credentials and experience in structured settlements rummage through the argle-bargle, provide the clarity about structured settlement annuity companies that is needed.

Lack of credibilty of Top 10 Reviews as a source of accurate information about structured settlements

Top 10 Reviews Argle-Bargle 1  "The best structured settlement annuity companies are on hand should you prefer to swap the promise of future payments for an upfront lump sum right now"

What's Wrong Wit Dat?  Structured settlement factoring companies such as those listed in Leonard's Argle-Bargle are not licensed insurance companies and do not issue structured settlement annuities. 

Top 10 Reviews Argle-Bargle 2   "For this reason, structured settlement annuity companies are often used by those who've won their day in court, but would like to immediately receive the funds they've been granted under any settlement to meet the costs of their legal team.

What's Wrong Wit Dat?

1. One doesn't win one's day in court.  To get there one files a lawsuit. Most cases don't go to trial. They settle. 
2. Before a lawsuit is filed, a notice of claim may be filed and claim may be settled before lawsuit is filed. A structured settlement may result from a  compromise of a claim, or a lawsuit.
3. A structured settlement is not granted,  it is a negotiated compromise.
4. Structured settlement factoring companies, which ARE NOT structured settlement annuity companies ARE NOT at all necessary to "meet the cost of their legal team" who prosecuted the legal case for the plaintiff.
5. Companies such as JG Wenwtorth and others listed are not structured

Top 10 Review Argle-Bargle 3   "With the top rated structured settlement annuity companies, you’ll have the option to receive everything owed to you in a single payout, or to take a lesser amount and continue to receive the remainder as reduced regular payments. As a result, anyone hoping to raise a specific sum of money to maybe fund the purchase of a home, or assist loved ones financially, will also often find structured settlement annuities are a good choice". 

What's Wrong Wit Dat?

IMisrepresentations by Top 10 Reviews 

1. "J.G. Wentworth is almost always featured in the top ten of any structured settlement annuity company list".  JG Wentworth is not a structured settlement annuity company. It does not buy or sell structured settlement annuities.  JG Wentworth buys structured settelment payment rights
2. "DRB Capital is a flashy, high-profile structured settlement annuity company that offers plenty of bells and lots of whistles".  DRB Capital is not a structured settlement annuity company. DRB Capital is a purchaser of structured settlement payment rights
3. Strategic Capital is listed in the Top 10 despite not being a structured settlement annuity company. The fact that Strategic Capital is no longer a member of the National Association of Settlement Purchasers (NASP) is seen as a negative, even though JG Wentworth is listed as #1 and it too is not a structured settlement anniuity company and not a member of NASP.  Hmm,wonder what that's all about?  

Top 10 Reviews Argle-Bargle 4

        "Loss of future gains
When you sell your structured settlement, you give up future value for present gains. Structured settlement companies take into account the depreciation of future earnings and apply a discount rate to your settlement. What this means is for a $100,000 settlement, you can expect to receive anywhere from $30,000 to $50,000."

What's Wrong Wit Dat?

Do you really think you can trust a company that tries to position a 50% to 70% loss of future payments a "present gain"? You're getting a discount on present value.

"Argle-Bargle Gargle"

Top 10 Reviews collectively mentions the terms, structured settlement annuities, structured settlement annuity and structured settlement annuity company four times in the same two sentence paragraph. 

"Given the various circumstances in which structured settlement annuities can prove useful, this guide to the best structured settlement annuity companies includes recommendations that are suitable for different scenarios too. So as well as finding our choice of the top structured settlement annuity company overall, you’ll also find other companies that excel for customer support, the level of information provided, and the sheer number of structured settlement annuity choices available". 

The "subtlety" is overcooked.

 

Listerine GIFfrom Listerine GIFs

Vulture Suggests"Honor a Legacy" by Selling Structured Settlement for Pennies on the Dollar

by Structured Settlement Watchdog

One can always count on shills for CBC Settlement Funding to prostitute a really good settlement planning idea, for pennies on the dollar predation of vulnerable annuitants. Shameful. Don't fall for it. Let me break it down for you.

