Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

James R. Gibson, Structured Settlement Crook Who Threatened to Kill Judge, Denied Compassionate Release

by Structured Settlement Watchdog

James R. Gibson, an evil lowlight in the history of the structured settlement industry, has been denied compassionate release from his 480 month (40 year) prison sentence that he is serving in the low security prison FCI Miami, in Miami,Florida.  BOP Register Number: 62228-004

What is James R. Gibson Doing Time For?

On September 21, 2005, the Southern District of Illinois sentenced Defendant Gibson to a term of 480 months.
On November 3, 2005, the Court ordered restitution in the amount of $83,282,767.42. A jury found Defendant guilty of conspiracy to commit mail and wire fraud in violation of 18 U.S.C. § 371; mail fraud in violation of 18 U.S.C. § 1341; wire fraud in violation of 18 U.S.C. § 1343; and conspiracy to commit money laundering in violation of 18 U.S.C. § 956(h).

James R. Gibson Self-Serving Slime Who Purloined From The Needy

Gibson was owner and president of SBU, Inc. and several other companies around St. Louis, MO. United States v. Gibson, 490 F.3d 604, 606 (7th Cir. 2007). Under the guise of a legitimate business operation, Gibson stopped buying Treasury
obligations with his clients’ settlement funds and instead spent over $16 million of his clients’money on unauthorized business transactions, high-risk investments, and real estate and luxury items for his own use. Id.

The total loss of Gibson's clients was $156,194,810.92 and many of them needed the money to support themselves and fund necessary medical treatment. Id.  Also Man who stole from orphans sentenced to jail (nbcnews.com)  September 21, 2005 and Gibson convictions upheld: Investor who stole from widows, orphans helped by judges | Madison - St. Clair Record (madisonrecord.com) August 16, 2007.

Gibson referred to as a "parasite" 'Parasite' handed 40-year sentence (chron.com)   September 22, 2005

U.S. District Judge J. Phil Gilbert labeled James R. Gibson “nothing more than a flimflam man of the first degree who used SBU as your own personal piggy bank". Man who stole from orphans sentenced to jail (nbcnews.com)  September 21, 2005

NATIONAL FOOD'S EX-OWNER IS HIT BY CIVIL SUIT (supermarketnews.com)  October 25, 1999

James R. Gibson Skipped Town With Millions of His Clients' Money

After Gibson’s attorney informed him he was under government investigation for the mismanagement of client funds, him and his wife set sail to Belize and wired over $3 million of those clients’ funds to Belize bank accounts. Id. The couple returned to the United States and went back to Belize in July 1999. Id.  Gibson was originally sentenced on April 15, 2002.

Gibson was charged in March 2001 in an eight-count indictment with conspiracy to commit mail and wire fraud (Count 1), mail fraud (Counts 2-4), wire fraud (Counts 5-6),conspiracy to commit money laundering (Count 7), and a forfeiture count (Count 8). In October of the same year, Gibson’s wife was added to and charged regarding the same counts (Doc. 30). Defendant was arrested in Belize on May 10, 2001, and subsequently returned to the United States.Gibson, 490 F.3d at 606. Gibson
pled guilty to one count of conspiracy to commit mail and wire fraud on January 8, 2002.

Pursuant to the plea agreement, the government dismissed the remaining seven counts and Gibson, who was sentenced to 262 months’ imprisonment. Id. at 606. Defendant appealed and the Seventh Circuit Court of Appeals vacated and remanded to the district court for further proceedings on February 26, 2004. Id. at 607. The Government moved to reinstate the counts of
the indictment dismissed pursuant to the plea agreement and charges were reinstated on July 14,2005. Id.

James R. Gibson Threatened to Kill a United States District Court Judge!

At this time, Gibson made a credible threat that he would have District Court Judge Murphy killed and Judge Murphy was forced to recuse himself from this matter. Id. at fn 2. Gibson fired several count-appointed counsels and proceeded pro se in front of the Court. Id.

