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The Structured MSA "Metaverse" | The Rapture v Raptor Episode

by Structured Settlement Watchdog

It's the time of Rapture. Not just THE Rapture, but 41 years ago last week, the last time inflation reached current levels, Rapture, by Blondie was finishing up a two week stretch at #1 on the Billboard Hot 100.  In the Structured MSA "metaverse" there are no "Men from Mars eating cars and eating bars" but a blog from one company suggests that there is the Raptor, or Raptors, velociraptors to be precise, just like in Jurassic Park. Technically speaking however, in real life however, a Velociraptor was roughly the size of a turkey, considerably smaller than the approximately (6+1⁄2 ft) tall and 80 kg (180 lb) reptiles seen in the Jurassic Park films.

So, when a company writes in block capitals " THE BEST WAY TO SAVE ON MSAS MAY HAVE JUST BECOME THE ONLY WAY: STRUCTURES!" accompanied by the picture below, has ANYONE considered that it could be interpreted as "invasion of the turkeys"?

"Invasion of the Jurassic Turkeys"?

"Velociraptor was just a scary turkey, say scientists"

"In a study of the fossilized forearms of velociraptors found in Mongolia in 1998, paleontologist Mark Norell of the American Museum of Natural History found "quill knobs" - bumps where the feathers used for flight in modern birds are anchored to the bone with ligaments. His results were published in 1998 in the Journal Science.

"The more that we learn about these animals the more we find that there is basically no difference between birds and their closely related dinosaur ancestors like velociraptor," said Professor Norell.  The Guardian, Alok Jha, Science correspondent September 21, 2007

 

Velociraptors were " speedy thieves"

 

In 1924, Henry Fairfield Osborn, then-president of the American Museum of Natural History, named Velociraptor. He bestowed the name on this dinosaur, which is derived from the Latin words "velox" (swift) and "raptor" (robber or plunderer), as an apt description of its agility and carnivorous diet.    Source:  Velociraptor: Facts About the 'Speedy Thief' By Joseph Castro published March 18, 2016

 

Velociraptors did not hunt and packs

 

It's also worth noting that Velociraptors did not hunt in packs as the above picture suggests. Research from University of Wisconsin Oshkosh revolves around an analysis of raptor teeth that shows Velociraptors did not hunt in coordinated packs. "Raptorial dinosaurs often are shown as hunting in packs similar to wolves," said Joseph Frederickson, a vertebrate paleontologist who led the study with Michael Engel and Richard Cifell.

 

Facing Bemusement with Amusement

 

When promoting Structured MSA, the devil is in the details. You know "a picture tells a thousand words".  A Structured MSA has tremendous benefits, but a mural of "scary turkeys" known as "speedy thieves" in the scientific community, does not showcase the characteristics that I would have in mind to promote them.  How about you readers?

 

 

 

 

 

 

 

Bad Lingo for Settlement Consultants 101 | "Refactored Structured Settlements"

by Structured Settlement Watchdog

Refactored Structured Settlements is the creation by some to inartfully describe investments in transferred structured settlement payment rights from other people's structured settlements. The term is used by structured settlement consultants, settlement planners and such, when used as an alternative investment vehicle to a settling plaintiff. The purpose of this post is to set the record straight and to to keep the information highway clear.

• A structured settlement factoring transaction is defined under at IRC § 5891 (c)(3)(A) as "a transfer of structured settlement payment rights (including portions of structured settlement payments} made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration".
• There is no transfer of an annuity or insurance product.
• It is worth noting that I.R.C. § 5891(c)(1) separately defines the term structured settlement as "an arrangement which is established by suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2), or agreement for the periodic payment of compensation under any workers' compensation law excludable from the gross income of the recipient under section104(a)(1), and under which the periodic payments are of the character described in subparagraphs (A) and (B) of section 130(c)(2), and payable by a person who is a party to the suit or agreement or to the workers' compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130".

So, to boil it down:

• A structured settlement is an arrangement 
• A structured settlement annuity is a customizable insurance product used as a qualified funded asset, which is defined at §IRC 130(d) as "any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States, if—(1) such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment; (2) the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates; (3) such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
  (4) such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

 

When "Re-" precedes any word, it suggests something has been re-done, re-manufactured or even re-structured. Think of a retread tire. Someone patches up an unroadworthy balding tire, re- treads it and out it goes onto another car.  The end product is still a tire!

We're talking two different things in this case:

To sum up

• A transfer of structured settlement payment rights is not the transfer of an annuity or an insurance product or the creation of a new insurance product. There is no "re-tread" going on.
• An investment in structured settlement payment rights is not an investment in an annuity. It is an investment in a receivable.
• An investment in structured settlement payment rights is not an investment in a structured settlement.

For the benefit of consumers, let's keep the structured settlement information highway clear of inaccurate terms.

 

 

Genex Capital Corporation Issues "Recall Notices" on Certain Pre-2015 Genex Capital Receivables

by Structured Settlement Watchdog

What are the duties of a structured settlement factoring companies to their investors?