First, The Good Idea

Creating a Loving Legacy by creating a payments stream  (or payment streams) using structured settlements. Create structured settlement payment streams to fund:

• Annual holiday gift " from Dad", "from Mom" or "from Grandpa or Grandma"
• Annual birthday gift
• Funding college or graduate school

My video "Money and Meaning: Creating a Loving Legacy Using Structured Settlements" provides more information.  Click to watch immediately below

The Bad Idea from the CBC Settlement Funding shills behind Structuredsettlements(dot)com 

Honoring a Legacy with your Structured Settlement  (Translation: "sell your payments for pennies on the dollar" and then...)

• Loss and money on their own evoke strong feelings – and together can be explosive. But it doesn't have to be.
• Instead it can be something beautiful to actively pay respects to the person you lost. It could be a way to realize your dream of finishing college. Or it could be that you've always wanted to be your own boss. Or maybe you just want a home to call your own.
• Whatever your dream is, a settlement can be the way you turn that dream into a reality.

Just remember what StructuredSettlements(dot)com is all about by their own admission

"StructuredSettlements.com is an educational and financial resource for people who are interested in selling their structured settlement or annuity payments. We arm you with the information you need to make the best decision for your situation, and we connect you with experts who can help you achieve financial freedom".

How do Structuredsettlements.com and Annuity.org make money?  From generating leads for CBC Settlement Funding, its partner in the cash now for structured settlement industry.  

There is clearly nothing saccrosanct in Conhohocken.

 

 

What Does "Unclaimed Funds" Structured Settlement "Client Relations Dept" Mean?

by Structured Settlement Watchdog

What does it mean if you have a structured settlement and you've received a mailer that refers to "Unclaimed Funds" Structured

Don't be fooled by silly emails like this one sent to structured settlement annuitants 

Settlement "Client Relations Dept"  "Immediate Verification Required", and bears the telephone number of 888-556-2740?   

Here's what I've discovered:

The mailing department of Fortune Settlement Solutions has been blitzing people with structured settlements to generate leads with the teaser of "unclaimed funds" using the mailer displayed below  [Disclaimer: the green nail is not mine :-)].  

FACT: THERE ARE NO UNCLAIMED FUNDS.  You could call any structured settlement factoring company and get an offer to buy your payments, whether or not it is in your best interest. 

What Happened When I Called 888-556-2740?

I called 888-556-2740 yesterday after receiving  a call from Pennsylavania concerning a similatly worded letter.

With the addressee listening in on the phone I dialed  888-556-2740. The person who answered the phone at 888-556-2740 was really cagey, claimed to be from New York and said the name of the business was Structured Settlements and that it was registered to do business in New York and that they were based in Manhattan. I looked up the name and there was no such company. It would have been much simpler to simply say who they really are, like the person who answered the follow up call today, at Fortune Settlement Solutions from Miami Lakes, Florida.

I called the same number today and spoke to Will from Fortune Settlement Solutions and he was far more professional and straightforward from the start of the conversation.

Silly letters like the one displayed have plagued the structured settlement factoring industry for years. 

Motion to Compel Discovery GRANTED Against Structured Settlement Factoring Company AFTER 7 Years

On October 14, 2022, Judge Charles Maxfield granted Terrence Taylor's motion to compel discovery against Structured Asset Funding and related entities. The motion had been pending for the lion's share of 7 years, which is more than THREE TIMES the time it took of judges on the Portsmouth Circuit to approve 11 improvident structured settlement factoring transactions  (two years). 

Taylor's case made the national news media in March 2015  (Wall Street Journal) and December 2015  (Washington Post and Virginia Pilot). Just months later in March 2016, Virginia strengthened its Structured Settlement Protection Act. “Structured Settlements are created by the courts for the protection of injured and disabled victims. Companies that prey upon these individuals should be sharply regulated,” said Herndon Virginia personal injury & workers comp lawyer Doug Landau at the time.

Things seem to be moving now since August 2022, after Judge Maxfield granted New York Life's motion for interpleader.  Trial is set for June 2023.

What Did They Know and When Did They Know It?

One of the key issues in discovery will be concerning the true residence of Terrence Taylor when the subject structured settlement transfer petitions were submitted.

