by Structured Settlement Watchdog
The Factoring Companies Came For Cedric Thomas' Structure When He Became an Adult
In October 2015, I reported how a then 21 year Long Island New York native, a New York resident who had a structured settlement with AIG's (now Corebridge's) subsidiary Variable Annuity Life Insurance Company, that was very well designed, but had the guts ripped out of it, for substantially less than market value by a settlement purchaser, forum shopped to Florida in a stunning case of predatory profiteering by the structured settlement secondary market. The profit spread was almost $1.5M based on estimates I obtained at the time.
Thomas' Structure was Due to Pay Him Lifetime Increasing Ongoing Tax Exempt Income
Not just a little income. A large amount of Income! A "job" Thomas could never be fired from, with guaranteed annual raises, that would have provided him hundreds of thousands in tax free income annually for the rest of his life.
Decision|One of The Worst Ever Under Florida's Structured Settlement Protection Act (Opinion)
Judge Gary Sweet of the 19th Judicial District in Okeechobee County approved the horrible initial deal in October 2015. Sweet, who retired a few years ago, is no doubt drawing a nice pension for all his years of service. Of course he deserves his pension. Unfortunately Cedric Thomas won't because of a judicial decision when he was 21. But a decision like this will long live in structured settlement history as one of the worst ever.
Just a year later, in 2016, Florida's structured settlement protection act was amended. Why am I raising this now? Becasue I believe that state legislatures across the country need to be aware of the horrible outcomes that result from a horrible judicial decision in a stuctured settlement transfer hearing.
The Thomas case is NOT an isolated case.
By raising the consciousness, perhaps some further thought will go into these decisions in the future and state legsilatures will not sit idly by until blistering publicity appears in the mainstream press (e.g.Maryland, Virginia, Minnesota, South Carolina) and spurs them into action. The Cedric Thomas example case is a disaster that should never have gone down the way it did and it all stems from the first deal.
Here's the reality. If at some point in the next 50 years (Thomas is only just entering his 30s now) Thomas needs to draw on tax payer funded public assistance in New York, Florida or anyowhere else, one can look back to the 2015 decision and the absence of (1) independent professional advice and (2) a close enough evaluation of the absurd deal that Sweet approved.
Please read on...
What Happened in 2021?
Fast forward to 2021. JG Wentworth submitted a Petition to Transfer Structured Settlement Payments in Suffolk County New York for what appears to be the last of his structured settlement payments, that have not been sold. Is it really the end of the structure road already?
He is now in his 30s. The latest petition was to sell $55,997.85 per month almost $672,000 annually in life contingent payments increasing at 3% compounded annually beginning in the 2070s.
If he lives that long it would likely put him in among a high tier of retirees. But if he hadn't sold other payments he'd be earning hundreds of thousands a year between now and then.
To put that in context, consider these age 65+ stats sourced from The Motley Fool:
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Median Income: The median annual income for Americans in this age group is $50,290. This represents the middle value in the dataset and provides a more accurate representation of typical retirement-age income, as averages can be skewed by a small percentage of wealthy retirees.
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Mean (Average) Income: The mean (average) annual income for the same age group is $75,020. However, it’s essential to note that this average can be influenced by outliers and may not fully represent the typical retiree’s financial situation.
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Social Security Benefits: As of January 2024, the average Social Security retirement benefit check is $1,907 per month. When multiplied by 12 months, this amounts to an average annual Social Security income of $22,884.
Cedric Thomas would have crushed those stats many times over with his structured settlement. Unlike most retirees, he wouldn't be paying income tax on the income from the structure. Perhaps Sweet took God's (played by Morgan Freeman) position in Bruce Almighty about "not being able to mess with free will".
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