Genex Capital Corporation recently issued "recall notices" to investors in structured settlement payment rights where payments are being serviced. The notice headline is "RECALL FIRST NOTICE---ACTION REQUIRED"

""As a valued client, we believe it is our duty to continually evaluate your holdings, consider whatever external risks may be developing and make recommendations in an effort to protect your investments with us" signed Genex Capital Corporation, Per Roger Proctor President and General Counsel

One of the notices says RE: GENEX CAPITAL RECEIVABLE---GABC-SAF -LC/ Original Purchase Date 6/12/2015

________________________________________________________________________________________________

Side Bar

What is GABC?

On April 19, 2012, the Supreme Court of the State of New York, Nassau County (“Receivership Court”) entered an Order finding Executive Life Insurance Company of New York (“ELNY”) to be insolvent and approved a Restructuring Agreement in connection with the liquidation and restructuring of ELNY.  By Order of the Receivership Court, the Superintendent of Financial Services of the State of New York, as Receiver, was directed to liquidate ELNY’s business and affairs in accordance with New York Insurance Law and in substantially the manner provided in the Restructuring Agreement.  The Liquidation Date of ELNY was the closing date of the Restructuring Agreement, which occurred on August 8, 2013.

Substantially all of ELNY’s remaining assets have been transferred to Guaranty Association Benefits Company (“GABC”), then a newly created not-for-profit captive insurance company owned by the Participating Guaranty Associations that is referred to as “NEWCO” in the Restructuring Agreement.  Since the Liquidation Date, GABC has been responsible for managing such assets and making payments to contract owners, payees and beneficiaries.  Source: New York Liquidation Bureau

What about the other acronyms?

SAF is presumably Structured Asset Funding and based on the content of the notice, LC stands for Loan Care, a company that is involved with payment servicing.

Receivables v Annuity

It is worth noting that in this "recall notice", Genex Capital refers to the investment as a receivable not an annuity. On the other hand, since late 2013, Genex Capital has operated a website called Assured Annuity which it describes on that brand's website as its "retail arm" It has been my long-standing position that what is being sold are not annuities but factored structured settlement payment rights.

In January 2022, in litigation pending in Arizona, Proctor issued a declaration in which he eloquently described what investors who chose payment servicing (instead of direct assignment), were buying were "subsets" of structured settlement payment rights. In my opinion, consistent with my long term documented beliefs, it's the perfect way to describe them as opposed to the inaccurate "annuity". 

To wit "Each of the Defaulting Investors in this litigation chose payment servicing over taking a direct assignment to the payments. As such they voluntarily elected to take the lesser subset of rights associated with the Receivables with all of the corresponding benefits and restrictions associated therewith rather than choosing to become the direct designated payee in the respective court orders. By this election the Defaulting Investors avoided having to, among other things, indemnify the Annuity Issuers and Annuity Owners".

[from 1/3/2022 Decl. of Roger Proctor in Response to Seeley Defendants' Motion for Partial Summary Judgment (at #56) IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

GENEX CAPITAL CORPORATION, a Delaware corporation; Plaintiff, vs. SEELEY CAPITAL MANAGEMENT, INC., a Massachusetts corporation; et al., Defendants. AND RELATED COUNTERCLAIM; RICHARD L. KEEFER and VICKI L. KEEFER, husband and wife; et al., Plaintiffs,vs. GENEX CAPITAL CORPORATION, a Delaware corporation; et al., Defendants.  Case Nos: CV2020-004958 CV2020-013796 (Consolidated) at #1]

_________________________________________________________________________________________________

In a recent letter to a structured settlement investor:

"Our records indicate that you purchased a Genex Capital Corporation ("Genex") Receivable paid by___________. You selected the servicing option with Security Title Agency ("STA"). At the time you purchased this investment, STA was the premier payment servicing company. Genex prepaid the fees for STA's services for the duration of the term of your Receivable.

Recently, STA has undergone a number of ownership changes. In 2018 STA was sold to LoanCare, LLC and then on December 1, 2021 LoanCare resold STA's payment servicing portfolio to Sutton Park Capital, LLC ("SuttonPark"), all without Genex's prior knowledge or consent. Sutton Park is a reputable company with whom we have a good relationship, but the series of sale transactions and poor state of STA historical recordkeeping have resulted in significant and chronic payment delays being experienced by our valued clients. In short,  Genex no longer has confidence in the servicing arrangement originally attached to your investment. Many of you have contacted us over the past several months expressing concern and seeking our assistance in obtaining your missing payments. The situation is not acceptable.

To keep our clients out of harm's way, we considered three potential options:

1. Commence litigation against STA and Loancare seeking damages for breach of contract on your behalf (Downside-potential aggravated payment delays and costly protracted litigation)
2. Transfer the more than 478 active STA accounts to another Genex approved servicing company(Downside-potential further payment disruption while Genex obtains amended court orders naming a replacement servicing entity.)
3. Offer our value (sic) clients a one-time Genex subsidized Recall/Repurchase option to permanently eliminate this unforeseen risk and provide liquidity to you.

After consideration, we decided to proceed with Option 3 as it is the most effective, efficient, and certain option that maximizes your protection. Upon repurchase, Genex will be taking these Receivables out of circulation so as to safeguard the continued integrity of Genex's Receivable products.

This offer is open for acceptance until April 30, 2022. If you choose to not accept this offer, Genex shall no longer oversee the timely remittance 'of your payments as we have no contractual relationship with SuttonPark. However, reassignment restrictions shall continue to be in effect to protect the integrity of Genex's Receivable products.