All of the structured settlement transfer petitions by SAF and related companies were submitted in Virginia, specifically Portsmouth Circuit.

 

But as Terrence Taylor's camp has already pleaded, Terrence Taylor was a resident of West Virginia.  Taylor alleges that is supported by:

• The lease of residential property in West Virginia
• The eviction notice from the same properties in West Virginia
• Records of documents sent by SAF to Terrence Taylor at the address in West Virginia
• Paramedicals for the life insurance applications to Nationwide Insurance and Sagicor that were collaterally assigned to the the assignee investors Allen Grosnick and Income Payment Stream Partners were conducted at the West Virginia address. From the point of domicile, it's important to note that the Grosnick and Income Payment Stream Partners' acqusitions were at the TAIL END of the series of structured settlement factoring deals in Virginia.
• Affidavits of two notaries that attest that relevant documents related to the proposed transfer were signed in West Virginia

Ultimately this matter needs to be resolved after having gone on way too long, so that people to have more faith in the system.

Firmwide QSF Promoter's Inartful Gaffe "Defendant Receives an Immediate Payoff" in "How It Works"

by QSF Chef*

An attorney for a firm that is a heavy promoter of Firmwide QSFs has made quite the gaffe, in an article promoting same on his firm's website. 

"How it works

When the settlements and fees are settled into a QSF, the defendant receives an immediate payoff/1099"**

 

Wait, whaaaaat!

Wait, Whaaaaaaat?

 

What is a Payoff?

(1)   a payment made to someone, especially as a bribe or reward, or on leaving a job: 

"widespread rumors of payoffs and kickbacks in the party"  Synonyms: payment · payout · reward · recompense · consideration · bribe · inducement ·enticement · incentive · payola · douceur 

 

(2) the return on investment or on a bet

Source: Oxford Languages

What is a 1099?

A 1099 is an Internal Revenue Service (IRS) form that is used to report income received through sources other than employment. The IRS refers to 1099s as information forms. They serve as a record that reflects income given to someone by a person or organization that they are not formally employed by.  Source:  UpCounsel.com  What is a 1099?  Everything You Need To Know

I love language and part of what I've done blogging over the years is to point out where perhaps there might have been a better choice of words. 

This isn't the first time I've questioned the use of the term "payoff" in connection with settlements. See my January 31, 2010 blog Northeastern Capital's Amusing Finnacial Literacy Lesson

 

Note

*QSF Chef is a QSF blog nom de plume I'm trying out. Why? Because it rhymes!

** at time of publishing this appeared in an article credited to Sam Dolce-Powers

 

 

Judge Denies Motions of NBA All Star and Uncle in $1.5MM+ Lawsuit Brought by NY Retirement Plan/Retirees

by Structured Settlement Watchdog

Buying structured settlement payments rights, or rights to any cash flow in the secondary market is not the equivalent of buying an annuity. Buying purported cash flows from athletes or agents of athletes are even further removed from what an annuity is. A series of investors have learned that the hard way.  But things may be looking up.

On October 6, 2022, Montgomery County Maryland judge Debra L. Dwyer denied motions to dismiss and summary judgment

Dwyer Dunks

motions from Paul Millsap and Brendrick DeAngelo Simmons in a long running dispute over an odd investment in subsets of an NBA agent fee that was marketed to investors as an annuity.

Millsap, 37 is an American NBA professional basketball player who most recently played for the Philadelphia 76ers (and previously played as a power forward for the Utah Jazz, Atlanta Hawks, Denver Nuggets and Brooklyn Nets), and his uncle and agent Brendrick Simmons. The investment was in a purported agents fee due Simmons September 16, 2021. Daily penalties were to be assessed if payment was not made on time.

Count V – Fraud against Simmons and BDS Sports                DENIED, Motion to Dismiss, or in the alternative Summary Judgment by Simmons

Count VI – Negligent Misrepresentation against Simmons     DENIED, Motion to Dismiss, or in the alternative Summary Judgment by Simmons

Count VII – Breach of Contract against Simmons                  DENIED Motion to Dismiss, or in the alternative Summary Judgment by Simmons

Count VIII – Aiding & Abetting Fraud against Millsap             DENIED Motion to Dismiss or in the alternative Summary Judgment by Millsap

Count IX – Unjust Enrichment against BDS Sports                 DENIED motion by Simmons  DENIED  motion by Millsap

Count X – Violations of Maryland Consumer Protection Act against Simmons (this was dismissed).

