by Structured Settlement Watchdog®
"Those who have received settlements designed to provide income for many years--aren't supposed to be able to easily cash it out", observes Leslie Scism of the Wall Street Journal. [Scism is referring to the Structured Settlement Protection Acts that have been enacted in nearly all states since 2001]
Scism looks at the important premise of structured settlements, in the context of two recently filed lawsuits, the Michael Lafontant case against Imperial Structured Settlements, pending in the Southern District of New York, which I've extensively reported on here and here, and the Terrence Taylor case filed in Virginia March 2015 against various wholly owned subsidiaries and/or companies affiliated or associated with 123 Lump Sum Holdings, Client First Funding and other settlement purchasers and investors. Unfortunately despite extensive interviews of many, including Terrence Taylor and his family, Scism's article is woefully short on detail and inexplicably misses important details about serious allegations of business conduct by the defendant entities, and the human beings affected by the serious allegations about the business conduct of the respective Defendants in relation the respective plaintiffs.
Many of the comments posted to Scism's article in the WSJ are rushes to judgment by people who have not read the Complaint and do not have all the facts. Not only are many obviously unaware of the fact that there are structured settlement protection laws that were established to protect annuitants in much the same way that there are laws to protect seniors and investors in other financial transactions, in the United States we have a legal process in which the Plaintiffs must prove their cases. How about reserving judgment until you are properly informed? The Lafontant and Taylor cases put structured settlement transfer laws under the spotlight, laws that are supposed to protect individuals from the alleged business conduct that has occurred.
Both cases involve alleged abusive business conduct by settlement purchasers, forum shopping and a complete and systematic destruction of a dependable source of long term income over a very short period of time. The Lafontant case involves 4 transfers in 6 months, the Taylor case 11 transfers in 2 years that left Terrence Taylor to deal with his own medical issues and support his child with zip. It has not only impacted him financially but his parents who must now support him. In virtually each case the seller did not appear in court and judges approved multiple transactions without the qualitative oversight that would come from an "in camera" examination of the seller by the judge.
What About Sword is "Fishy"?
The same judge in the Taylor case, Dean Sword Jr. approved most of the transactions, which appear to have all been submitted by a single attorney, Stephen E. Heretick, who happens to be a local politician, a councilman for the city of Portsmouth, Virginia. Fortunately for sellers in Virginia, in my opinion, Judge Sword is now off the bench. Even if you were to discount the first Taylor transfer as valid, it seems clear that the Sword receives the dubious distinction of presiding over an impaired person's structured settlement Armageddon. How much scrutiny could he possibly have paid to the transfers? If that is all that is required for a judge to discharge his or her duty under a structured settlement protection act then why do we need them? As I mentioned in the immediately prior post, in 2007 Judge Sword was almost stripped of his job!
Interesting Stat| One Lawyer Lots of Transfer Activity on Portsmouth Docket
The Portsmouth docket appears to be a happy hunting ground for cash now pushers. According to my source, between January 2014 and March 3, 2015 Judge JHC heard 403 transfer cases, all submitted by Portsmouth Virginia lawyer and city councilman Stephen E. Heretick. Seem strange to you? Heretick was also attorney of record on 178 transfers before another judge and 65 before another judge. All in all Heretick submitted 646 transfers during the time period, according to the source.
Scism's article was in the words of one of my readers "devastating though brief and not as detailed as it could have been. Either way it definitely shined a light on this disreputable segment of the industry" I want each and every NASP member and non-members of NASP, to look at those words " disreputable segment of the industry", particularly all the back slappers, those in denial, and the platitude shovelers...you all know who you are... THAT is how YOU are generally perceived. You've done it to yourselves.
Weak NASP Leadership Needs to Step Up to The Plate
National Association of Settlement Purchasers representative Earl Nesbitt is quoted in the Scism article and his published commentary is weak, as to be expected. There's a certain point when being affable means squat and that time is now. But Nesbitt, a Dallas Texas lawyer and the settlement purchaser association mouthpiece just doing his job, is appearing on factoring panels at upcoming Society of Settlement Planners and NSSTA annual meetings. Someone recently told me that the impetus for including Nesbitt on an industry panel was "Nesbitt knows how to work a room". So did Rodney Dangerfield and he got no respect. Who's a "stand-up" and laughing about Michael Lafontant or Terrence Taylor?
Nesbitt evaded questions at the 2014 SSP meeting about a Florida case involving a 29 year old cognitively impaired Tampa Florida resident and Client First Funding. The annuitant was a young father with dependent children aged 4 and 1, where another Florida judge approved the sale of an entire $60,000 lifetime income stream for about $577,000. Another case with no seller appearance in court and Wells Fargo entering the discussion, just like Terrence Taylor (Taylor complaint at p 62 and 63-see prior post for link to Complaint) . Had the Florida annuitant in THAT case appeared in court, and/or been required to appear before the court, the judge would have clearly seen a diminished capacity, in my opinion, based on conversations I personally had with the seller "Mr. D." in December 31, 2013 and early January 2014. After the seller reached out to me as the industry watchdog, I initially reached out to Earl in early January 2014 in his a capacity as a representative of NASP, in good faith, to make him aware of a very bad situation that had the potential to be a national news story. I had previously reached out to Burt Kroner at Client First. Then Earl reached out to Burt Kroner and within no time informed me he agreed to represent them as its legal counsel against the annuitant! During the course of that representation Earl Nesbitt unsuccessfully tried to brow beat me, a non-party, into a confidentiality clause as a condition of settlement. Had I agreed I would not have been able to reveal my observations and question the connection as I have now done today (and in the immediately prior post).
Scism's article features a quote from Andrew Savysky, an officer of 123 Lump Sum and member of the board of NASP, which is consistent with my conversations with him, that his company "will start to identify serial filers and to scrutinize their stated reason for each transfer"
NASP and its members need to be proactive an not reactionary.
Comments and Trackback Policy