WHETHER YOU CHOOSE TO ACCEPT THIS OFFER OR NOT, YOU MUST CONTACT US IMMEDIATELY TO UPDATE YOUR CONTACT INFORMATION ANO CONFIRM THAT YOU ARE STILL THE RECIPIENT OF THIS RECEIVABLE. FAILURE TO PROVIDED (sic) UPDATED INFORMATION BY APRIL 30, 2022, SHALL BE CONSIDERED AN EVENT OF DEFAULT RESULTING IN THE AUTOMATIC SUSPENSION OF YOUR RECEIVABLE PAYMENTS UNTIL SUCH TIME AS YOU RESPOND TO THIS REQUIREMENT.

For further information (about their recall notice), Genex Capital asks to direct your inquires "to Kevin Lowe or Linda Holland at 1- 800-348-3098. Please note, Genex Receivables purchased after 2015 were never serviced by STA and, therefore, remain unaffected by this unfortunate situation".

In an excerpt of another similar letter, the last sentence said:

“Please note, Genex Receivables purchased using Allied Servicing Corporation or Goldstar Trust Company remain unaffected by this unfortunate situation”.  That letter had a response date in May 2022.

Commentary

1. What is the significance of the Genex Capital use of the term "duty" as set forth in Proctor's letter?  What type of duty is it?  Is it a fiduciary duty, a moral obligation? Again they say, "As a valued client, we believe it is our duty to continually evaluate your holdings, consider whatever external risks may be developing and make recommendations in an effort to protect your investments with us?"
2. In view of Proctor's 1/3/2022 declaration and these letters, together with NAIC Statutory Issue Paper No. 160, the definitions of annuity under state insurance departments and the granular differences between annuities and receivables, and a fundamental fallacy that any structured settlement factoring company is actually buying a structured settlement annuity, can Genex Capital, or any other company justify the use of the term annuity to describe receivables they make available to investors. Roger Proctor deserves partial credit by his recent actions, for helping to reverse an inaccurate definition of what investors are buying when they buy factored structured settlement payment rights, or subsets of structured settlement payment rights. Thank you.
3. Whether or not it makes sense to proceed depends on an individual's facts and circumstances. If you don't need liquidity and are satisfied with the security of your cash flow, is there a need to sell, if you must sell at a discount?   As is clear from the Genex Recall Notice, there is a cost to selling. The investor must give up some of their contracted-for gains. One of the excerpts reviewed involving a $120,000 receivable from an Allstate structured settlement due in October 2024.  While the investor, in one example, would end up with a 43% gain on their original investment, the investor would have to forego about $16,389.13 ($120,000.00- $103,610.87).  The cost of doing business.
4. With respect to #3, Allstate Life Insurance Company spun off its non-New York life insurance and annuity business (including structured settlements to Everlake Life Insurnace Company. On March 4, 2022, AM Best affirmed the A+ (Superior) Financial Strength Rating and the aa- (Superior) Long-Term Issuer Credit Rating for Everlake Life insurance Company and Everlake Assurance Company. in A.M. Best opinion, these ratings reflect Everlake’s balance sheet strength, which was assessed as “very strong”, as well as its “strong operating performance, favorable business profile and appropriate enterprise risk management.”
5. Pay attention to the deadline in the letter regardless of whether you are going sell. 

Recalls.gov is a resource for recall notices from 6 government agencies

Last updated April 14, 2022

CrowFly | It's a Bird USPTO! It's a Fintech Buffalo Business First! No, It's a "Financial Institution" Google

by Structured Settlement Watchdog

I guess crows don't like to be pigeonholed. Can a company that has no licenses be considered a financial institution?  CrowFly LLC advertises on Google My Business that it is a Financial Institution.  Is CrowFly LLC a financial institution?  

CrowFly financial institution?  Retrieved 4-9-2022

According to the Code of Federal Regulations 31 CFR 1010.100(t), a financial institution defined as:

Each agent, agency, branch, or office within the United States of any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the capacities listed below:

(1) A bank (except bank credit card systems);

(2) A broker or dealer in securities;

(3) A money services business as defined in paragraph (ff) of this section

(4) A telegraph company;

(5)

(i) Casino. A casino or gambling casino that: Is duly licensed or authorized to do business as such in the United States, whether under the laws of a State or of a Territory or Insular Possession of the United States, or under the Indian Gaming Regulatory Act or other Federal, State, or tribal law or arrangement affecting Indian lands (including, without limitation, a casino operating on the assumption or under the view that no such authorization is required for casino operation on Indian lands); and has gross annual gaming revenue in excess of $1 million. The term includes the principal headquarters and every domestic branch or place of business of the casino.

(ii) For purposes of this paragraph (t)(5), “gross annual gaming revenue” means the gross gaming revenue received by a casino, during either the previous business year or the current business year of the casino. A casino or gambling casino which is a casino for purposes of this chapter solely because its gross annual gaming revenue exceeds $1,000,000 during its current business year, shall not be considered a casino for purposes of this chapter prior to the time in its current business year that its gross annual gaming revenue exceeds $1,000,000.

