by Structured Settlement Watchdog
It's not looking good for the reputation of US Annuity Services, LLC, as the Frederick MD structured settlement factoring broker's attempt to perform an end around the South Carolina structured settlement transfer laws has been stuffed by the alert Honorable Judge Charles B. Simmons, Jr. and uS Annuity Services LLC ended up with being referred to South Carolina government authorities for investigation into their business practices
In the transcript of testimony of the transfer proceeding dated September 15, 2016 In Re: Application of U.S. Annuity Services, LLC and Alyson Rainey for the approval of (Transfer of) Settlement Payment Rights pursuant to S.C. Code Section 15-50-60 , Columbia SC lawyer Tucker Player, representing U.S. Annuity Services, LLC discusses a proposed structured settlement factoring transaction in which Alyson Rainey would transfer $245,000 in future payments from MetLife for $51,085.20.
The line that Mr. Player tried to run by Judge Simmons was that Ms. Rainey wanted to use the money to buy a home and that she's unable to qualify for traditional financing and this is the only way that she can get the money sufficient to buy a home, because of credit issues". Except Player didn't have the story straight between his client and Ms. Rainey as we'll see in a moment.
Judge Simmons then asked Player, the U.S. Annuity Services, LLC lawyer for an "effective interest rate if this were a credit transaction" (i.e. effective discount rate). while Ms. Rainey thought is was like 8.86% or 8.36%, Mr. Player stated on the record that "It was not in the documents that his client U.S. Annuity Services, LLC provided". Furthermore when the Judge asked (obviously from experience) "isn't that typically provided?", Player replied " No, not typically. They don't tell us that"
Mr. Player's articulation about the interest rate is a comical but sad commentary about Finance 101 and the structured settlement transfer process
Prior to making the following quoted statements excerpted below, Mr. Player has already represented to the Court on page 2 (line 13-15) of the transcript that the amount reduced to present day value at a 1.8% discount rate is $170,554.19.
'We know the discount-- how they reached the present day value, that discount rate, but the interest rate is---you have to calculate it--because it's actually--you have to take it as she's borrowing money from herself, paying interest at that rate to someone else for the money for the money that she's borrowing from herself" '...God knows i couldn't figure it out on my own"
Comment: Judge Simmons' initial question was appropriate and correct. The 1.8% discount rate is a statutory rate but not the effective discount rate which takes into account all applicable fees, expenses and profit spread built into the transaction. you don't have to know finance to see that the amount that U.S. Annuity Services, LLC was going to pay $51,085.20 instead of $170,554.19 is the major clue that the effective discount rate isn't 1.8%. Too bad Mr. Player missed the obvious. Surely what has been exhibited here is a reason for South Carolina and other states that don't already require a disclosure of effective discount rate be mandatory. That notwithstanding, it probably should be a prerequisite to hiring a lawyer for a structured settlement transfer hearing to be able to thoroughly comprehend and confidently articulate what the statutory discount rate is and the effective discount rate.
Ms. Rainey and Factoring Company Lawyer Have Their Signals Crossed
Judge: The Petition says you want to buy a house. How far in the process have you gone with that?
Rainey: "OK that's where I'm a little bit confused. I have just--me and my fiance have just recently bought a house, just moved in this past weekend"
U.S. Annuity Services, LLC Purportedly Dispenses Investment Advice
Ms. Rainey testified that she received" calls from 100 different (factoring companies) all of the time, trying to get her to sell a payment, "Let's make a deal'. " I can get you some great money" "So now I get to deal with that 24/7'" she said. She testified that she made it clear that she was not interested in making any kind of deals or hearing any kind of offers on selling her lump sum payments.
The response, as testified to by Ms. Rainey, was the question "'Well would you be interested in receiving-"us being able to use this money to invest to turn around and receive monthly checks?" When asked how, Ms. Rainey testified that she would purchase some properties and she would have a property manager that would manage these properties and she would pretty much just receive monthly income off the investment that was made in property management.
When Judge Simmons pointed out that that's not what they're (US Annuity Services)--" Ms. Rainey cut him off and said " I understand that now".
Judge Denies Transfer of Structured Settlement Payments and Slams U.S. Annuity Services, LLC as Comme ci, isn't Comme ça
Judge Simmons denied the request for the structured settlement transfer and opined that Annuity Services LLC engaged in borderline unethical and illegal practices in South Carolina. " What they told you and what they're telling the Court are two different things". He referred his concerns to the South Carolina Secretary of State. On October 13, 2016, Meredith Augustine Deputy General Counsel of the South Carolina Office of Secretary of State noted that referred the matter to the South Carolina Office of Consumer Affairs for investigation.
U.S. Annuity Services,LLC is a Delaware limited liability company listing a primary address in Frederick, MD and has been in business for only 2 years. US Annuity Services LLC is not registered to do business in the State of South Carolina. Mr. Jeremy Wright,a Seneca One alum, is its CEO. Despite the company name, Wright has no active insurance license in the State of Maryland according to public records.
Stifle the Carpetbaggers!
For years "carpetbagging' structured settlement factoring brokers, cash now pushers or structured settlement buyers have solicited and done business with citizens of many states without registration to do business with the applicable Secretaries of State. Annuity Sold, another company from the Maryland Cauldron of Deceit even fraudulently advertised that it that was licensed to purchase payments in all 50 states. This potentially puts consumers at risk if deals go bad. Recent Maryland reforms require registration with the Maryland Secretary of State, the posting of a bond and other requirements. Given the high levels of deception on exhibit all around the country, it is critical that legislators in all states require registration to do business with its citizens. For every astute judge like Charles Simmons, Jr or Lisa M. Fisher (in another US Annuity Services LLC case in New York that I reviewed a few days ago), there are others that let these folks skate.
Comment: While Judge Simmons made sure to document the record regarding Mr. Player's being not in complicity with his client US Annuity Services, LLC it is not lost on this author that on the one hand Player responded as follows when the Judge asked (obviously from experience) "isn't that (effective discount rate) typically provided?", " No, not typically. They don't tell us that', while on the other hand in his later testimony Mr Player testified that this was the first case assignment from his client
As a final observation this case demonstrates the importance of structured settlement protection acts uniformly requiring mandatory court appearance by the seller. Had this been done on the papers, the result might have been different. At present,some but not close to all have this requirement.