THE CIRCUIT COURT FOR MONTGOMERY COUNTY, MARYLAND

GENERAL & VASCULAR SURGERY OF LONG ISLAND, PC, et al.,
Plaintiffs
v.                                                             Case No. 487210V
BRENDRICK SIMMONS, et al.,
Defendants

It is believed that Millsap previously contributed to a monetary settlement to similar investors who bought subsets of the same purported fee payment from Millsap to Brendan DeAngelo Simmons in what was dubbed the 'Secondary Market "Annuity" Shit Show' lawsuit, but was not able to obtain reoslution with the remainining plaintiffs. See link below.

Background

• The Ties That Bind | Witness to Millsap's Agent's Signing of Millsap's Name Was Hired by Reliance Funding LLC
   
• SMA Hub Purchase Order Referred to NBA as an Insurance Carrier
• New York Lawsuit Reveals 7 SMA HUB Purchase Orders That Named NBA as "Insurance Carrier"
• Settlement Reached in Hansen Lawsuit Against Settlement Planners, SMA Hub, NBA Player, Agent et al
• $1.5M Confessed Judgment Against NBA Player & Agent Over SMA Hub "guaranteed" "NBA Annuity"
• Disabled 65 y/o Arizona Man Sues Settlement Planners, SMA Hub and Others in Secondary Market "Annuity" Shit Show
• Michael Vick agrees to chip away at a nearly $2 million judgment stemming from an unusual financial deal

 

Convicted Structured Settlement Felon Joe Gargan Released From Prison

by Structured Settlement Watchdog

Joe Gargan, the convicted felon and former structured settlement broker and head of The Pension Company Inc. who purloined millions of dollars from the United States taxpayers and a New York City area hospital, was granted compassionate release after being incarcerated less than 2 years. The United States Department announced June 15, 2020 that Gargan pleaded guilty to the embezzlment.

Gargan spent the majority of his custody at FMC Butner in North Carolina, a joint that housed notorious felons such as the late Bernie Madoff. FMC Butner had a deadly oubreak of Covid-19.

According to Judge Rossie D.Alston, Jr. of the United District Court, District of Alexandria, Gargan" has established that extraordinary and compelling reasons justify his release pursuant to 18 U.S.C. § 3582(c)(1)(A). Accordingly, for the foregoing reasons, it is hereby

ORDERED that Defendant’s Motion for Compassionate Release (Dkt. 39) is GRANTED and
Defendant’s Motion to Vacate Sentence pursuant to 28 U.S.C. § 2255 (Dkt. 41) is DENIED; and it is

FURTHER ORDERED that the custodial portion of Defendant’s sentence is reduced to
time served; and it is

FURTHER ORDERED that the Federal Bureau of Prisons is directed to release Defendant
from confinement no more than fourteen days (14) from the date of this Memorandum Opinion
and Order; and it is

FURTHER ORDERED that upon release, Defendant shall begin serving the three-year
term of supervised release this Court imposed on September 23, 2020; and it is

FURTHER ORDERED that all terms and conditions of supervision remain in full force
and ".

Source:

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division.

UNITED STATES OF AMERICA 

v.             Criminal Action No. 1:20-cr-110 (RDA)

JOSEPH E. GARGAN,  Defendant. 

MEMORANDUM OPINION AND ORDER

Download Gargan Granted Compassionate Release Sentence Not Overturned 10-4-2022

 

In related news, the domain name for ThePensionCompany.com is for sale for $24,500.00

Last updqated October 16, 2022

Original Department of Justice announcement of Gargan's crimes

The Structured Settlement Secondary Market | Let's Be Honest About Size Shall We?

by Structured Settlement Watchdog

Accurate data about structured settlement factoring would be useful for legislators to understand how big the vastly underegulated structured settlement factoring industry is. Is it as small as one funder claims, or is it something that sticks out as the trade association says? I hate to be prickly about this, but what we have is a 20 percentage point disparity that doesn't inspire much confidence. So what is the truth?