On May 2, 2005, the Gibson was found guilty of Counts 1-7 of the superseding indictment after a 14-day jury trial. (Doc. 463, 472). On September 21, 2005, Defendant was sentenced to 480 months’ imprisonment, supervised release of three years, and ordered to pay restitution in $83,282,767.42, and a $700 special assessment. (Doc. 566). Gibson appealed and the Seventh Circuit affirmed this Court’s judgment on March 6, 2007. (Doc. 595). Gibson’s projected release date is July 7, 2035, 

Last updated February 25, 2023

 

Structured Settlement Design For Minor is WTF With Habaneros

by Structured Settlement Watchdog®

Things that make you go hmmm...

An average size structured settlement for an 8 year old was designed to pay only two lump sums, a larger lump sum at age 18 and another smaller "neither rhyme nor reason" lump sum, 35 years later,  at age 53. True story, I heard it from the annuitant's mother today.

If you are the structured settlement broker or settlement planner who slapped a structured settlement together with this plan design in 2007, please step forward and take your lumps.  Other than smoke and mirrors to make the numbers look better than they were at the time, how was this ever in the plaintiff's best interest, your client's best interest or the interest of the structured settlement industry?

Such a plan design encourages a young adult to sell their structured settlement for the figurative equivalent of a half eaten french fry composting on a landfill for 9 years, on the dollar. Such a structured settlement plan design has no place in the structured settlement industry.

My lump sum is only worth as much as THAT half eaten french fry?

 

 

 

 

Structured Settlement Anti-Assignment Provisions Focus of New JG Wentworth Class Action Lawsuit

by John Darer CLU ChFC CSSC RSP CLTC

Valerio Sanders has filed a class action complaint Feb. 11 in the St. Clair County Illinois Circuit Court against JGWPT Holdings Inc., JGWPT Holdings LLC, J.G. Wentworth LLC, Peachhi LLC, Peach Holdings Inc., Peachtree Financial Solutions LLC, Peachtree Settlement Funding LLC, Settlement Funding LLC, doing business as Peachtree Settlement Funding, and Chicago personal injury lawyers Brian Mack and the Mack Law Group PC, citing violations of the Illinois Consumer Fraud and Deceptive Business Practice Act.

According to the complaint, the JGWPT entities purchased deferred payment annuities from consumers, including plaintiff Valerio Sanders, for an amount that was discounted to present cash value, but intentionally failed to inform consumers that if their settlement contained an anti-assignment clause, no lump sum payment could be made to the consumer. The plaintiff further alleges, JGWPT entities failed to inform consumers, including the plaintiff, that anti-assignment clauses prohibited the sale of deferred payment annuities.

In 2013, an Illinois 5th District panel, sitting for the 4th District Illinois Court of Appeals, held that an Illinois state court, which had previously approved transfers requested by Cathy Brenston:

• Had a duty to enforce anti-assignment provisions in Brenston's original structured settlement documentation; and
• Had no authority under the Illinois protection act to approve the transfer petitions - even though all of the relevant parties had waived the anti-assignment provisions.

A companion case involving Peachtree and Cathy Brenston remains on appeal in the 3rd District Illinois Court of Appeals and will be argued February 27, 2014. The parties had previously stayed their appeal waiting for the Illinois Supreme Court to rule on the Brenston 4th District case.

The new class action against JGWPT et al. also sounds in forum shopping. In a subsequent transfer involving Plaintiff Sanders and the Defendants,  Defendant Brian Mack's representation that jurisdiction and venue were proper was also a fraudulent misrepresentation because the action was filed in Madison County, Illinois and the Plaintiff never lived in Madison County and the underlying action did not accrue there.

A potential whistleblower from a NASP member company told me several years ago that Illinois was a target state for cash now pusher forum shopping.  I believe that there is alot more to discover. 

If the structured settlement protection act is not complied with the IRS can levy a 40% excise tax  as set forth in IRC 5891. Forum shopping is clearly rampant in spite of the remonstrations of counsel associated with the National Association of Settlement Purchasers.  The question is how willing is the United States government going to be to kick some ass?

Who else is going to come forward?  Do the companies that are not engaging in these practices have the guts to do the right thing  and use their resources to turn the bad actors in?

