by Structured Settlement Watchdog
Is it Ethical for a Financial Services Company to finance the purchase of structured settlement payment rights from a structured settlement annuitant at a substantial discount and subsequently benefit from fees derived from providing financial advisory services or stock brokerage services to the would be seller, solicited by an licensed or unlicensed representative of the originator of the deal on the very same funds?
Time to start putting two and two together and see who has invested and who is investing in heinous structured settlement factoring deals. Here is one deal where the optics don't look to great for Wells Fargo Bank.
The Terrence Taylor Case
Terrence Taylor is an African American man who suffered horrible burn injuries resulting from a space heater caught fire when he was 6 years old. Taylor's parents agreed to a substantial structured settlement from the product maufacturer as part of the resolution of that case to assure that Taylor would have income for the rest of his life. Between 2012 and 2014, Taylor had his substantial structured settlement dismantled due to (1) ineffective regulation (2) ineffective Portsmouth Virginia judges and alleged unethical sales practices by certain representatives of structured settlement factoring companies. Despite being essentially unemployable and having a young child, 11 transactions were approved in less than 2 years, without Taylor ever appearing in Court. His plight was the subject of a blistering December 2015 expose in the Washington Post.
In 2015 Taylor retained a lawyer and filed a complaint in Federal Court in Alexandria, VA in March 2015 and an amended complaint April 2015. One of the Defendants was Bexhill, LLC , whose agent was Client First Funding.
According to the amended complaint, WFB Corporate Trust was the assignee for Bexhill on one of the 11 Terrence Taylor structured settlement factoring transactions approved in less than 2 years.
The assignee in a structured settlement factoring transactions is the investor who the structured settlement payment rights are assigned to when the structured settlement factoring transaction is completed. The WFB Corporate Trust deal was the 7th Taylor transaction of 2013 alone!
But it appears from the amended complaint in the Federal case filed in Alexandria, that was dismissed, a Bexhill/Client first representative was also soliciting Wells Fargo financial advisory services to invest Terrence Taylor's discounted lump sum proceeds from the structured settlement transfer. To wit...
p 17 of Amended Complant
"The Solicitation to Sell Structured Settlement Payments by Factoring Company Representative
65. According to Terrence, Alex told him that Defendant Bexhill, and its agent, Client First were affiliated with Wells Fargo, a nationally recognized banking institution. Alex told Terrence that he could invest the money he received from doing this transfer with Wells Fargo.Alex told Terrence it would be crazy to pass up this deal.
66. Alex convinced Terrence that Wells Fargo would double his money if he did the proposed deal with Defendant Bexhill and its agent, Client First. In order to induce Terrence to do the deal with Bexhill and Client First, Alex accompanied Terrence to strip clubs and encouraged him to spend money recklessly. Alex took Terrence grocery shopping, to the movies and out to dinner at restaurants. Alex encouraged Terrence to spend even more lavish sums of money on women and gambling so that Terrence would “need” to sell even more of his structured settlement annuity payments to pay his debts, which would qualify Alex to earn additional commissions". Let that sink in for a minute.
Upon information and belief, Bexhill/Client First settled with Taylor BEFORE the Federal Taylor case was dismissed. A state court action remains pending against Structured Asset Funding and ISettlements since 2015. One wonders how many times Wells Fargo was being pimped by Client First sales representatives and what if any financial arrangement was made between the two organizations that could present a conflict of interest?
In December 2013, a cognitively impaired 29 year old African American annuitant from Florida, A.D., contacted me looking for a man named Escobar who "worked for Wells Fargo" and was distraught when he called Wells Fargo. He learned that Escobar did not work there.He felt that he was "misrepresented". It turned out Escobar worked for Client First. It turned out that Jeff Eglow, a financial advisor then with Wells Fargo, had a relationship with Client First. It was later discovered that Client First took the extraordinary step of sending out an investment letters projecting an 8% return on investment of discounted lump sums, as I reported in "Was Client First Settlement Funding Show Of 8% Investment Projection to Structured Settlement Annuitant A Permissble Inducement?" in July 2016. A sample letter appears in that post along with more of the details of the A.D story. The Client First letter features a virtual billboard for Jeffrey Lewis Eglow, a Wells Fargo advisor and another Wells Fargo advisor. hat records did Eglow and Wells Fargo keep of their relationship with Client First?
Isn't This Just Cross-Selling?
Wall Street companies have offered leveraging opportunities for investors to tap their home equity to buy investments for more than 37 years. The difference is that many of those investors have earned income and are not giving up a tax free stream of income at a substantial discount in order to invest. If an unemployable structured settlement seller sells their structured settlement payments at a 50% discount, it will take more than 14 years just to break even at 5% AFTER TAX return and more than 10 years with a 7% AFTER TAX return.
There is something morally wrong about this, in my personal opinion.
How Does a Judge Evaluating a Structured Settlement Factoring Transaction Make the Connection?
Virtually impossible, but the SEC, state securities or banking regulators can crawl up the behind of institutions and analyze the relationships for undisclosed conflicts?. What can state banking and securities regulators do to better protect citizens?