(iii) Any reference in this chapter, other than in this paragraph (t)(5) and in paragraph (t)(6) of this section, to a casino shall also include a reference to a card club, unless the provision in question contains specific language varying its application to card clubs or excluding card clubs from its application;

(6)

(i) Card club. A card club, gaming club, card room, gaming room, or similar gaming establishment that is duly licensed or authorized to do business as such in the United States, whether under the laws of a State, of a Territory or Insular Possession of the United States, or of a political subdivision of any of the foregoing, or under the Indian Gaming Regulatory Act or other Federal, State, or tribal law or arrangement affecting Indian lands (including, without limitation, an establishment operating on the assumption or under the view that no such authorization is required for operation on Indian lands for an establishment of such type), and that has gross annual gaming revenue in excess of $1,000,000. The term includes the principal headquarters and every domestic branch or place of business of the establishment. The term “casino,” as used in this chapter shall include a reference to “card club” to the extent provided in paragraph (t)(5)(iii) of this section.

(ii) For purposes of this paragraph (t)(6), “gross annual gaming revenue” means the gross revenue derived from or generated by customer gaming activity (whether in the form of per-game or per-table fees, however computed, rentals, or otherwise) and received by an establishment, during either the establishment's previous business year or its current business year. A card club that is a financial institution for purposes of this chapter solely because its gross annual revenue exceeds $1,000,000 during its current business year, shall not be considered a financial institution for purposes of this chapter prior to the time in its current business year when its gross annual revenue exceeds $1,000,000;

(7) A person subject to supervision by any state or Federal bank supervisory authority;

(8) A futures commission merchant;

(9) An introducing broker in commodities; or

(10) A mutual fund.

(ff) Money services business. A person wherever located doing business, whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.

(1) Dealer in foreign exchange. A person that accepts the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more countries in exchange for the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more other countries in an amount greater than $1,000 for any other person on any day in one or more transactions, whether or not for same-day delivery.

(2) Check casher -

(i) In general. A person that accepts checks (as defined in the Uniform Commercial Code), or monetary instruments (as defined at § 1010.100(dd)(1)(ii), (iii), (iv), and (v)) in return for currency or a combination of currency and other monetary instruments or other instruments, in an amount greater than $1,000 for any person on any day in one or more transactions.

(ii) Facts and circumstances; Limitations. Whether a person is a check casher as described in this section is a matter of facts and circumstances. The term “check casher” shall not include:

(A) A person that sells prepaid access in exchange for a check (as defined in the Uniform Commercial Code), monetary instrument or other instrument;

(B) A person that solely accepts monetary instruments as payment for goods or services other than check cashing services;

(C) A person that engages in check cashing for the verified maker of the check who is a customer otherwise buying goods and services;

(D) A person that redeems its own checks; or

(E) A person that only holds a customer's check as collateral for repayment by the customer of a loan.

(3) Issuer or seller of traveler's checks or money orders. A person that

(i) Issues traveler's checks or money orders that are sold in an amount greater than $1,000 to any person on any day in one or more transactions; or

(ii) Sells traveler's checks or money orders in an amount greater than $1,000 to any person on any day in one or more transactions.

(4) Provider of prepaid access -

(i) In general. A provider of prepaid access is the participant within a prepaid program that agrees to serve as the principal conduit for access to information from its fellow program participants. The participants in each prepaid access program must determine a single participant within the prepaid program to serve as the provider of prepaid access.

(ii) Considerations for provider determination. In the absence of registration as the provider of prepaid access for a prepaid program by one of the participants in a prepaid access program, the provider of prepaid access is the person with principal oversight and control over the prepaid program. Which person exercises “principal oversight and control” is a matter of facts and circumstances. Activities that indicate “principal oversight and control” include:

(A) Organizing the prepaid program;

(B) Setting the terms and conditions of the prepaid program and determining that the terms have not been exceeded;

(C) Determining the other businesses that will participate in the prepaid program, which may include the issuing bank, the payment processor, or the distributor;

(D) Controlling or directing the appropriate party to initiate, freeze, or terminate prepaid access; and

(E) Engaging in activity that demonstrates oversight and control of the prepaid program.

(iii) Prepaid program. A prepaid program is an arrangement under which one or more persons acting together provide(s) prepaid access. However, an arrangement is not a prepaid program if:

(A) It provides closed loop prepaid access to funds not to exceed $2,000 maximum value that can be associated with a prepaid access device or vehicle on any day;

(B) It provides prepaid access solely to funds provided by a Federal, State, local, Territory and Insular Possession, or Tribal government agency;

(C) It provides prepaid access solely to funds from pre-tax flexible spending arrangements for health care and dependent care expenses, or from Health Reimbursement Arrangements (as defined in 26 U.S.C. 105(b) and 125) for health care expenses; or

(D)

(1) It provides prepaid access solely to:

(i) Employment benefits, incentives, wages or salaries; or

(ii) Funds not to exceed $1,000 maximum value and from which no more than $1,000 maximum value can be initially or subsequently loaded, used, or withdrawn on any day through a device or vehicle; and

(2) It does not permit:

(i) Funds or value to be transmitted internationally;

(ii) Transfers between or among users of prepaid access within a prepaid program; or

(iii) Loading additional funds or the value of funds from non-depository sources.

(5) Money transmitter -

(i) In general.

(A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or

(B) Any other person engaged in the transfer of funds.

(ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only:

(A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services;

(B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller;

(C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution;

(D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation;

(E) Provides prepaid access; or

(F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

(6) U.S. Postal Service. The United States Postal Service, except with respect to the sale of postage or philatelic products.

