by John Darer CLU ChFC CSSC
A Broome County New York Supreme Court judge, Ferris D. Lebous recently ruled against a proposed structured settlement transfer involving a 27 year old structured settlement annuitant Eric R. Lindsey. Lindsey hoped to transfer a $20,000 lump sum annuity payment scheduled for November 2010 to buy a motor vehicle.
The factoring company in question, Settlement Funding of New York LLC (believed to be the New York front for Peachtree Settlement Funding), offered Lindsey $9,517.07 for his rights to the $20,000 structured settlement payment, which represented only a portion of the overall structured settlement created when he was a child. The figure included the gross advance amount of $11,717.07, legal fees of $2,000, and a $200 assessment for costs and disbursements.
In his ruling that the factoring transaction was not in Lindsey's best interest, Judge Lebous cited the discount rate applied to the transaction of 19.9%, the fees and expenses used to determine the net amount, and the fact that the transfer amount wound up being less than 47% of the amount that Ferris would get if he waited for the disbursement. Apparently another mitigating factor was that Lindsey had nothing to show for the $55,000 he had already received.
- 19.9% is a pathetic discount rate which simply demonstrates that the seller didn't shop and the blatant opportunism of the buyer. 19.9% is NOT EVEN CLOSE to the reality of the structured settlement secondary market place. The buyer simply wasted Lindsey's and the Court's time.
- While a motor vehicle seems like a reasonable expense to Eric R. Lindsey get to and from work, it's clear that annuitants must do more than just show up in Court. WHERE'S THE PLAN, MAN? Did Eric R. Lindsey contact an independent financial professional for advice or did he just call in from a hypnotic TV ad?
- In another example of editorial ineptitude, DealFlow Media's April 2, 2008 coverage of this story inaccurately reports and thereby falsely implies that the judge rejected the transfer amount because "it wound up being less than 47% of the amount that Ferris would get if HE waited for the disbursement".
- Either DealFlow Media is on a first name basis with the judge, or continues to demonstrate a lack of respect for the judiciary first revealed in its report of Rhode Island Judge Netti C. Vogel's "vulture decision", where DealFlow referred to the judge as "Netti".