by Structured Settlement Watchdog
Fraud in the structured settlement secondary market appears to continue unabated in New York and elsewhere. According to Greenwich CT lawyer Edward Stone, one of the the latest structured settlement secondary market scams seems to involve transfer companies that obtain court orders authorizing an annuitant to sell his/her periodic payments, and then the factoring company fails to pay the seller. The seller is then faced with chasing down the company or figuring out a way to go back to court and have the court order set aside. This situation is exacerbated by fly by night companies with no track record and no real business.
Not one of the 49 state structured settlement protections statutes allows a company to obtain a court order authorizing the sale of periodic payments and then fail to pay the Seller. This is fraud. Plain and simple says Stone.
Advance Funding LLC
Today my Structured Settlement Watchdog site received a contact from an annuitant, who says they "entered into an agreement with Advance Funding in 2012 and due to get 10% interest on monies. Told now they owe me nothing and my contract is not proof of the interest payments. Need advice on how to get the rest of my monies"
There was a similar deal a few years ago involving Advance Funding,about which I received a call fromanother industry colleague in New York who I referred to Stone. In that case the structured settlement transfer proceeds were $1,500,000, but the seller was only given $500,000 in cash and the $1,000,000 was purportedly "earning 10% interest". The man I spoke to was Dan Cevallos, who I later learned was a convicted felon, who I also later learned was banned for life by FINRA due to improprieties involving securities. Cevallos struck me as extremely cagey. The guy wanted an NDA from a "phantom shopper". Stone was able to get the annuitant's money back in that case.
There was another case in New York, in the Bronx where, according to our source, Cevallos' company did not pay the seller after the company had obtained a court order authorizing sale of periodic payments.
Read the January 5, 2017 affidavit of Julia Ashirova, Cevallos once common law wife and business partner in Northeastern Capital Funding LLC, a former member of the National Association of Settlement Purchasers and the alleged shenanigans she reports about a Cevallos scheme to cheat on restitution payments regarding Cevallos' 2002 felony and prison time.
Cevallos alleged scheme sucks in sellers with an attractive discount rate to beat off the competition and to get the transfer done then only part of money actually goes to the seller, the rest goes to the purported 10% fund. The $1,500,000 deal mentioned above possibly carved out the $1,000,000 amount to possible use a Reg D accredited investor defense.
An Unregulated Morass
The structured settlement secondary market is an unregulated morass. Why does a felon and a FINRA banned person get to operate in a space where they can take advantage of people who cannot afford to lose? I asked the same questions when jailed and convicted Ponzi Scheme felon Todd Dyer tried to sashay his way into operating a structured settlement income stream exchange. Thankfully Todd Dyer was jailed again for 15 years before he could be unleashed.
Prosecution and Licensing
- The Attorney General of New York and attorney generals throughout the USA, the CFPB and the FINRA and the SEC need to step in and do something. How many more vulnerable people have to be scammed before they step in?
A robust licensing standard needs to be instituted in all 50 states. A regulator MUST be able to fine, suspend and revoke.
Did You Buy a Structured Settlement Payment Stream from Deals Originated by Advance Funding and Dan Cevallos?