(7) Seller of prepaid access. Any person that receives funds or the value of funds in exchange for an initial loading or subsequent loading of prepaid access if that person:

(i) Sells prepaid access offered under a prepaid program that can be used before verification of customer identification under § 1022.210(d)(1)(iv); or

(ii) Sells prepaid access (including closed loop prepaid access) to funds that exceed $10,000 to any person during any one day, and has not implemented policies and procedures reasonably adapted to prevent such a sale.

(8) Limitation. For the purposes of this section, the term “money services business” shall not include:

(i) A bank or foreign bank;

(ii) A person registered with, and functionally regulated or examined by, the SEC or the CFTC, or a foreign financial agency that engages in financial activities that, if conducted in the United States, would require the foreign financial agency to be registered with the SEC or CFTC; or

(iii) A natural person who engages in an activity identified in paragraphs (ff)(1) through (ff)(5) of this section on an infrequent basis and not for gain or profit.

 

 

 

 

Not so "Miner" Errors About Structured Settlements in Buffalo Business First CrowFly Promotion

by Structured Settlement Watchdog

It took Buffalo Business First two sentences to completely flub structured settlements in profiling CrowFly, a local firm, co-founded by its current CEO, Nita Bhatia, and Milestone Consulting's John Bair and Tony Barnes. 

Buffalo Business First reporter Dan Miner says what CrowFly does is " a web-based marketplace for structured settlements"

However, the CrowFly website home page states "We make it easy to buy & sell structured settlement payments. That's something completely different. CrowFly indicates it has no insurance license or securities license and does not provide such advice. 

Buffalo Business First was clearly "at sixes and sevens" in describing structured settlements as "a monetary award, such as winning a personal injury lawsuit and the money is paid over time"

_________________________________________________________________

Pro Tip  A settlement is not an award. It's a negotiated compromise. That's why it's called a settlement.

 

_________________________________________________________________

Then Buffalo Business First doubles down on wrong by asserting without authority that "the awardee can sell those settlements to get all the cash at once, but much less than the entire settlement is worth".

First, let's deal the Lingo"

• Meaning of awardee in English "a person who is given money, a prize, etc. by an official organization"- Cambridge Dictionary.
• According to law Insider, citing 6 sources an "official organization means any organization recognized by the university".
• A settlement is not an award, case closed.

Now that we've clarified that, there's the matter of:

Can someone sell their settlement?   Nope. Think about it, "their settlement" typically includes a provision for payment of attorney fees and a pay off of outstanding liens. How is someone going to sell the money paid to their attorney? It's just silly. If they are receiving structured settlement payments, they can sell their structured settlement payment rights.  Such transactions must be approved by a court in compliance with state structured settlement protection laws.

How do you "sell that settlement to get all the cash at once" while at the same time " BUT much less than the entire settlement is worth" ?

Part of my stated pro bono mission as Structured Settlement Watchdog is to help root out and correct inaccuracy in social media and other online media related to structured settlements, wherever it exists. 

 

 

 

 

 

 

NJ Personal Injury Attorney's "Negative Aspects of Structured Settlements" Falls Short

by Structured Settlement Watchdog

A Fort Lee New Jersey personal injury law firm asks, " What Are the Negative Aspects of a Structured Settlement?" Its response to its own question falls a bit short. 

Here is my response to the Fort Lee personal injury firm's 3 purported claims

What Are the Negative Aspects of a Structured Settlement?

1. These settlements may have some exceptions of the tax rule, meaning that punitive damages and some attorney’s fees may be taxed.

Response

Punitive damages are not a negative aspect of structured settlements.  Punitive damages are not a negative aspect of settlements if you're the plaintiff. Attorney fees are not a negative aspect of structured settlements. Attorney fees are payable whether or not there is a structured settlement.

A structured settlement is defined under the Internal Revenue Code. Where payments represent damages on account of physical injury or physical sickness, wrongful death, wrongful incarceration, claims for workers compensation the plaintiff/claimant receives payments income tax free.  [ See IRC Sections 104(a)(1), 104(a)(2), 130, 139F] Read about the Tax Benefits of Structured Settlements

Claims for taxable damages such as punitive damages, interest on judgment and so on, may benefit from a non-qualified structured settlement. These are tax deferred periodic payment solutions.  Where there are taxable damages such as punitive damages or judgment interest, attorney fees on certain taxable damages, a plaintiff attorney ought to engage a settlement planner and consider employing a two-pronged approach, with a Plaintiff Recovery Trust as well as a tax deferred non qualified structured settlement to help mitigate current taxes and maximize the client's net recovery. Read about Plaintiff Recovery Trust

Attorneys may benefit from structured attorney fees or attorney fee deferred compensation. An attorney may defer well in excess of the limits of qualified pension plans. In fact, there are many options for attorneys.  Read about Attorney Fee Deferrals and Structured Attorney Fees and Non-Qualified Assignments

2. Unknown changes in the economy could lead to a sudden, drastic change in payments and a plaintiff may receive less.

Response

If you invest in stocks, you can lose value in a minute. People go into structured settlements for safety and income certainty. Insurers are highly regulated, must maintain reserves that are annually audited in each state in which they do business. 5 companies that currently write structured settlement annuities have been in business since the 19th Century.  Modern index linked structured settlement annuities offer options that provide upside potential with downside protection.

