by Structured Settlement Watchdog®
The Michael Lafontant case is a prime example of questionable best interest test enforcement rendering a structured settlement protection act meaningless. Multiple judges are making incredibly bad decisions with devastating consequences. Who is at fault? Are the judges simply incompetent on the subject matter, or are they making decisions based on inadequate or even fraudulent submissions by cash now pushers? One way or another we are dealing with a flawed system, in my opinion.
On Friday March 13, 2015, Washington Square Financial d/b/a Imperial Structured Settlements and Andrew Levine were slammed with new allegations in the "forum shop churn and burn" lawsuit brought by Michael Lafontant, a naïve then 19 year old New Yorker who was allegedly victimized by the Defendants. The amended complaint was filed in the United States District Court for the Southern District of New York. [Case No. 14-CIV-9895]
The amended complaint summarizes the claim as follows:
"Defendants’ egregious scheme to defraud Plaintiff out of millions of dollars in periodic payments due to Plaintiff under a structured settlement annuity. Defendants preyed upon and took advantage of Plaintiff, made material and fraudulent misrepresentations to Plaintiff, and caused Plaintiff to lose all of the tax free benefits and protections that were built into the settlement agreement reached in connection with the traumatic wrongful death of Plaintiff’s mother. Within a span of less than six months, Defendants managed to prepare and file three knowingly falsified and misleading petitions with a Sumter County, Florida court and one transaction with a Broward County, Florida court that were not in Plaintiff's best interest, resulting in suspect structured settlement payment rights transfers in excess of $4,000,000 to Defendants or their agents. Never once did Plaintiff appear in court in Sumter County or Broward County and, upon information and belief, Defendants knew that they could get the aforesaid petitions granted in Florida even though Plaintiff resided in and was domiciled in New York, was solicited in New York, and even had a transfer petition filed and pending in New York while Defendants orchestrated his “relocation” to Florida
Defendants also urged Plaintiff not to have his New York lawyer review the Florida petition because "it was the same" as the pending New York petition. Defendants knew this claim was completely untrue, as they injected into the Florida petition an arbitration provision that was not in the New York petition, and which violated New York law. Defendants also put a new discount rate into the Florida petition that was much higher than contained within the New York petition, and included more of Plaintiff’s structured settlement payments in the Florida deal. None of the aforesaid Florida petitions met the “best interest” standard outlined in Fla. Stat. § 626.99296 (the “Florida Structured Settlement Protection Act”) nor did they comply with the spirit or letter of New York law, Florida law or Internal Revenue Code § 5891"
The amended complaint illustrates a detailed forum shopping timeline and the efforts of Defendants to create the alleged fiction. For example. there is allegation that the then Imperial representative and co-Defendant, Andrew Levine, who was not an attorney, allegedly told the branch manager at RBC that he was acting as Lafontant's attorney while setting up a bank account with $100. (Amended Complaint para 33)
To induce Plaintiff into leaving New York, Defendant Levine took at least the
following additional steps according to the Amended Complaint (Para 160):
i. Levine sent money to Plaintiff in the form of stored value cards;
ii. Levine sent Plaintiff a plane ticket so that Plaintiff could travel to Florida;
iii. Levine met Plaintiff at the airport;
iv. Levine arranged for Plaintiff’s hotel in Florida;
v. Levine arranged for Plaintiff to obtain a lease in Florida;
vi. Levine arranged for Plaintiff to open a bank account and provided the money to
fund that account;
vii. Levine arranged for Plaintiff to get Florida identification, going with Plaintiff into
the appropriate state office and acting as his representative with state officials,
including doing all the talking for Plaintiff when state officials asked Plaintiff
viii. Levine provided Plaintiff with marijuana and took him out “partying” in Florida
At all times, Plaintiff was led to believe he was doing the same deal he had been
pursuing in New York for months. In fact, as noted herein, the alleged Florida agreements had the
same look and feel as the New York agreements, with one notable exception that was concealed
from Plaintiff: the broad arbitration provisions.
Plaintiff is seeking the court for a Declaration finding that the 2012 Florida Transactions were procured by fraud, that Plaintiff received none of the benefits from these transactions, and ordering that the 2012 Florida Transactions be set aside, with the structured settlement payments taken via the 2012 Florida Transactions restored to Plaintiff, and further directing Defendant Imperial to take all steps to rescind the transactions and restore Plaintiff’s benefits, with interest, and to pay appropriate penalties, and attorney’s fees.
Is Best Interest Test Enforcement a Joke in Certain Jurisdictions and Why?
The Lafontant case and another lawsuit filed recently in another state, which will be the subject of an upcoming post, raise serious questions about the how effective the best interest requirement in both Federal and state laws is being followed. This has implications to annuitants that seek liquidity as well as investors in any tainted deals. People are getting hurt financially and questions need to be asked about the process.
As a woman named Martha once remarked "nowhere to run, nowhere to hide" from this. There's more to come.
Related Lafontant v Imperial Structured Settlements | New Yorker's Alleged Forum Shopping Nightmare December 22, 2014