by Structured Settlement Watchdog
Privacy is Not Something You Can Count On If You Invest in Structured Settlement Payment Rights
Despite recent advertising to the contrary, buying someone else's structured settlement payment rights is not always a private transaction. Selling structured settlement payment rights requires a petition filed with a Court. The name of the Buyer's Assignee is often part of the Court record for anyone to see.The originating factored company assigns the rights to Payments by Court Order to its Assignee or Assignees. Those names appear in the structured settlement transfer order. Even if it is a private transaction, matters outside of the investor's control could make it very public.
Buying Structured Settlement Payment Rights is Buying Into an Unregulated Morass
While licensed insurance agents, stock brokers and financial advisers and insurers are subject to laws to protect clients, the structured settlement factoring industry has been allowed to evade regulation of sales practices for its entire existence. This impacts investors when the deals that were "heavily vetted" end up being litigated for one reason or another and it ends up coming at a heavy cost to investors. At best they have to incur legal fees to protect their investments which will drive down the effective return on those investments and may even turn a winning investment into a losing one. If you proceed, proceed with caution and with your eyes wide open.
The Downside is "Cray Cray"
The Okebiyi case (Ongoing)
Take the crazy pending in Kings County New York right now, where a judge denied a structured settlement tranfer petition in April 2015, but then WITHDREW and amended the order in November 2015 stopping all payments including the legitimate transfer Order approved by a different judge in 2014. Download 519239_2019_Dennis_Deiasi_et_al_v_Michael_Okebiyi_et_al_EXHIBIT_S__33
The investors in the 2014 deal had nothing to do with the 2015 deal, but the factoring company Freedom Financial Solutions was represented by Paris & Chaikin, a New York law firm whose paralegal was indicted in September 2015, the paralegal having been alleged to have forged more than 100 structured settlement transfer orders (and subsequently convicted). It gave Judge Silber pause. The investors have been in limbo for almost 5 years! The sellers, the Okebiyis will not give up the payments that the investors paid them for. Now the names of two retired couples are in open Court records. Probably not what the investors signed up for. See Dennis Deiasi, Ann Marie Diasi, Brian Greig and Patricia Greig, Plaintiffs v Michael Okebiyi and Shirmine Okebiyi, Defendants Supreme County State of New York County of Kings Index Number 519239/2019.
The Wall case
Wall v. Altium Grp., LLC, CIVIL ACTION NO. 16-1044 (W.D. Pa. Jul. 12, 2019). The Walls, who ended up losing all their investment, spent money on their own attorney fees and then had to pay the attorney fees of the people they sued, because they lost. All the information about their case is online. The Walls, retirees from Pittsburgh might have thought they were buying a safe, secure sleepy retirement investment when they did business with Altium Group of New Jersey.
Quotes from Judge Kearney's Memorandum Decision that will haunt investors ...
"Individuals purchasing complicated financial investments through investment companies may be aware of their need to carefully examine the governing agreements. But they may overlook language as to attorney's fees incurred in disputes about these agreements. These agreements may require a party unsuccessful in challenging the agreement to pay the reasonable attorney's fees and costs for the other party".
"The Walls signed a complex commercial Master Agreement through which they agreed to pay reasonable attorneys fees incurred by Altium should litigation follow. After extensive litigation, the Walls lost their arguments. They are contractually obligated to pay the reasonable amount of fees and costs. They raise limited objections to Altium's detailed invoices. After careful analysis, we find the Walls are correct on some objections but not others. In the accompanying Order, we enter Judgment in favor of Altium and against the Walls for the reasonable fees and costs of $92,163.23 incurred under the Master Agreement".
Then you have investors who bought a piece of what turned out to be the Access funding mess, or the Advance Funding Ponzi scheme in which injury and lottery victim sellers were scammed into buying into the scheme and lost all their money. In the Bronx New York venued Alcantara case, SMA Hub, an intermediary in the tertiary market was identified although its investors were not.
Structured settlement factoring transactions that originate with factoring companies like JG Wentworth are securitized and sold to institutions. Certain other factoring companies who shill to private investors or other companies that use fly by night LLCs with names like food items such as Dos Nachos (2 Nachos) or "Palantir Packaging" (to capitalize on the hype of a company due to go public), masking the names of the firms at the heart of the transaction. If some part of the transaction was messed up or the transfer was vacated a some have then it all becomes very public as investors sue to protect their interests (if they can). Efforts by an intermediary to help "shield" its investors may not work if the court does not recognize their standing. The name of the Buyer's Assignee is often part of the Court record for anyone to see.