by Structured Settlement Watchdog
Another lawsuit filed against two members of the National Association of Settlement Purchasers on August 16 2016 in Superior Court for King County Washington, suggests that the Washington Structured Settlement Protection Act needs a lot of strengthening.
According to the complaint against JG Wentworth and Seneca One, captioned;
SARAH DAVIS and G & L ADVOCACY, INC., GUARDIAN OF THE ESTATE OF KYLE STIBB, Plaintiffs,
J.G. WENTWORTH ORIGINATIONS, LLC, a foreigncompany; SENECA ONE, LLC, a foreign company; SYMETRA LIFE INSURANCE COMPANY, an Iowa corporation; SYMETRA ASSIGNED BENEFITS SERVICE COMPANY, a Washington corporation [ King County case 16-2-21021-SEA]
1990- Kyle Stibb, aged 2 fell off a tractor and was run over by a piece of farming equipment. the resulting injuries included a diagnosis of severe and disabling traumatic brain injury, epilepsy with intractable epilepsy and hydrocephalus.
1994-Circuit Court of Dane County Wisconsin approves settlement in the amount of $1,241,273. and enters and order in which it finds that 'a lump sum settlement would not be in the best interest of the plaintiff'. Under the minor settlement order, Kyle Stibb was to receive:
- $5,124 in monthly income for life, starting on October 1, 2011, when Kyle stibb was 22 years of age. Payment was guaranteed for 40 years. The total value of those payments is at least $2,459,520.
- Kyle Stibb was also to receive lump sum payments in specific years, starting in 2012, totaling $1,720,000.
- The period [sic] payments from the assignees cannot be accelerated, deferred, increased or decreased by the Plaintiff nor shall the Plaintiff have the
power to sell, mortgage, encumber or otherwise anticipate these payments, or any portions thereof
2012-the alleged abuse and financial exploitation of Kyle Stibb starts
Washington’s Structured Settlement Protection statute, RCW 19.205 et seq., requires any court approving a structured settlement transfer to make at least three express findings:
- The transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents;
- The payee has been advised in writing by the transferee to seek independent
professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; and
- The transfer does not contravene any applicable statute or the order of any court or other government authority. (emphasis added)
One of the primary purposes of this statute is to protect structured settlement beneficiaries from predatory business practices resulting in transactions that are not in the payee’s
The primary purpose of many structured settlements is to protect settlement beneficiaries from incompetently managing their financial affairs, particularly large sums that are intended to serve the person’s needs for a lifetime. Structured settlements are commonly used in cases involving minor settlements and in cases where the settlement beneficiary lacks the capacity to competently manage his affairs. In Washington and in many courts around the United States, minor settlements and settlements of incapacitated persons require court approval for the protection of the settlement beneficiary. In Washington, such court orders prohibit transfer of funds or benefits without a subsequent court order for the protection of the settlement beneficiary. The requirement in RCW 19.205 et seq. that a structured settlement transfer not contravene an order of another court is essential to protect the persons who have structured settlements precisely because they have been deemed incapable of managing their financial affairs.
With respect to Kyle Stibb's mental capacity the complaint contends that;
- At all times material hereto, Kyle Stibb lacked the capacity and competency to protect himself from abuse, exploitation, and dissipation of his property.
- At all times material hereto, Kyle Stibb lacked the capacity and competency to plan his financial future, draft a will, or enter into any agreement concerning his structured settlement.
- Due to the minor settlement court order, Kyle Stibb lacked legal authority and competency to enter into any agreement to sell, transfer, or encumber his structured settlement.
- At all times material hereto, Kyle Stibb was incompetent and disabled to such a degree that he could not understand the nature of the above-described proceedings until the appointment of a guardian on March 18, 2016. RCW 4.16.190
- Due to Kyle Stibb’s incapacity and incompetence, the facts constituting fraud as alleged herein were not discovered, within the meaning of RCW 4.16.080, until the appointment of a guardian on March 18, 2016.
- Starting in approximately 2012, Mr. Stibb’s relatives and others began attempts to coerce Mr. Stibb to sell substantial portions of his periodic payments, usually with the justification of business ventures they had planned but from which Mr. Stibb would receive little or no benefit. For example, the complaint alleges that Kyle's uncle Randal Stibb convinced Kyle to sell his structured settlement funds to purchase and open a bar business. Kyle deposited $451,200 into a joint account with Randal Stibb. Randal Stibb used this account to purchase a building for the bar, but the deed was only in his name. He subsequently withdrew all but a few thousand dollars from the joint account and deposited the money into his personal account. Mr. Stibb’s uncle, Randal Stibb, also allegedly coerced Kyle to invest between $100,000 and $200,000 from his settlement funds in a home-flipping business. Mr. Stibb may have received approximately $5,000 out of that business “investment.”