The 2012 Executive Life of New York liquidation was an instance where there was a reduction in benefits. It was far from sudden. It was well known in the mid 1980s that ELNY priced very aggressively and that its qualified assignment company had at one time 40% of its assets in junk bonds. I've studied and written about it extensively.  See for example, Lessons to be Learned from Eric Yerkes v Cessna and Yerkes v Anapol Weiss

3. Insurance companies are sometimes reluctant to disclose how much they would have to pay to buy an annuity to cover the settlement, which means that an attorney can’t make a complete assessment of the benefits of the offer.

Response

All the more reason for plaintiff lawyers to work with a settlement planner. It's so easy to find out the cost. This talking point is nearly 40-year-old relic of a time of the "urban legend" that knowledge of the cost of a structured settlement would trigger a taxable event.  For a comprehensive write up, please see my February 5, 2010 blog Disclosure of Structured Annuity Cost by Defendant Is Not Constructive Receipt - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

There is more to settlement planning than a structured settlement. A plaintiff attorney should be engaging a settlement planner to (at the very least) price out the cost of the plaintiff's needs.  Advocate from a position of knowledge. Avoid reacting from a position of the unknown. What is Settlement Planning?

 

Annuity.org Revives Tired "Bobby Bonilla Day" for the Ides of March. Why?

by Structured Settlement Watchdog

Annuity.org could not wait until July 1st to revive the tired "Bobby Bonilla Day" story.   So, they revived it for the Ides of March. Go

Madoff died in April 2021 at FMC Butner

figure! Business must be slow.

Annuity.org's 35-year-old research challenged staff writer Catherine Byerly, who was only 12 years old in July 1999, gossiped about Bonilla "getting into shouting matches with team manager Bobby Valentine wasn’t exactly helping team moral (sic). (There were even allegations, later denied, that Bonilla threatened to fight Valentine after a heated exchange in the dugout)", snipped Byerly.

Many other athletes, with more storied careers than Bobby Bonilla, have taken deferred payments.

Ken Griffey, Jr.  $112M contract deferred $3.59MM/year from 2009-2024. Despite being retired and not playing for the Reds since 2008, Hall of Fame slugger Ken Griffey Jr. is the 6th highest-paid players on the Cincinnati Reds.  Multiple Sources.

Manny Ramirez  $160M contract deferred $1.968MM/year from  2011-2026

Matt Holliday     $120M contract deferred $1.5MM/year from 2020-2029

Bruce Sutter      $4.8MM contract deferred $1.12MM/year from 1991-2022

Source: CBS News, Chris Bengel July 1, 2021 Bobby Bonilla Day: 10 other athletes who are getting big checks from deferred payments

Performance comparisons

Griffey Jr.  630 HR,  .284 BA,  1836 RBI,  184 SB, .538 SLG

Ramirez     535 HR   .312 BA,  1831 RBI   38 SB,   .585 SLG

Holliday     316 HR   .299 BA    1220 RBI   108 SB   .510 SLG

Bonilla       287 HR   .287 BA    1173  RBI   48 SB     .472 SLG

Bonilla career stats performed well below his peers with deferred payments. 

But for the fact the Mets and others were scammed by the late crooked Bernie Madoff, there would be no Bobby Bonilla Day.  Instead of "celebrating" Bonilla, consider Bonilla's deferred compensation peers as a better role model for annuities. Madoff was a crook who destroyed lives and died a miserable death at FMC Butner. 

You would think that Annuity.org would have the class to not keep proliferating the Bonilla story with the title "Commonalities of Bernie Madoff, Baseball & Annuities". According to the New York Department of Financial Services, "an annuity is a contract issued by an insurance company.  An annuity is a contract between a purchaser and an insurance company in which the purchaser agrees to make a lump sum payment or series of payments in return for regular disbursements, beginning either immediately (within 12 months) or at some future date". If the deferred payments to Bonilla were simply a contract signed by Bonilla and the Mets, and the Mets were self-insuring, relying on the assumptions of investments made with Bernard L. Madoff, it doesn't fall within that definition.

Instead of celebrating "Bobby Bo", celebrate Vincent Edward "Bo" Jackson (born November 30, 1962, the same year as Bobby Bo), who is an American former professional baseball and NFL player. Bo Jackson is the only professional athlete in history to be named an All-Star in both baseball and football, having been named to the Pro Bowl (1990) and the American League MLB All-Star team  (1989). Jackson's elite achievements in multiple sports have given him the reputation as one of the greatest athletes of all time. At the end of his career and before a career ending injury,  Jackson earned a reporting bonus of $100,000 and an additional $416,000 in deferred payments. By failing his physical, Jackson stood to collect a reported $4 million on a disability insurance settlement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Split Funded Structured Settlements Require Careful Documentation

by John Darer CLU ChFC MSSC CeFT RSP CLTC

In Patterson v. McMickle, 191 S.W. 3d 819 (C.A. Tex 2006), the administrator of the Estate of Daniel Myracle sued the attorney and his structured settlement broker Gary McMickle for negligence, breach of fiduciary duty, fraud, and violations of the Texas Deceptive Trade Practices Act. The administrator alleged that the attorney and broker obtained two annuities for Daniel Myracle, the second of which did not have a guaranteed refund of the premium and was to be deferred for 15 years. However, Daniel died a year after the settlement and 14 years before the second annuity was to begin monthly payments. Because the annuity did not have a guaranteed return of premium, the estate was not entitled to any payment or refund. In granting McMickle’s motion for summary judgment, the trial court found that McMickle owed no duty to Sharnae Myracle, Daniel’s mother, who had been displaced as Daniel’s personal representative before the settlement. McMickle argued that, at most, he owed duties to Daniel’s attorney and personal representative. The Court of Appeals affirmed. Although the Court of Appeals did not have to decide whether McMickle owed a duty to Daniel’s attorney and personal representative, it seems clear that such a direct relationship would be sufficient to survive a summary judgment motion, according to Philadelphia attorney Stephen Harris who wrote the commentary on his law firm's blog.