Reference  Illinois Appellate decision in Settlement Funding LLC v Cathy Brenston  2013 IL App (4th) 120869

Illinois Supreme Court Tosses Brenston "Turkey" at Peachtree

by John Darer CLU ChFC CSSC RSP CLTC

On November 27, 2013, the Illinois Supreme Court denied the Petition to Review of Peachtree Settlement Funding in the Brenston case, a decision that may leave some structured settlement factoring companies and their investors with the turkey "trots".

It remains to be seen how the Brenston decision affects JGWPT which acquired Peachtree and only went public last month, as well as other stakeholders in the structured settlement secondary market. At time of posting the shares of JGWPT Holdings were up 2.96% on the day.

The decision filed August 26, 2013 in Settlement Funding, LLC (Peachtree Settlement Funding) v Cathy Brenston, 2013 IL App (4th) 120869, the subject matter of which involved THREE prior transfer orders  (June 28,2007;  March 31,2008 and April 10, 2008) approved by the Circuit Court of Sangamon County and a petition by the seller, MORE THAN TWO YEARS AFTER these the transfer orders to vacate the Orders on the basis of fraud by the purchaser and the assertion of a legal disability of incompetence,  the Illinois Appellate Court reversed a lower court decision denying the petition to vacate and ordered:

• that the lower court enter orders declaring the underlying transfers void ab initio  ("from the beginning"), overcoming opposition that Brenston's petiton was time-barred;
• that the trial court, pursuant to its inherent equitable power, conduct a hearing to restore Brenston to the economic position she held prior to the legally ineffective transfer of her annuity payments, less any funds advanced to her to avoid a windfall.

I understand that Peachtree has another case with an appeal filed in Peoria, another district of Illinois. If that decision is different than this Brenston decision that the higher court may need to get involved to resolve conflicts between the districts.

For more information read my August 29, 2013 post  Illinois Appeals Court Overturns Old Structured Settlement Transfer Orders

Image:  Dreamstime.com

Illinois Appeals Court Overturns Old Structured Settlement Transfer Orders

by John Darer CLU ChFC CSSC RSP CLTC

Can someone who has sold structured settlement payment rights get their structure back if they later regret their decisions? 

If a recent decision in the Appellate Court of Illinois, 4th District holds, the answer is changed from a "no" to a "maybe".

Do structured settlement purchasers "forum shop" in order to have petitions approved?  

The answer appears to be yes and it may have potential wide ranging implications for the structured settlement secondary market, as the Illinois Court has effectively questioned the practice and its impact on the legality of the transfer in the recent decision.

The decision filed August 26, 2013 in Settlement Funding, LLC (Peachtree Settlement Funding) v Cathy Brenston, 2013 IL App (4th) 120869, the subject matter of which involved THREE prior transfer orders  (June 28,2007;  March 31,2008 and April 10, 2008) approved by the Circuit Court of Sangamon County and a petition by the seller, MORE THAN TWO YEARS AFTER these the transfer orders to vacate the Orders on the basis of fraud by the purchaser and the assertion of a legal disability of incompetence,  the Illinois Appellate Court reversed a lower court decision denying the petition to vacate and ordered:

• that the lower court enter orders declaring the underlying transfers void ab initio  ("from the beginning"), overcoming opposition that Brenston's petiton was time-barred;
• that the trial court, pursuant to its inherent equitable power, conduct a hearing to restore Brenston to the economic position she held prior to the legally ineffective transfer of her annuity payments, less any funds advanced to her to avoid a windfall.

The court stated regarding Settlement Funding LLC (Peachtree), that:

•   it found "the actions and omissions of Settlement Funding (Peachtree) to be beyond troubling".
• "its suppression of the true facts of the underlying settlement suppressing "procured a fraud upon the trial court in order to deceive the court into finding that it had the authority to consider and rule on the transfer petitions under the (Illinois Structured Settlement Protection) Act"
•  The Settlement Funding (Peachtree) fraud "entirely frustrated the purposes of the bargained-for anti-assignment provisions in the underlying structured settlement annuity,interfered with parties contractual intentions and contavened the clear legislative intent of the Act, to protect structured settlement recipients from unscrupulous practices by factoring companies
  
• "The fraud perpetrated in this case (by Settlement Funding LLC/Peachhtree) seriously affected the integrity of the normal process of adjudication so that the judicial system could not perform the impartial task of adjudicating cases.
  