January 28, 2016 After the discovery of the above-described financial abuse and exploitation, Dodge County Circuit Court entered an injunction, dated January 28, 2016, preventing Kyle Stibb’s uncle, Randal Stibb, from further contacting and exploiting Kyle Stibb
May 4, 2016 After the discovery of the repeated violations of a prior Wisconsin court order, Dodge County Circuit Court entered an order authorizing Kyle Stibb’s local counsel, to obtain Washington counsel to recover the funds wrongfully taken from Kyle Stibb
January 2, 2013 JG Wentworth files petition in King County to transfer $660,000 of Kyle Stibb's structured settlement payment rights for $230,000
May 12, 2014 Seneca One files petition in King County to transfer $592,368 of Kyle Stibb's structured settlement payment rights for $153,000. The court approved the transfer on June 5, 2014 and Kyle Stibb's relatives are alleged to have taken his money.
In filing these petitions, it is alleged that JG Wentworth and Seneca One falsely certified to the King County Superior Court that its application complied with RCW 19.205.030, in that it did not contravene another court order. At the time this certifications were made, JG Wentworth and Seneca One had actual or constructive
knowledge that Kyle Stibb obtained the settlement due to personal injuries he sustained when he was two years old.
In 2015 a Fredricksburg Maryland company called Tru Vision Funding, LLC submitted a petition to transfer $1,280,000 in Kyle Stibb's structured settlement payment rights for $118,051.56. Fortunately the petition was denied True Vision Funding advertises that it is a company you can’t afford not working with! Apparently not thought the judge.
Life insurer finally objected to the 3rd attempted transfer in 2015
'SLICO and SABSCO filed an objection to the transfer, noting that “the majority of states, including Washington, have enacted structured settlement protection acts.” SLICO and SABSCO further note that “the acts were not enacted to have the Court serve as a ‘rubber stamp’ to proposed transfers. Rather, the acts were intended to regulate the transfer of structured settlement payments rights and to protect annuity issuers from administrative costs and liabilities that frequently result from these transfers, as well as protect payees'
Nevertheless neither the annuity issuer nor assignee objected to any of the prior transfers, according to the complaint.
Life Insurer and Assignee Are Also Defendants in the Kyle Stibbs Action
SLICO and SABSCO had the opportunity to object to a petition to transfer payments to Concordis Group, Ltd. in the Circuit Court for McHenry County, Illinois, but failed to, resulting in further dissipation of Kyle Stibb’s structured settlement in subsequent 2015 orders.
SLICO and SABSCO subsequently sent Mr. Stibb an offer to purchase its own structured settlement payments in exchange for a lump sum payment, by letter dated June 22, 2016
Plaintiff seeks the following relief
- Special damages in an amount to be proven at the time of trial;
- For consequential, reliance, and expectations damages in amounts to be proven at
the time of trial;
- For costs and disbursements
- For pre- and post-judgment interest as allowed by law;
- For attorney’s fees;
- Treble damages pursuant to RCW 19.86 et seq.;
- For an order vacating the above-described judgments as well as other relief from
- For an order enjoining any further payment by SLICO and/or SABSCO to J.G.
Wentworth and Seneca One
The Stibb's case is the latest in a series of legal challenges to validity of transfer orders with open cases in Maryland, Virginia, Florida with others percolating around the country.
This outcomes of these cases may have serious potential financial consequences for financial advisers who put investors, including injury victims, into recycled structured settlements, who do not do adequate due diligence on deals that turn out to be non compliant, and rely on the creditworthiness of the originator.
That the life insurer and assignee have been named in the Stibb suit is also interesting in the context of a January 31, 2000 quote by Jim Terlizzi, CEO of DRB Capital then of Peachtree (subsequently merged into JG Wentworth)
"While masquerading as consumer protection measures, the legislation being advanced by the insurers is, in reality, a ban on the practice of refinancing or selling one's settlement payments. Because of their massive financial and political clout, the three-card monte dealers and their shills-the insurers and the structured settlement brokers-are trying to pass laws to keep the police-the settlement purchasers-off their block and out of their way. They don't want anyone telling the public about their scam.
In an effort to end the practices of the insurance industry's equivalent of three-card monte dealers, the settlement purchase industry is standing up to the insurers and opposing their efforts in courtrooms and legislatures around the country.
What hangs in the balance are the rights of consumers to do with their property as they choose and to know what they are getting in the first place".
I wonder what Jim Terlizzi thinks now that an Insurer is getting sued for NOT standing up to the 'cops" whose alleged frauds on the Court while exploiting an incompetent, have been exposed?