by Structured Settlement Watchdog
A series of Consent Orders against a predatory factoring companies controlled by Scott Kohn with state regulators in New York, Iowa, California and others, begs the question about why there is only selective regulation of predatory factoring companies instead of comprehensive regulation (and enforcement) across market segments to protect some of America's most valuable citizens, including settlement recipients (who are receiving periodic payments from structured settlements arising from personal injury or wrongful death lawsuits).
Consider the following actions against Future Income Payments, LLC, a company that issued predatory loans secured by retiree's pensions.
New York v. Future Income Payments LLC
On October 20, 2016 Future Income Payments LLC entered into a Consent Order with the New York Department of Financial Services. It was alleged that the company operated without a license, charged interest rates higher than New York's civil usury caps, and intentionally misrepresented their financial products or services. The company was banned from operating in the State of New York. The company was ordered to "forgive all amounts due in excess of the amount advanced," totaling $6,348,232, and refund to pensioners' amounts paid more than the pensioner's lump sum received. They were also ordered to pay $500,000 in fines. { Read more]
California Department of Business Oversight v. Scott A. Kohn, Pensions Annuities and Settlements LLC aka Future Income Payments LLC, et al.
In September 15, 2015 the business entered into a Stipulation to Desist and Refrain Order with the California Commissioner of Business Oversight. The Assurance settles allegations that the business engaged in the business of a finance lender or broker without a license from the Commissioner. Under the terms, the business agreed to stop operations in the capacity as a finance lender or broker.
This should not be considered as an admission of guilt or finding of violation of the law. For more details, click here.
Iowa v. Future Income Payments LLC
The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.
On December 22, 2016, Future Income Payments LLC entered into an Assurance of Voluntary Compliance with the Iowa Attorney General. The company is not licensed to offer consumer loans in Iowa. Further, the Iowa Attorney General had concerns that the company was charging exorbitant interest rates of up to 200 percent, on cash advances on mostly military pensions. The company paid $35,000 to the State of Iowa, who will then refund the overcharged consumers and modify the existing contracts into interest-free loans. The company is banned from offering unlicensed loans and charging interest rates that violate state law.
For more details, click here.
City of Los Angeles v. Scott A. Kohn (pending)
On February 16, 2017, the Los Angeles City Attorney Mike Feuer announced his office will be filing a lawsuit against Scott Kohn and several companies he owns (Cash Flow Investment Partners LLC Future Income Payments LLC, London Square Specialty Services LLC, Money Stream Funding Companions LLC), Buysell Annuty Inc. Allegations include predatory lending practices that targeted seniors and veterans in California, including using illegal debt collection practices and charging interest rates up to 96% (CA limit is 10%)
Kohn solicits California investors to invest in underlying pension loans, but fails to disclose material information and makes material misrepresentations. For example, the lawsuit alleges that Kohn affirmatively assures investors (falsely) that the pension loans comply with all applicable laws. As a result, investors unknowingly bear the risk of loss on loans which are legally challenged or deemed void.
Miinesota AG v Future Income Payments LLC (pending)
On August 16, 2017 the State of Minnesota's Attorney General filed a complaint against Future Income Payments LLC. The company is being accused of unlicensed lending and charging interest rates higher than the Minnesota law allows. Future Income Payments "loans provided to Minnesota residents are void, and Minnesota residents are under no obligation to pay any amount owing and are entitled to recover all amounts paid."
Oregon Announces investigator into Future Income Payments LLC January 12, 2018 (pending)
"Future Income Payments, LLC, f/k/a Pensions, Annuities and Settlements, LLC, a Delaware limited liability company; and FIP, LLC, a Nevada limited liability company, (“FIP”) have been the subject of administrative action in several states, including New York, California, and Washington. The entities, along with sole member Scott Alan Kohn (“Kohn”), is the named defendant in class action lawsuits in California and Oregon, as well as suits filed by the Attorney General’s Office of Minnesota and the Office of the Los Angeles City Attorney.
Through its marketing affiliates, Cash Flow Investment Partners, LLC; BuySellAnnuity, Inc.; and Pension Advance, LLC; all of which are wholly owned by Kohn, FIP solicits pensioners to enter into contracts in which the pensioner will receive a lump sum payment in exchange for some or all of the pensioners monthly pension payments for a fixed period of time, generally three to ten years.
FIP also enters into contracts with investors, who provide funding for the lump sum payments in exchange for some or all of the pensioners monthly payment. While the investment yields approximately 6%-7% for the investor, the effective interest rate charged to the pensioner often exceeds 100%.
While FIP defines these contracts as the sale of an asset, state regulators have concluded that they are in fact loans and subject to applicable lending laws. Furthermore, the investments being offered by FIP are not registered for sale in Oregon. In addition to internet traffic diversion and cold calls, FIP relies on insurance agents to sell this product to their clients as part of a fixed income retirement plan.
We are in the process of investigating these transactions and we would like to hear from producers who have been approached to sell any of the FIP products to investors in Oregon. We are advising insurance producers not to pursue marketing opportunities with FIP or any of its named affiliates without first consulting with your own legal counsel or contacting our office.
If you have made any sales of this product to Oregon residents, or you have been approached by FIP or one of it’s affiliates to sell this product, please contact Enforcement Investigator Rachel Royston at [email protected] or (503) 947-7093".
Structured Settlement Factoring Connection to Scott Kohn
BuySell Annuity is one of the Scott Kohn entities that solicits structured settlement annuitants to sell their structures. Of note is that FIP, LLC ("presumably Future Income Payments" LLC and a Henderson Nevada address is listed at the bottom of the web page. Notable in the display is "Not available in Arkansas, California, Colorado, Connecticut, Indiana, Iowa, Maine, Massachusetts, Minnesota, Mississippi, New York, North Carolina, Pennsylvania, Vermont, Washington and Wisconsin
The BuySell Annuity website (FIP LLC) also promotes structured settlement derivatives to investors using the scam label Secondary Market Annuity. What BuySell Annuty labels a secondary market annuity is not an annuity. BuySell Annuity also falsely states that the seller is the original owner of the annuity. That is an out and out lie. In a structured settlement factoring transaction the structured settlement payment rights move not the annuity, which remains with its original owner, the qualified assignment company in most cases.
Tremendous Regulatory Gap
While regulators are apparently doing something about pension abusers like FIP, LLC, how about some parallel legislative and regulatory support to combat structured settlement factoring abusers in a more uniform manner across the United States?
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