by Structured Settlement Watchdog
There's a reason why most states do not allow lawyers to lend clients money. Those that do have clear rules and consequences. In 2005, New York's 8th Judicial District Attorney Grievance committee, operating under the authority of the Appelate Division, charged two Buffalo lawyers with "advancing financial assistance to a client in a matter not related to the the expenses of litigation" One of the lawyers was suspended for 6 months, the other censured.
What level of responsibility does Patrick Daniel, a Houston personal injury lawyer and member of the Louisiana and Texas bars have, who advises his/her client to accept a structured settlement on one day, while on another day, 16 months later, armed with the personal knowledge gained from 5 years of dealing with the clients, directly or indirectly enters into a contract with a client to buy their structured settlement payment rights at a grotesque discount rate of 22% (that was misrepresented to the clients and the Court as a lower rate), or advises the client to do same? It is one of the most egregious attempts to gouge a structured settlement annuitant that I have ever seen in recent times. Nowhere near a competitive discount rate.
Did lawyer Patrick Daniel, or lawyer Rachel Martin-Deckelmann, owe a fiduciary duty to Bobby Bourque and Peggy Bourque?
D & A Litigation Support LLC, a Puerto Rico Company, connected to Patrick Daniel, has same Houston Phone Number as the Daniel & Associates LLC law firm That Represented Bourque's in Underlying Personal Injury Case Download ECF - U.S Bourque v CNH America Plaintiff lawyers D. Patrick Daniel and R Deckelmann
- Daniel & Assciates LLC law firm Houston TX. Telephone Number on Website is 713-589-3589 FAX 713-481-9884;
- An exact match for the telephone number and fax number listed at the bottom of the December 2016 letter Sent from D&A Litigation Support LLC to Prudential regarding the Bourque structured settlement transfer Download D & A Litigation Support Letter to Prudential 12-13-2016(see bottom of letter). As noted in my previous post on this subject the phone listed in #2 in the middle of the letter, with a 939 area code was not in service when I called it Friday.
Document irregularities [emphasis added]
A. The structured settlement transfer agreement submitted has two power of attorneys, one limited (which is typical) and one that might gently be described as overly broad.
"Seller grants to Buyer an Irrevocable Power of Attorney with full powers of substitution to do all acts and things that Seller has under the Settlement Agreement", including, without limitation, the power to endorse checks, drafts or other instruments, the power to alert, edit and change payment instructions and/or beneficiary directions and other acts which, in the sole discretion of the Buyer as Sellers' Attorney-In-Fact, is necessary or expedient to obtain the benefit-of-the-bargain contemplated by this Agreement" The power of attorney is coupled with an interest and shall survive Seller's death or disability".
Benefit of the Bargain, or Benefit of the Jargon?
The question is the benefit of whose bargain. Charging your client in excess of $1 million profit spread (directly or indirectly) assuming a reasonable cost of money, is no bargain for the Seller. Not even close.
B. Right of First Refusal
The structured settlement transfer agreement that D&A Litigation Support, LLC had Bobby Bourque and Peggy Bourque sign, required a right of first refusal. The right of first refusal essentially gave D&A Litigation Support, LLC the right to a penalty if Bobby Bourque and Peggy Bourque got a better deal and didn't give the Puerto Rico company the right to match.
"In consideration of the Transfer Agreement's execution, Seller hereby grants and conveys to Buyer a ten (10)day right of first refusal beginning upon Buyer receiving actual written notification of an offer to purchase or otherwise acquire any Periodic Payments, as follows: If Seller receives an oral or written offer to sell, assign, borrow against, pledge or otherwise encumber an(y) Periodic Payments and Seller desires to enter into a transaction involving the safe(sic), assignment, borrowing against, pledging, or other encumbrances thereof, Seller agrees to immediately notify Buyer in writing (a) that Seller has received an offer; and (b) describing in detail all terms of said offer along with providing any writings evidencing such. Seller agrees to direct any other purchasers to directly pay over to Buyer 10% of the amount of Periodic Payments transferred by Seller to a person in violation of breach of this paragraph 10."