Read the entire Illinois Appellate decision in Settlement Funding LLC v Cathy Brenston  2013 IL App (4th) 120869

 What does this mean to structured settlement factoring companies?

• Will this decision spook individual investors in structured settlement payments rights in Illinois cases(and elsewhere)?
• Should investors in structured settlement payment rights exercise more scrutiny and be inquiring about what law of the case applies?  
  
• Will the Brenston case lead to a flood of petitions in Illinois (and elsewhere) to undo structured settlement factoring transactions by disgruntled sellers?  In the Brenston case the transfers occurred prior to the Peachtree combination with JG Wentworth when Peachtree was known for having some of the highest discount rates around. If so, will the transfer orders be undone?
• If transfer orders are undone, will the funders have enough money to be able to make the seller's whole?
• Will reserves need to be maintained to cover the contingency?  How will this impact securitizations and investors in securitizations of such cash flows?
• Will annuity issuers invoke indemnification and hold harmless provisions against the settlement purchasers that are typically stipulated to when payment rights are assigned if they begin to incur added legal costs?
  

What about Forum Shopping?

At Paragraph 37 of the Brenston decision the court found that "Settlement Funding (Peachtree) filed its petitions for approval of the transfer of Brenston's structured settlement payment rights in the circuit court of Sagamon County invoking the provisions of the Illinois SSPA, even though section 25 of the Act clearly states that the transferee is required to file its petition in the circuit court of the county where the action was or could have been maintained. The underlying malpractice case which gave rise to the structures in the first place, was filed in Cook County, Brenston resides in Cook County and that Settlement Funding (Peachtree) counsel maintains his law office in Cook County".

The issue of forum shopping for favorable judges to approve structured settlement transfer petitions is not a new problem. For example:

● In re Joseph Surmanek, No. CL11-237 (Va. Cir. Ct. May 18, 2011) – Court ruled that it would violate public policy to allow a factoring company to engage in forum shopping by initially filing a petition for transfer of structured settlement payment rights in North Carolina state court, and
then withdrawing that petition and filing in Virginia state court.
● In re Keshon Moore, No. CL11-1670 (Va. Cir. Ct. July 18, 2011) – “A prior application for the approval of a similar transfer of payment rights was sought in the State of New York. Said application was deemed against the transferor’s best interests and denied by the New York State Supreme Court
of Bronx County on April 12, 2011. It would be against the public policy of the Commonwealth of Virginia to allow the forum shopping that may have occurred here.

We understand that 'forum shopping" is rampant in Illinois and Florida, with Sagamon County, Illinois,  being a particularly sought out jurisdiction.

Structured Settlement Annuity and Ownership Remain Intact Through Structured Settlement Transfer

• The result of a structured settlement transfer simply means that the structured settlement payment rights (rights to receive structured settlement payments conferred in the settlement of the underlying legal case) are transferred from seller to purchaser in exchange for a lump sum of cash to be paid by the purchaser to the seller.
• The structured settlement annuity itself is not sold.
• The ownership of the structured settlement annuity stays the same. Most cases today involve qualified assignments, so this means that the ownership of the structured settlement annuity is STILL the qualified assignment company  after the transfer  of structured settlement payment rights.

 

 

 

Illinois Lawmakers Discussing 75% IncomeTax Increase

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Illinois lawmakers are set to vote on a 75% income tax increase according to a January 6, 2011 CBS Chicago news report. Without annuitants doing a thing, tax increases improve the intrinsic value of existing structured settlements, as well structured attorney fee programs and non qualified assignments. An increase in income tax also makes new structured settlements more attractive, even at times when yields are modest.  Moreover, the Federal government will eventually need to raise taxes to make a dent in the trillions of dollars in debt it has accumulated.

Helpful Financial Tool

Taxable Equivalent Yield  chart enables you to find the taxable equivalent yield of a structured settlement, or any other tax free income stream at various assumed income tax rates. The chart also allows you to calculate what the after tax yield of a taxable investment at various assumed interest rates.