Has the amount of factoring expanded or contracted?  One thing we do know that there has been an expansion of consumer and investor litigation (and other questionable activity) in this area since 2013.

1. Ongoing class action against Symetra
2. Access Funding Scam with associated Consumer and CFPB litigation against its principals
3. Annuity Sold, JRR Funding and related companies fraud and 7 year ban  (Maryland)
4. The Great Texas Disabled Annuitant  Money Train "Robbery". A factoring entity in existence for 6 months, just enough to do a single massive deal with a Texas incompetent that couldn't even make change. 
5. " Synchronized sinning"? In the same 12 month period it was revealed, hundreds of forgeries of judges' signatures on structured settlement transfer documents, at the hands of a New York paralegal, and a now disbarred former member of the Florida bar in another 100 or so instances in Broward County Florida.
6. Financial exploitation of a minor's structured settlement (Pennsylvania)
7. The Advance Funding/ Dan Cevallos Ponzi scheme  (Diego, Alcantara, First Trinity cases for example)
8. "Blue Buy-You" The Houston and Louisiana lawyer who put his client into a structure and then bought his client's 'structure 1 year after at a really crappy rate through a Puerto Rico company in which he had an interest.
9. Blistering mainstream media coverage in Maryland, Virginia and recently Minnesota and South Carolina exposing the consequences of inadequate regulation.

What drives such individuals and companies to engage in the bad behaviors to induce consumers? There has to be more than the proverbial lollipop as a reward.

The Trade Association Estimate

The National Association of Settlement Purchasers (NASP) asks "Do most people receiving structured settlement payments sell their future payments?

NASP answers  "No, most people receive payments according to the original schedule. In the estimation if the National Association of Settlement Purchasers, "less than 20% of structured settlement recipients ever complete a Secondary Market transaction".   -NASP Secondary Market FAQ retrieved from NASP website October 2, 2022.

The Member of the Trade Association Answer

But Strategic Capital, which is a member of NASP, and sponsors a number of trial lawyer associations,  published a winky dink contradiction in its website's FAQ, implying that NASP is 20X too high.

Strategic Capital, based out of Toronto Canada, says:

1. Very few people actually sell structured settlement payments

"Out of the total outstanding amount of money currently held in structured settlement annuities -more than $80 billion- less than $800 million is transferred on the secondary market each year. That means that only about 1% of structured settlement payments are sold each year."

2. Only about 1% of structured settlements are sold or traded in the marketplace.

Not a lot of people sell their structured settlement annuity payments. In fact, 99% of people do not sell structured settlement payments

"Only about 1% of structured settlements are sold or traded in the marketplace. That is still published October 2, 2022.  

The Scholar's Erstwhile Estimate

Patrick Hindert, author of the structured settlement industry's seminal text, Structured Settlements and Periodic Payment Judgments, stated in 2013 that there were $365M present value secondary market purchases. This number represented only 7.1% of new money flowing into structured settlement annuities in 2013. So we're looking at a "20 or 7 to 1".  People of a certain vintage might appreciate that it could be the " B" side to a "new release" by Chicago as a buzz cut from "25 or 6 to 4"

Stratcap's number seems a bit optimistic, er unrealistic. Prove me wrong, please. What would be nice to know is ...

• The percentage of people who've sold once, twice thrice, four times and sold it all.
• The time frame from first sale to obliteration and so on.
• The percentage of sellers who are people of color.
• The percentage of repeat sellers who are people of color

Let's hear the real numbers, warts and all.  I would think that the trial lawyer associatons whose sposnor testimonial letters have been displayed on the Strategic Capital website should be interested in these numbers.

The National Association of Settlement Purchasers holds its annual meeting in New Orleans, in early November 2022. That leaves a month to get real on the stats of structured settlement factoring.  How about it?

