by Structured Settlement Watchdog®r®
A decade ago JG Wentworth held what it labeled a Structured Settlement Thought Leadership Conference, the goal of which was to discuss education and to brainstorm ideas to grow the industry. Since then the secondary market has patronized SEOs and marketing networks like Annuity.org who do a massive disservice to consumers and the industry and to consumers by dispensing inaccurate information.
Annuity.org just redid its website. It uses an H1 tag We Know Annuities to make a broad unsubstantiated claim that it knows annuities But Annuity.org clearly does not know annuities or structured settlements. On the other hand We do Know Annuities and We Know Structured Settlements®. In my opinion such a claim by Annuity.org is nothing short of a scam.
Annuity.org is still plagued by former staff writer Catherine Byerly's longstanding fundamental ineptitude "Being Awarded a Structured Settlement" Of course there is no such thing. Oh yeah, it was "just modified August 12, 2018". Annuity.org has always fallen short of its goal "to provide you with comprehensive online resources for annuities and structured settlements..."
Why is the management of Annuity.org LLC so intent on continuing to publish such misleading information, even after its website do-over? CBC Settlement Funding, its exclusive beneficiary was originally started by JG Wentworth alumni. They have been and still are the primary financial beneficiary of the misleading information provided on Annuity.org. In December 2017, CBC was sold to an entity associated with Sutton Park Capital CEO Steve Pasko. Catherine Byerly and Alanna Ritchie are not dolts, but they are definitely not structured settlement professionals. They are staff writers with have no legitimate professional credentials or bona fides related to structured settlements in their resident state of Florida. They do not show up on FINRA or IAPD searches. Their shoddy research is evident in their writing. What a pity.
Byerly states that "Structured settlements are considered ideal for ensuring that an underage child’s cash settlement is preserved and spent appropriately", yet it is has come to light that participants in the structured settlement secondary market scrape court records (or pay third parties to do so) and deliberately target minors when they become an adult. One New York high school senior, a minority, was given a bus ticket to go to Virginia, a place he did not live, to consummate the structured settlement factoring deal. Cedric Martez Thomas, also from New York, was harassed from the time he was 18 years old until he was financially raped by West Palm Beach based Novation Funding, in a sour deal that was sanctioned by an Okeechobee county judge Gary Sweet in October 2015.
Former staff writer Alanna Ritchie, who has also been sucked into the "awarded a structured settlement vortex" (2016), states in the still published on the re-do as a "Pro Tip" "IRC Section 104(a)(2) that periodic payments after sickness or personal injury constitute damages that are tax-free to the injured party". That puts the cart before the horse. What IRC 104(a)(2) actually says is this:
"Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include—the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments on account of personal physical injuries or physical sickness; "
So the key takeaways from IRC 104(a)(2) are:
- it is an exclusion from gross income related to damages.
- the types of damages that qualify for the exclusion under this section are for personal physical injury or physical sickness
- the exclusion applies whether paid as a lump sum or as periodic payments
- the exclusion applies whether or not the matter is in suit.
- that punitive damages are not excluded under IRC 104(a)(2). [ Note: In a settlement where punitive damages have been alleged and an allocation is made for punitives, they may be structured using a non qualified assignment for possible tax deferral]
Annuity.org worst lie
The worst lie told by Annuity.org is that "today, federal and state laws have successfully driven most of the dishonest players from this now thriving and well-regulated industry".
The structured settlement secondary market is about as well regulated as General Half-Assed. The structured settlement secondary market is reeling from one bad story to the next. The last 5 years have seen fraud on the courts, false advertising, forgery of structured settlement transfer documents, Richart Ruddie and Ryan Blank companies banned from doing business in Maryland for 7 years, improper forum shopping, extortion. The CEO of one company is even offering a bounty to rustle up informants. More people are chasing fewer deals at lower profit margins as interest rates are driven down. Marry that to an industry segment overly salted with individual with no sense of right or wrong and you have a cocktail very dangerous for consumers. Many of those hurt are young, Black or Hispanics and other minorities. Some are induced to commit fraud by slick unregulated secondary market hucksters.
The real question is why there has been no regulation of sales practices?