by Structured Settlement Watchdog
Move over Buffalo wings, Buffalo business has some new "hot" sauce. Combining structured settlement brokerage, settlement planning and structured settlement factoring originations.
Buffalo settlement planning firm and structured settlement brokerage, Milestone Consulting, is also an origination firm for structured settlement transfers, according to correspondence from its CEO to one of our sources last month. Milestone Consulting's CEO John Bair claimed in an October 2018 email from his milestoneseventh.com email address (that I have obtained from its recipient), that Milestone is "the only primary market, as well as origination firm for secondary market transfers that I’m aware of". Read Structured Settlement Agency Claims "Only Primary Market, As Well As Origination Firm for Secondary Market Transfers".
Bair has been teasing the story since March 2018 in a series of blog posts on the Legal Examiner, Milestone edition.
As I observed in June 2018, it is remarkable that all of the images on enuities.com feature people of color. Calling the phone number on that website on June 15, 2018, brought a return call from Milestone Consulting, which upon information and belief, is appointed with most structured settlement annuity carriers and is well connected with the trial lawyer community. The agency has also advertised in the past and apparently continues to advertise about using structured settlement derivatives with current plaintiffs or their attorneys. The company representative I spoke with said that the platform would actually be launching in the Fall of 2018. Back in June the word was " it is just gathering names and information about structured settlement annuitants". According to that company representative, it had retained Earl Nesbitt, of Nesbitt Vassar McCown LLP, a Dallas lawyer who is well connected counsel to the National Association of Settlement Purchasers.
In June 2017, Seventh Amendment Holdings, LLC submitted an application to the United States Patent and Trademark Office (USPTO) in an attempt to trademark "Structured Settlement Exchange". The application was rejected by the USPTO for descriptiveness (i.e. cannot trademark descriptive) . Seventh Amendment Holdings, LLC, the holding company for Milestone Consulting, appealed. On April 3, 2018 the descriptiveness refusal was maintained and made final by the USPTO. Yet on August 7, 2018 the trademark was registered after an amendment acceptable to the USPTO was allowed. The first use in commerce as stated in USPTO records was June 13, 2018 and the same telephone number used for Milestone Consulting, 716-883-1833, was used in the trademark application.
Structured settlement factoring is not illegal. Structured settlement secondary market origination of factored structured settlement payment rights is not illegal
The idea of an structured settlement exchange is not a bad one. However, despite what I'm sure were good intentions, common ownership and operation with an individual or entity that owns a structured settlement general agency, an entity that directly, or indirectly, provides pre-settlement loans and also engages in the marketing of structured settlement derivatives to investors in concurrent fashion, raises an eyebrow, in my opinion, which is exacerbated when those interrelationships are not publicly disclosed on its website.
Milestone is not alone in that regard. Few members of the structured settlement primary market openly discuss their involvement in structured settlement factoring, presumably due to fear about the optics.
That needs to end. The structured settlement secondary and tertiary markets are in a period of transition. In the last 5 years there has been an unprecedented amount of unconscionable business conduct in the structured settlement secondary market, by both factoring companies and their agents as well as members of the bar, that has cost annuitants millions of dollars.
Milestone Consulting is not a member of the National Structured Settlements Trade Association and thus not subject to its bylaws, which addressed the subject in 2006 and reiterated in early 2012. In June 2012 the NSSTA Board then issued a letter concerning recycled payment rights or structured settlement derivatives (which are not annuities but labeled such by some marketers), followed by an April 5, 2014 memorandum to members by Hogan Lovells US LLP, counsel to NSSTA about the marketing and distribution of structured settlement payment rights. Patrick Hindert, a blogger, who is now with Independent Life, wrote in 2012, "It is common knowledge within the industry that multiple structured settlement annuity providers (NSSTA members), or their affiliates, are active purchasers of structured settlement payment rights after those payment rights have been securitized by structured settlement factoring companies. NSSTA, however, has made no apparent attempt to investigate and/or punish members who promote structured settlement factoring as purchasers thereby helping to generate demand".
What Should a Structured Settlement Exchange Look Like?
- Independently operated and managed, not tied to any structured settlement general agency, by common ownership, affiliation or otherwise.
- The exchange and its participants should be regulated.
- The marketplace must be transparent When you buy health insurance you can see exactly which companies are on the exchange up-front, without being in a password protected area.
When I asked John Bair on June 27, 2018 if it was possible that we can speak constructively, in good faith , on broad terms about concepts (e.g. purpose, transparency, ownership, regulation) Bair stated he would only speak with me if I signed an NDA. The NDA proffered included a 3 year non compete and a $100,000 liquidation of damages clause. I respectfully declined given the significant information I had already pieced together.
Will Milestone Consulting's activity embolden other primary market settlement consultants to come out of the closet with their structured settlement factoring business?
What are the differences between what Milestone is doing in structured settlement exchange ,and other purported platforms for buyers to compete, such as Genex Capital's SSQ and Settlement Exchange, LLC?
- Milestone is based in the United States out of a real address as opposed to a Regus mail drop like Genex Capital's SSQ offering, or a tiny UPS store mailbox in Dover Delaware, like Genex Capital Corporation.
- Milestone has the potential to eat Genex Capital's lunch, judging by how often it updates its primary webite. Genex Capital's SSQ has information that is almost a decade old on the website, has been used as a brandjacking weapon against competitors and promoted two of the Mt. Airy Faker David Springer's multiple aliases.
- Vancouver based Genex Capital 's situation is a bit less complicated, as it does not place structured settlement annuities or do settlement planning or injury victims like Milestone. In my opinion, Milestone has to address how it intends to resolve the obvious conflicts of interest.