by Structured Settlement Watchdog
Two investors have sensationally sued Genex Capital Corporation and Genex Strategies, Inc. in a lawsuit that presents a stunning example of the transactional
risks of investing in factored structured settlement payment streams that are wildly different from real annuities. The investor plaintiffs are a husband and wife from Oceanside California in their late 60s.
The 7 count Complaint in the matter of RICHARD L. KEEFER and VICKI L. KEEFER, husband and wife, Plaintiffs, vs. GENEX CAPITAL CORPORATION, a Delaware corporation; GENEX STRATEGIES, INC., a Canadian corporation; HAPPY STATE BANK & TRUST COMPANY, d/b/a/ GOLDSTAR TRUST COMPANY, a Texas corporation; SECURITY TITLE AGENCY, INC., an Arizona corporation. filed October 29, 2020 in Maricopa County Superior Court CV2020-013796, alleges:
- Breach of Contract v Genex Capital Corporation
- Breach of Implied Covenant of Good Faith and Fair Dealing vs Genex Capital Corporation
- Unjust Enrichment vs Genex Capital Corporation
- Conversion vs Genex Capital Corporation
- Aiding and Abetting v Genex Strategies, Inc.
- Civil Conspiracy vs Genex Strategies, Inc.
- Declaratory Judgment v Genex Capital Corporation
According to the Complaint against Genex et al, filed by Plaintiffs on October 29, 2020 in Maricopa County Superior Court in Phoenix, Arizona:
- The Keefers purchased structured settlement payments from Genex Capital in a series of 10 transactions beginning on September 12, 2012 and ending on January 21, 2013. The factored payment streams were acquired through both their IRAs and in their individual capacities. Each purchase was evidenced by an Investor Assignment Agreement signed by Genex's principal and CEO Roger Proctor, a Canadian businessman from Vancouver.
- Each Investor Assignment Agreement is signed an dated by Genex and contains language confirming the Investor has paid good and valuable consideration, “the receipt and sufficiency of which is hereby irrevocably acknowledged,” has been paid by the Investor in exchange for the assignment of the structured settlement payment rights.
- Each Investor Assignment Agreement provides for the assignment of “all of [Genex’s] right and interest it may have” in specific structured settlement payments.
- The Keefers subsequently assigned certain payments to New England Annuity Associates which then reassigned the payment rights to new investors. paperwork was submitted to the servicing agent, Security Title and until February 2020 Security Title honored the reassignments to the new investors without delay or objection.
- On or about February 3, 2020, Genex improperly redirects the Keefer Assigned Payments to Genex Strategies, Inc., and erroneously alleges the Keefers are in default of a " Receivables Purchase Agreement" for assigning two sets of payment streams to New England Annuity Associates.
- Plaintiffs allege upon information and belief, that Roger Proctor, in his capacity as Genex's CEO, had supervised, managed and participated in Genex's direction to Security Title to remit payments that Genex had previously assigned to the Investors (including the Keefers), directly to Genex Strategies, Inc, rather than the investors who had already purchased the payments from Genex.
- On or after February 24, 2020, Genex sent a notice of default to Richard Keefer alleging that his re-assignment of Perdun payments to NEAA violated the terms of a Receivables Purchase Agreement allegedly entered into between Keefer and No fully executed copy of the RPA was provided. The default letter purported to give Keefer 20 days to cure the alleged default by reversing the assignment.
- Certain of the Keefer Assigned Payments which the Keefers never reassigned to NEAA, or any third party Investor, cease. At the time of the Complaint $32,456.48 has not been received. Genex never provided notice of default relating to the Non Assigned Keefer Payment that ceased.
- Upon information and belief, Genex subsequently sold and reassigned the structured settlement payment rights which belong to and are owned by the Keefers, including but not limited to the Perdun Payments, Duran Payments, and Non-Assigned Keefer Payments (hereinafter, the “Converted Payments”) to third-party Investors.
- Genex has not turned over or paid any portion of the purchase price or proceeds it received from the new Investors for the Converted Payments to the Keefers
- Genex did not notify the Keefers that Genex planned to convert their structured settlement future payment rights, treat those payment rights as its own, re-sell them to new third-party Investors, and keep any or all of the proceeds of its sale of the Converted Payments.