Split Funding of Structured Settlements is Not Uncommon

My apologies in advance for triggering nightmares of cramming for your last high school geometry test. Euclid of Alexandria, from

Euclid of Alexandria (Circa 300 BC), father of Geometry

his famous book Elements, Book I, Common Notion 5 says, “The whole is greater than the part.” In geometry, the Segment Addition Postulate states that given 2 points A and C, a third point B lies on the line segment AC if and only if the distances between the points satisfy the equation AB + BC equals AC.  How does this "classic" phyllo wrapped postulate relate to structured settlements and "McMickle's pickle"?

Depending on the state, there are at least 10 structured settlement annuity issuers, and they all have their pricing sweet spots. Read more about structured settlement quotes.  Some insurers are better on short term durations from 5 to 15 years and others may be better on long term cash flows. Some have competitive rated ages and others don't.   Daily rates may or may not be available.

Sometimes, by combining two or more segments from different structured settlement annuity issuers the payee will receive more than they would with a single company. In Euclidian terms AB+ BC equals AC plus!

In the "McMickle pickle", it's clear that a 15-year certain annuity was combined with a life annuity to create a "15 years certain and life" cash flow.  Instead of 15 plus 0, the combination of annuities could have had a longer certain period (15 and 5, 15 and 10, 15 and 15 for example). The longer combined certain period would have reduced the amount of income to the decedent. Without seeing the entire file, my best assumption would be that McMickle's intention was to maximize the income to the child from the settlement money while the child was living. McMickle 

Carefully Document the File When Split Funding Structured Settlements

When using split funding in any combination, whether a mixed duration split, annuity company split, or a product split, it's a good idea to have a simple summary of the documentation delivered to the client.

In 2015, I received a call from a concerned Allstate annuitant whose benefits had been suddenly "cut off". The annuity was the annuitant's share from a divorce settlement and naturally they were concerned. I did not write the policy.  Unfortunately, the outsourced customer service rep service at a Phillipine call center was neither knowledgeable nor helpful and set the annuitant into a state of panic. Fortunately, the annuitant contacted me, someone with enough experience to know the history and peculiarity of Allstate's policies, which split the certain and life contingent portions into two separate policies.  What happened was the periodic certain policy stopped and the switch to the life contingent policy did not click in as it was supposed to.  It took some calling to find someone at the home office of Allstate who could take remedial action but eventually the situation was rectified. It would have been helpful however and have saved the annuitant a bit of agita, if the original broker had placed a summary in with the delivery of the policy.

In Coral Springs You Can "Dream Big" (for Pennies on the Dollar) on a Black Square

by Structured Settlement Watchdog

Today we go round the world in colored squares. Red Square is in Moscow and there you have St. Basil's Cathedral. Green Square is fast becoming Sydney Australia's most exciting cosmopolitan playground. Yellow Square is a hostel in Rome.  Brown Square is a small green space in downtown Newburyport, Massachusetts. Blue Square is a hotel in Amsterdam

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St Basil's Red Square

 

 

Blue Square Amsterdam            Brown Square Newburyport, MA

 

 

And you can dream big, by betting on black.  But oh dear, in Coral Springs Florida that only means "pennies on the dollar". Black Square Financial is a Coral Springs Florida company that features a great example of predatory advertising. Black Square Financial buys structured settlement payment rights at a discount and the most they can give you is pennies on the dollar, so you only get a fraction of what your asset is worth. 

 

Black Square Financial falsely represents to structured settlement annuitants that "you can take control of your policy".  That's a Prime Fib, with a loaded "faked potato" and "frazzled bunyans".  How can you control something that you don't own?

Screenshot of Black Square Financial home page 4-4-2022

To give a window to my serious concerns, read my May 10, 2020 blog, wherein I reported about an absolutely horrible Texas case that Jarrod Freeborn, one of the co-founders of Black Square Financial was involved with. It has to be one of the worst cases of predation I've reported about.  See FL Company Preyed on Mentally Disabled Man's Structure and Caused Alleged Loss of Government Benefits 

To say the least, from the Court record, Jarrod Freeborn's role in communicating with M.H., a mentally disabled man, with the severity of afflictions described therein and partially reproduced below, was absolutely shocking. Read the blog, Read the court decision and then ask yourself, what kind of judgment did/does Freeborn have to proceed with communicating with a person afflicted in such a way?  If you were Freeborn and you had this information, would you proceed or back off, like another factoring company did?

