by John Darer CLU ChFC CSSC RSP
The deposition of convicted felon Ponzi schemer Scott Rothstein, a disbarred Florida lawyer has been released and in it, Scott Rothstein testified, under oath, that the scam that Scott Rothstein was offering DID NOT involve structured settlements. Rothstein testified that there was reason to make sure they were not structured settlements to avoid making the Ponzi scheme easier to detect, because it would have required falsifying more documents and required Court involvement. Apparently the mischaracterization of structured settlements allegedly had its origins in the lawyers doing due diligence.
I, and others have maintained since the end of October 2009 that what Scott Rothstein offered were not structured settlements,nor could they have been structured settlements. Rothstein's criminal complaint (made public in December 2009) never mentioned structured settlements
'Following is a relevant excerpt of the transcript of Scott Rothstein's December 12, 2011 deposition retrieved from Scribd.com on January 2, 2012.
Beginning at p 23 of 197 at Line 20, under examination by William Scherer Esq:
Q. There was some issue, was there not, about whether these structured payments were structured settlements or not?
Q. Because of a need for Court approval?
Q. Would you tell us about that briefly? What was the problem?
Rothstein: "On several occasions with several of the due diligence groups, people were calling this structured settlements. And from a Ponzi perspective, and bearing in mind we never called it Ponzi when it was ongoing"
Rothstein: "From that perspective we had reason to make sure that this was not structured. Because when you're dealing with structured settlements you need other levels of Court approval. It would ave required the manufacturer of literally hundreds of phony orders, which would have led the entire scheme to detection.
It was intentionally made in a way and presented to that firm and the other firms that were looking at the structure issue that it was merely a purchase of dollars already in-house; that it was not a structured settlement because the true definition of a structured settlement is when someone is actually receiving payments over time that has some other value. We didn't have a true definition of a structured settlement, not by any of the statutes" Page 24 of 197 lines 15-23
Q. Were they a settlement that had been structured turns into or bought out by a lump sum payment, there needs to be Court approval, is that your understanding?
Rothstein: "Right. Because in essence it's discounting the purchase of an annuity. We weren't presenting it that way. It would be as if my client settled their case say for a million dollar annuity; they would get paid a million dollars over time. The Defendant perhaps would have to fund it with six or seven hundred thousand dollars . whatever the varying rate was my client was and then my client was going to sell it to get money up front. That's not the situation.
This is a situation that we put together where the Defendant fully funded it. And our obligation as, quote, unquote escrow agent was to disburse the money over time in the hopes it would convince the Plaintiff to keep everything quiet."
Q. Did you ever read the statute on structured settlements* concerning when you had to have Court approval to unravel them and when you didn't?
Rothstein: "I'm sure I did because it was sent to me my multiple people..."
Do Kendall Coffey, the ABA Journal's Martha Neil , and North By Northwestern, "Northwestern University's leading independent online publication", by its staff writer David Tuber, and certain members of the South Florida Press now publicly apologize to the structured settlement industry for misrepresenting, and unfairly associating, an important core financial product for injury victims with Rothstein's con job in 2009 [Coffey still posted a video interview on his website containing a bogus association with structured settlements before this author called him out March 30, 2011, in Ms. Neil's case June 14, 2011 and Mr. Tuber's case September 26,2011)? A modicum of research by either of these folks in the first instance should have been the order of the day.
* this author assumes that Scherer is referring to the Florida Structured Settlement Protection Act (FloridaStatute § 626.99296 ), which governs the factoring of structured settlement payment rights