C. Definition of Periodic Payments
"Periodic Payments" Are Broadly Defined in the Transfer Agreement and Can Be Construed as all Structured Settlement payments NOT Just the Prudential Payments from the Settlement in Bourque v CNH America, LLC et al. Western District of Louisiana 6:10-cv-013247
Whereas Seller is entitled to structured settlement payments (collectively referred to as the "Periodic Payments") under the Settlement Agreement* and pursuant to annuity certificate SGQ000039178"
D. The Bourque structured settlement transfer looks and smells worse than a rotting gator carcass on the bayou on a hot humid summer day.
In my opinion a complete inquest needs to be done on the Independent Professional Advice provided to the Bourques. A document notarized by Harvey Louisiana attorney Jennifer Theriot on December 16, 2016 states the following:
"Regarding the financial implications, I understand the discount rate is a rate (that) would significantly reduce the actual amount I receive for the future payments in relation to waiting or discounting them at the rate the IRS issues for valuing annuities. I understand that this the time value of money in that money today is worth more than money tomorrow due to various factordss including inflation, cost of living adjustments, costs of capital, risk factors regarding the uncertainty of future payments and the cost of doing business and profit rate for the company purchasing the future payments. I have discussed other options such as loan options available to me, and believe this transfer is in my best interest"
The rate used in the December 2016 Court submission was a fraud on the Court, containing a misrepresentation of the applicable federal rate as 0.68%, when it was in fact 1.8% in December 2016. See Historical IRS Discount Rate since 1989
Then the explanation, that was clearly prepared for the Bourques to sign, begs the question about what the Bourques were told about the effective discount rate. The explanation taken together with the 6% and 13.2% rates represented as the equivalent charged rate of interest (effective discount rate) in the December 2016 and June 2017 submissions, are a complete fraud on the Court (three independent sources confirm the actual effective discount rate was in excess of 22%) and begs the question of whether the Bourque's were (1) defrauded and (2) brings into question the level of due diligence provided by the IPA, an as yet unnamed individual. If the Court knew the rate was actually 22%, surely that wouldn't have got by even the most cursory of reviews.
Any investigation would have to look into whether or not the IPA
- knew how to calculate a discount rate using TValue software or equivalent
- Did any sort of comparison of market rates and if not, why the heck not?
- Did any sort of review of the transfer documents?
- has a relationship with Daniel & Associates law firm?
- in having "discussed other options" with the Bourques, as was represented to the Court, why weren't other purchasers that could have offered discount rates in the 6-7.5% range and provided the Bourque's with well over $1 million instead of $396,000 considered? This is a huge problem for the IPA in my opinion.
- How much money was paid to the IPA for the work they performed, and by whom? What was the Bourque's understanding?
Read about Independent Professional Advice and what it should entail.
E. November 14, 2017 Court document references a September 25, 2017 Proceeding Which Is Not in The Court Record
Calls to Jennifer Theriot the Harvey Louisiana lawyer who clearly represented the buyer, for comment, and to identify the individual who did the mandatory IPA have gone unanswered. A call and email to Rachel Martin-Deckelmann (who along with Patrick Daniel, represented the Bourques in the personal injury case) who it remains unclear represents the Seller or the Buyer, where she appears on a November 14, 2017 document submitted to the Court in Acadia, have also gone unanswered.
F. An Indiana Annuity FMO has been shopping the case around as recently as last week, according to our sources in the secondary and tertiary market.
This case presents highlights some scary "sheet" for investors in structured settlement derivatives. That this is/was being funneled through an Annuity FMO is some scary "sheet". No better than those selling derivatives using the scam label " Secondary Market Annuities"
G. Judicial education about Structured Settlement Factoring is Clearly Needed in Louisiana to Prevent Financial Disaster
On this showing alone it is clear that the Acadia court did not sufficiently review the submissions closely enough to catch glaring errors and the fraud, twice on the same case. Fortunately the vigilance by the secondary/tertiary market caught this one when the Buyer tried to offload its bounty in the tertiary market.