 

 

SC Legislators Pressured to Up South Carolina Structured Settlement Protections After Troubling Findings

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Seems like South Carolina legislators recognize that South Carolina's Structured Settlement Protection Act needs significant improvement after troubling findings recently appeared in Myrtle Beach Sun News, a McClatchy publication, and other regional and national press. 

South Carolina sellers of structured settlement payment rights, who usually lack their own legal representation and may have received their settlements after suffering traumatic brain injuries, are selling their future payments to private companies, receiving an average of 25 cents on the dollar, according to the McClatchy. Until the troubling report was published, structured settlement transfer petitions were typically heard by masters-in-equity and special referees, who signed off on nearly all deals, including ones that do not appear to be in the sellers’ best interest, the investigation found.

Requiring Structured Settlement Transfer Petitions to Be Heard in the Same Court Where the Structured Settlements Were Established Makes Sense

According to a September 14, 2022  follow up article in The State, going forward, structured settlement sales in South Carolina will be heard only by circuit court judges, who generally vetted and approved the original structured settlements. “This is now a one-lane circuit court-only path for these folks trying to break up these long-term vetted and court-approved settlements,” said state Sen. Luke Rankin, R-Horry, a supporter of reforming the lightly regulated structured settlement factoring companies

“You’re going back before the same court to unwind the clock or prove to the satisfaction of the court that this is not predatory and/or inequitable to the ultimate holder of that future income stream.” Rankin, a Myrtle Beach attorney who chairs the Senate Judiciary Committee, said Beatty issued the structured settlement order after he shared McClatchy’s findings with the chief justice and asked him to put it on the State Supreme Court’s radar. 

An order of the Chief Justice VACATED all pending orders referring structured settlement sales to masters-in-equity and special referees and requires clerks of court to forward lists of such cases to the chief judges in each circuit. A copy of the Order was included in a prior post.  Masters-in-equity are judges appointed by the governor who rule on non-jury matters — most often foreclosure filings and other real estate-related issues — referred to them by circuit courts. Special referees have the same powers as masters-in-equity, but are appointed by administrative law judges rather than the governor, and are not screened by the Judicial Merit Selection Committee.

How Should South Carolina Structured Settlement Protection Act and Others Be Changed?

Implement Mandatory Independent Neutral Guardians

According to The State, Rankin suggested that reviews by independent neutral guardians or attorneys should be required before sales.  This is a similar response to the blistering Minneapolis Star Tribune expose that was the impetus for change in Minnesota.As things stood prior to the expose, South Carolina did not even mandate Independent Professional Advice. Most states don't and it's a travesty that leads to reasonably forseeaable perils for the citizens of those states without the requirement.

Has Simple Independent Professional Advice Been Effective?

The answer to that question is another question. How is it that there are so many stories in South Carolina, MInnesota, Florida, Texas, Virginia, Maryland (before the post Access Funding reforms) people who have sold umpteen times for pennies on the dollar in a very short time frame have waived independent professional advice?  A rapid sequence of transactions leading to financial ruin of people is not and can't be the intention of a structured settlement protection act.

• Were structured settlement annuitants encouraged egged on by the factoring company repesentatives to shun independent professional advice to create the perception that it would take longer?
• When Independent Professional Advice is being performed is it being performed by someone with the requisite skills to understand the transaction?

What is an Independent Professional Advice (IPA) ?

Van Nuys, California attorney Eugene Ahtirski promotes his services as a "Structured Settlement Attorney" on a national basis. Here's how attorney Eugene Ahtirski defines an IPA:

 

"An IPA is an independent professional adviser who is separate from the factoring company that is buying a structured settlement from an individual. They are simply to write or sign an opinion letter stating that they have reviewed the transfer of the structured settlement and that it is fair and in the best interest of the seller".  Source: Ahtirski website September 20, 2022

 

Ahtirski does not limit the definition to providing legal advice, even though he is a lawyer. In fact it is not mentioned in the definition.

 

Independent Professional Advice and/or Neutral Guardians Should Be Mandated in South Carolina, and All States and should not be limited to attorneys.

 

Part of the problem with SSPAs, including South Carolina, is the 3 prong advice concerning the financial, tax and legal implications.

