by John Darer® CLU ChFC MSSC RSP CLTC
Brian Baxter of American Lawyer Daily is just mailing it in on the Scott Rothstein Fraud.
In an article published Friday the 13th Baxter states "The unfolding fraud scandal involving high-rolling South Florida lawyer Scott Rothstein raises questions about the nature of structured settlements. Did Rothstein manipulate these financial arrangements to his advantage or concoct something else entirely?
Baxter includes the link to the Wikipedia entry for structured settlements and if he actually read the entry that is connected to the link he'd see that what Rothstein concocted was something else entirely. Furthermore, given what we know so far is there any reason to believe anything that Scott Rothstein has said?
For anyone researching structured settlements that is writing stories about Scott Rothstein please review the following flow chart which accurately describes what happens in a REAL structured settlement transaction. If any reporter reviews this chart and THEN goes back and reads every account of the purported money flow in the Rothstein scam it is patently obvious that it is a label that is being used to mischaracterize what really happened.
Baxter's ill informed article states "the traditional structured settlement is essentially an annuity. If, for example, a law firm were to settle a major case with the City of Miami that would pay out over one year, the firm might go to its lender bank and ask to borrow against the settlement. But when a settling party has a sketchier track record of creditworthiness, plaintiffs can sell their settlement stake to investors who assume the risk at a premium"
Fact: A structured settlement is not a product, it is a method for paying damages that has its foundation in various sections of the Internal Revenue Code
Fact: A structured settlement can be funded with annuities or obligations of the United States government. Source: IRC 130(d)
Fact: The "structured settlement" example used by Baxter describes a legal financing transaction for lawyers.
Edward H. Davis , Jr.(pictured above), a Miami lawyer with Astigarraga Davis who specializes in asset recovery is asked to weigh in. Davis was cited to have said "Structured settlements are basically people buying annuities at a discount, but they come with a risk, because presumably the person or entity that owes the money could default."
Fact: Edward H. Davis, Jr. has no bona fides on the subject of structured settlements. Click here for his professional biography as it appears on his firm's web site.
Fact: Structured settlement are not "basically people buying annuities at a discount". Comment: By publishing Edward Davis ' quote Baxter simply makes himself and AmLaw look like a horse's ass. Consider that Baxter and AmLaw link to the definition of structured settlement in Wikipedia and then quote a lawyer, who has no bona fides on the subject, who says something that conflicts with the Wikipedia definition and the structured settlement definition that one can find in the Internal Revenue Code.
Baxter steps on his own tail again when he states "Lending money to litigants isn't new. People who are caught up in costly civil suits and in need of financial help to fund those suits are willing to pay high yields to borrow money. Rothstein, lawyers say, likely saw a way to cash in on this by acting as the middleman who found investors to advance reduced settlement funds to plaintiffs". That's pre-settlement financing dude, NOT structured settlements!
In a response to LBN colleague Mark Wahlstrom who expressed similar concerns to mine in comments on the AMLaw blog, Baxter says "thanks for the feedback. I understand the sensitivity to the linkage between Rothstein and structured settlements, but the fact remains that this is what the lawyers closest to the situation are saying at the moment.
I tried to show in the post above how Rothstein allegedly warped the template of structured settlements to suit his own needs, not cast aspersions on the nature of those settlements themselves. The fact is that Rothstein is raising these questions himself by beating the structured settlement drum.
Until prosecutors file charges against Rothstein I think we'll all be pretty much in the dark as to what exactly transpired here".
Baxter's response to Wahlstrom is a cop out to cover up poor research. Nevertheless I do encourage him and other reporters to keep digging and look to informed sources with bonas fides on the topic of structured settlements.
Just a week ago weren't we reading an article from Harriet Bracky's column in the FL Sun-Sentinel:
- The Toe bone's connected to the foot bone
- The Foot bone's connected to the leg bone
- The Leg bone's connected to the knee bone... and so the story goes