by Structured Settlement Watchdog
As if "the escrow gambit" wasn't bad enough now I have learned today that some (and hopefully very very few) plaintiff attorneys have said to certain structured settlement brokers that certain other settlement professionals are advising their plaintiff attorney clients to write checks for structured settlements directly from their escrow accounts to the structured settlement qualified assignees or annuity issuers.
A plaintiff lawyer is the agent of the plaintiff. If the plaintiff lawyer or plaintiff has actual receipt neither the lawyer nor the plaintiff may structure. If the plaintiff lawyer or plaintiff has constructive receipt neither may structure. If a mistake has been made, then put the funds in an alternative periodic payment mechanism like a settlement preservation trust, settlement planning trust or, if within 90 days of settlement, a post-settlement periodic payment solution offered by MetLife, but don't set yourself down a potentially career threatening road to cover your butt.
The possibility of tax fraud is perpetuated by the "actors" because many life insurance companies have bank lock box facilities to gather in the consideration for the structured settlements. The perpretrators of this scheme allegedly perceive that the lock box means that the life companies will not notice or check where the money is coming from. Obviously "the nimrods" giving this shoddy advice have not taken an anti-money laundering course or they'd be familar with the record keeping requirements concerning deposits and movement of money.
The sad thing about this is that "the nimrods" are potentially hurting people who cannot afford to be hurt. Shame on them. In my opinion these people, again hopefully very very few in number need to have their insurance licenses yanked and serve some jail time. This is a MAJOR trustworthiness issue. Any information received by this author about a specific individual engaging in this behavior will be turned over to the appropriate authorities.
For those of you who have already done the deed... consider how do you defend yourself in an audit? You knew it was wrong but you thought they wouldn't notice? What an outrage! Do you really think the settlement professional's errors and omissions coverage will cover it?
Plaintiff attorneys be vigilant. Annuity issuers with lock boxes should have record of where the money is coming from and obtain copies of checks or wiring information.