- Upon information and belief, Genex effectuated the purported sale and reassignment of the Converted Payments by notifying the annuity issuers named in each of the state court approval orders to re-direct and remit the Converted Payments provided for each court order to Goldstar, rather than to Security Title.
- Although Genex may have signed documents purporting to transfer, sell, and re-assign the Converted Payments to new third-party Investors, and then accepted payment from those third-party Investors, Genex did so without right, title, or interest in the Converted Payments.
- Genex did not have the authority, right, or permission to sell and re-assign the Converted Payments which belong to and are owned by the Keefers.
- Genex did not and does not have the authority, right, or permission to keep all or any of the proceeds of the sale of the Converted Payments.
Who Were the Other Investors Whose Bought From Genex, the Payments that the Keefers Have Alleged Were Converted by Genex
One wonders how many investors bought "Assured Annuities" from Genex Capital since March 2020 and how many of them were reassigned from payments that are in dispute? Given the very serious allegations against Genex, line 95 of the complaint alleges "Although Genex may have signed documents purporting to transfer, sell, and re-assign the Converted Payments to new third-party Investors, and then accepted payment from those third-party Investors, Genex did so without right, title, or interest in the Converted Payments", if you have purchased investments from Genex Capital, between then and now, perhaps it would be wise to closely examine the transactions, particularly the original court orders. Look for payments to original annuitant surnames Perdun. Duran, Dacus, McAdory, Tolentino and Bender.
Did Genex Confiscate Any Other Investors' Payments?
I included a small but highly relevant (in my opinion) excerpt of a 2020 version of the Genex Capital RPA (which bears the notation "Version date February 18, 2020"), in my July 30, 2020 Genex Capital 2020 Receivables Purchase Agreement | Think You're Buying An Annuity? Think Again.
The Version date of February 18, 2020 is notable in that it is 15 days AFTER the February 3, 2020 date where the Keefer Complaint alleges "Genex improperly redirects the Keefer Assigned Payments to Genex Strategies, Inc., and erroneously alleges the Keefers are in default of a 'Receivables Purchase Agreement' for assigning two sets of payment streams to New England Annuity Associates and the aforementioned Keefer Assigned payments were stopped to the Keefers.
Then and now, in my opinion, yield starved buyers contemplating buying structured settlement payment rights as investments in their retirement plans should definitely pause before investing and see what they're getting into. Settlement planners should be guided accordingly before recommending these alternative non annuity investments to their clients. If you or your client have already bought a factored structured settlement payment stream via Genex Capital, your heirs could unwittingly lose their inheritance by reselling the inherited payment rights at the whim of Genex Capital CEO Roger Proctor if he chooses to "unreasonably withhold" approval.
Who is Genex Capital? Who is Genex Strategies, Inc.?
Genex Capital Corporation is in the business of purchasing (originating) structured settlement payment rights in the structured settlement secondary market. Genex then reassigns the future structured settlement payment rights to investors in the structured settlement secondary and tertiary markets. Structured settlement buyers commonly use payments servicing companies such as Security Title to facilitate payment administration. Upon information and belief, Genex operates a number of lead generation websites such as StructuredSettlementQuotes.com, QuoteMeaprice.com and and also markets factored structured settlement payment streams since November 2013 through Assured Annuity, on which website great pains are taken to justify the use of the term annuity, even though in a 2017 Delaware court case Greenwald v Caballero Goehringer, the Court decided that what was being sold to fund a medical malpractice settlement was not an annuity, but a Genex Capital Receivables Purchase Agreement, from an annuitant in a California case having nothing to do with the case being adjudicated in Delaware.
At various times Genex Capital has been referred to as a division of Genex Strategies and Genex Strategies, Inc., has been, and is at the time of posting, listed as an alternate business name of Genex Capital on its Better Business Bureau listing.
Genex Strategies, Inc, is the registrant of the trademark Genex Capital according to the United States Patent and Trademark Office. Proctor notably sponsors an annual skinny dipping contest for the Wreck Beach Preservation Society in Vancouver, donating C$5 per tush in support of the nudist beach.