by Structured Settlement Watchdog
Aggressive marketing of the opportunity to invest in other people's structured settlements surfaced during the 2008-2009 financial crisis as institutional financing was in short supply. These alternative investments in receivables were often (and in some cases still are) falsely promoted as annuities by companies and individuals with no insurance, financial advisory or securities licenses, operating in a gray area as well as (and more egregiously) by companies and individuals WITH insurance, financial advisory or investment credentials (people who should know better). More than a decade on, legal cases reveal a growing body of victims bubbling to the surface like coffins involuntarily exhumed in a flood.
I will continue to cover ongoing litigation in the public interest, while revisiting some of the false narratives and bogus advertising that led mom and pop investors and others to commit assets to what they may have been led to the mistaken belief were annuities (which they weren't).
Woodbridge Structured Funding LLC
My industry colleague Brian Loper from Birmingham Alabama, posts a solicitation and brochure, which was used by a now defunct company, Woodbridge Structured Funding LLC, as it aggressively sought financial advisors to sell the alternative investments, promising substantial commissions:
- Flyer and March 2012 letter solicitation promising substantial commissions…” (PDF) as much as $20,000 on the sale of a $50,000 annuity” “Earn 6-8% investing in: Structured Settlements…”. Are they soliciting the sale of an annuity or an investment mechanism? You decide, asks Loper.
10 years ago, 5 years before Woodbridge filed for bankruptcy and was exposed as a Ponzi scheme, with its CEO Robert Shapiro was convicted and condemned to a 25 year prison sentence, Woodbridge demonstrated a perfect circle of illogic in soliciting investors.
Woodbridge Structured Funding asserted in the brochure:
"A Structured Settlement is an annuity awarded to a plaintiff from a personal injury settlement that is paid out to the plaintiff over a period of time. The defendant often purchase an annuity through a highly rated insurance company based on an agreed structured settlement".
So from the plain reading of the words of the structured settlement factoring company that used the ad to solicit investors and financial advisors to sell to investors :
1. A structured settlement is an annuity FALSE
A structured settlement is a form of settlement or compromise of legal claims.
2. A structured settlemnent is awarded FALSE
A structured settlement is not awarded. That's why it's called a settlement.
3. A structured settlement is an annuity awarded FALSE
See #1 and #2
4. A Defendant often purchases an annuity based on an agreed structured settlement FALSE
If a structured settlement were an annuity (as Woodbridge asserted), why would a Defendant "often purchase an annuity" "based on an agreed annuity" ?
Woodbridge Duped Annuitants With "The Structured Settlement Factoring Company Solution"
" Annuity owners can sell all or part of their future periodic payments for a larger present value lump sum by working with cash flow purchasers like Woodbridge..."
The Woodbridge brochure misled structured settlement payees that they could sell all or part of their future periodic payments for a larger lump sum, while knowing that they were only paying sellers pennies on the dollar. Other structured settlement factoring companies pulled a MiniMax false equivalency scam in their advertising, but most did not go so far as to lie like Woodbridge did in the subject brochure.
Factoring Company Falsely Advertised it Offered Structured Settlement Annuities
Furthermore the would be sellers did not actually own the structured settlement annuities, just the payment rights.
Despite knowing that the structured settlement investments were in fact receivables not annuities, in the same brochure, Woodbridge falsely advertised "Woodbridge offers these annuities at a fixed rate of return to astute investors". In addition it stated Woodbridge Structured Funding LLC's experience and due diligence practices ensure the investment quality of the annuities offered for sale.
Woodbridge Were Predators of AIG Structured Settlement Annuitants During the 2008 Financial Crisis
In addition to misrepresentation directed at investor consumers and financial advisers that factored structured settlement receivables were annuities, Woodbridge grossly misrepresented that its purported "due diligence would ensure the investment quality of the annuities" (which were not annuities). None of Woodbridge's due dilience could ensure the investment quality of the receivables, given that Woodbridge did not have anything to do with the management of insurer portfolios, reserves, assets and liabilities of the insurers.
The Woodbridge brochure cited above includes a footnote to a Moodys report "Life insurers Likely to Maintain Solid Balance sheets" that appeared in the June 4, 2008 Wall Street Journal. Yet on On September 18, 2008 Woodbridge Investments opportunistically and prematurely danced on the graves of "major insurance giants like AIG" in a Press Release which stated:
"Recent financial troubles and bankruptcy scare for insurance giant AIG has created opportunity for structured settlement factoring company Woodbridge. Woodbridge claimed it was "a leading structured settlement factoring company who has seen explosive growth in the purchasing of settlements backed by major insurance giants like AIG...
"...Our customers are dealing with an inherent fear, and anxiety that naturally comes when you are expecting to receive payments for the next twenty or thirty years from companies like AIG that are linked with unprecedented real and rumored cases of bankruptcy"
The Woodbridge predators, sensing an opening, acted on Thursday September 18, 2008, days after A.M. Best downgraded AIG to an A (Excellent) on Monday September 15, 2008.
To get a greater appreciation of the scope of the Woodbridge predation, consider that on the one hand Woodbridge tried to throw structured settlement annuitants into a panic to unsettle them about the safety of insurance companies, while on the other hand Woodbridge bragged about the financial security of the same companies to get investors to buy the deals on the same assets. To wit..."Each annuity is paid directly to the investor by a US based life insurance company with credit rating that is generally rated AAA to A by major rating agencies"
So Woodbridge considered an A rating to be a financially safe company, yet preyed upon structured settlement annuitants with their pennies on the dollar solution anyway.
Ironically it was Woodbridge that filed for bankruptcy 9 years later after its Ponzi Scheme unraveled. Structured settlement annuitants receiving payments from AIG's life insurance subsidiaries, who didn't do business with Woodbridge and did not otherwise sell any of their payments to factoring companies at that time, would have received all payments contracted for when the structured settlement was established. That is the structured settlement annuitants would have received EVERY penny instead of pennies on the dollar that Woodbridge would have given them after fanning their fears.
Astute means "having or showing an ability to accurately assess situations or people and turn this to one's advantage"