M.H., was described in the court record as (among other things)

• "M.H. is a forty-year-old man suffering from chronic schizophrenia and mental retardation. CR 948-49. These conditions are permanent, and M.H. has suffered from this condition his entire life. CR 948, 951 
• As a result of his condition, M.H.’s cognitive abilities are extremely limited:
  
  - he cannot live independently, and requires assistance with the most basic elements of daily life, such as bathing, changing his clothes and handling money;
  
  - his inability to work and take care of himself is the product of M.H.’s mental abilities, which are akin to those of a small child;
  
  among other problems, M.H. has an extremely poor memory, he thinks and acts slowly and even when given the same information time and time again, he is unable to comprehend and remember it;
  
  - at most, M.H. can follow simple, one-step instructions, but shows little understanding of his surroundings or what he is doing;
  
  - he is unable to remember even simple tasks that had multiple steps, being fired from a job at a car wash just days after being hired because he could not remember that he was supposed to do;
  
  - M.H. has little ability to read, and no ability to retain or understand what he has read;"

"Freeborn was described by Fairlawn as being an “independent sales contractor” responsible for arranging for the sale of M.H.’s annuity; it was Freeborn who communicated with M.H. on Fairlawn’s behalf. CR 1047. However, the question of who Freeborn worked for exactly is not entirely clear: according to Freeborn, it was not Fairlawn that provided him with the “leads” about people who might have an annuity to sell, but rather Rising Capital, another of Ferrante’s entities. CR 1262 (26:5-28:13. In fact, the comings and goings of the various companies Ferrante and other defendants formed, used, rearranged and then dissolved confused even Freeborn, who worked for them". Compare CR 1260 (19:14-21:5 (“Rising Capital as the company involved in the M.H. deal) with CR 1263 1(31:1-31 (Freeborn unfamiliar with the name of Fairlawn; he excused his unfamiliarity by saying “We used a lot of different entities”).

On May 7, 2020, the Appeals Court Affirmed in favor of M.H.  Read Memorandum Opinion here Download 2020-09-19-00306-cv Fairlawn Assets LLC John Ferrante Jarrod Freeborn v Booker

Photo credit: Red Square photo, by Julius Silver - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=46508155. Others Wikipedia. 

Disclaimer: The use of any marks herein does not suggest any sponsorship, affiliation or relationship with owners of such marks. Any marks that may appear in commentary are in the context of fair use to discuss newsworthy topics presented herein.

It's Just Not an Annuity | Buying and Selling Structured Settlement Payments as an Investment

by Structured Settlement Watchdog

Here are fast facts and statements to set you straight on some of the dubious claims made by individuals and companies to investors in structured settlement payment rights.

Seven Facts

1. Buying structured settlement annuity payments is not the same as buying an annuity policy
   
2. Selling structured settlement annuity payments is not the same as selling an annuity policy
3. Buying structured settlement payment rights is not buying an annuity policy
4. Selling structured settlement payment rights is not selling an annuity policy
5. Buying a subset of assigned structured settlement payments rights is not buying an annuity policy
6. Selling a subset of structured settlement payment rights is not selling an annuity policy
7. A structured settlement transfer is not a transfer of an annuity policy

Just because they say it doesn't make it so

• Something the insurance agent calls a "secondary market annuity", if it originated from someone else's structured settlement or lottery winnings is not an annuity policy
• Something the financial adviser calls a "secondary market annuity", if it originated from someone else's structured settlement or lottery winnings is not an annuity policy
• Something the settlement planner calls a "secondary market annuity", if it originated from someone else's structured settlement or lottery winnings, is not an annuity policy
• What somebody who gives a lot of money to be a partner of your trial lawyer association calls a "secondary market annuity" or " SMIA", if it originated from someone else's structured settlement or lottery winnings, is not an annuity policy
• What someone at your country club calls a secondary market annuity is not an annuity if it originated from someone else's structured settlement or lottery winnings.
• If your accountant tells you to buy what they call a secondary market annuity, be forewarned that it's not an annuity policy
• An annuity is not a transaction
• Selling structured settlement payments is not restructuring your settlement. The settlement agreement does not change.

Verify Insurance Coverage

If you decide to buy structured settlement payment rights, you should confirm the existence of errors & omissions insurance that expressly includes factored structured settlement investments as a covered product. Be sure to get evidence from the policy form. It is possible that the settlement planner or financial adviser will try to claim that their advice on the specific product is covered under their policy, pointing to annuities as a covered product. Since investments in structured settlement payment rights are not investments in annuities there may in fact be no insurance coverage at all.

Even where they are covered products, errors & omissions policies generally do not cover insolvencies.  

Don't count on state insolvency schemes to provide a safety net either as 34/50 states at time of this post's publication, expressly exclude such investments with 2 states having such exclusions under consideration. The National Association of Insurance Commissioners is aggressively encouraging its members to adopt the 2017 revisions to the Life & Health Guaranty Associations Model Act (#520), which provides for a retroactive exclusion. In plain words, you're not safe if you acquired one of the investments prior to your state's adoption of the revisions.

Many E&O policies require a minimum A.M. Best rating.  A credit rating agency assesses the creditworthiness of an obligor as an entity or with respect to specific securities or money market instruments. A credit rating agency may apply to the SEC for registration as a nationally recognized statistical rating organization ("NRSRO"). While a securitization from JG Wentworth may be rated, random factored structured settlement payments are unlikely to have such a rating.