While some financial advisors cannot provide legal advice, one could also argue that a lawyer may not be qualified to provide financial or tax advice.  Furthermore, what a prospective seller may also need is someone with financial transition expertise, like a Certified Financial Transitionist.  A Certified Financial Transitionist (CeFT) is trained to help clients navigate through major life events and the financial transitions that accompany them. Lawyers and traditional financial advisors may be missing out on a key aspect of this process of financial transition—human emotion.  A neutral guardian has a higher standard and must seek out and collaborate with other experts to be able to properly evaluate if they do not possess the complete qualifications.

 

Furthermore the statement confirming that the person has received independent professional advice should be more than merely checking off a box and naming the adviser.  The adviser should provide a report that addresses each issue that they covered with the client and be free to express concerns if any.

 

One of the things that I mentioned in my 2015 White Paper on Structured Settlement Secondary Market Constructive Solutions,that has yet to be implemented anywhere, is a mandatory standardized sellers guide.  This should be a guide that is not created by the factoring company, but by a regulator, with input from stakeholders. There is nothing unusual about this. Anyone buying life insurance for example, must get a standard Life Insurance Buyer's Guide. Given the serious impact on the welfare of sellers who may not have the ability toi earn income, why not those selling structured settlement payments?

 

Other Considerations for an Improved SSPA in South Carolina

As reported by The State, Luke Rankin  (R-Horry) also discussed

a potential limit on how many times a person could sell off pieces of a structured settlement.

Venue-shopping, where buyers of structured settlements can choose the county where they seek court approval, essentially ended with the Supreme Court order directing such cases to Circuit Court.

“This order will be the law of the land until it’s lifted or we deal with it legislatively,” he said.

Independent Professional Advice (IPA) for Structured Settlement Sellers (4structures.com)

CBC Settlement Funding's "Minor Error"

by Structured Settlement Watchdog

CBC Settlement Funding is All Fakakta in Conshohocken

"Structured settlements can provide long-standing income for minors. They gain access to funds at 18 years old to prevent frivolous spending and to protect financial security".    CBC Settlement Funding website

Let's see...

1. Oy, the wordsmithery! Long-standing means something that has existed(or stood) for some time. Conjures up the image of long-standing water, a sort of "bug heliport"
2. Each structured settlement is bespoke, custom tailored at or around the time of settlement to provide future income.
3. Gaining access to funds at age 18 does not prevent frivolous spending. 

                                Yiddish Rap Song "It's All Fakakta" (2022)

 

 

 

 

 

11th Circuit Appellate Court Rules CEO of Shuttered Factoring Company MUST Pay IRS Penalties

by Structured Settlement Watchdog

The Coronavirus may be waning, but the "Kroner-IRS"  continues.  

Burt Kroner, the CEO of recently shuttered Boca Raton Florida structured settlement factoring company Client First Funding, failed

Burt Kroner was banged up by the 11th Circuit 

to report millions of dollars in income. After an audit, an IRS examiner sent him a letter that said Kroner owed penalties on top of his back taxes. See 26 U.S.C. § 6662. Kroner tried to negotiate without success; the examiner's direct supervisor signed a second letter, which proposed the same penalties, as well as a form approving those penalties.

See my prior post of June 7, 2020 for further background details

Client First Settlement Funding CEO Loses "KronerIRS" Re $24.77M Transfers But Avoids Penalties - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Since then

Eventually, after more failed negotiation, the IRS issued Kroner a statutory notice of deficiency, which triggered his right to petition the Tax Court for review. The Tax Court disallowed the penalties, holding that the supervisor's approval came too late because she had not approved the penalties at the time of the first letter.

The IRS appealed, arguing that the Tax Court misinterpreted Section 6751(b)'s requirements. The IRS prevailed against Burt Kronor.

Burt Kroner v. Commissioner, No. 20-13902 (13 September 2022) 11th Circuit REVERSES Tax Court: IRS CAN Impose Penalty on Millions in Unreported Income

In May I reported receiving phone calls from a number of investors missing payments from factored structured settlement payments from Symetra that were being serviced by Client First. Eventually they were paid. At this point if you are missing paymnets contact the annuity issuing life insurance company.

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)