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Annuity.Org Ritchie's "Cite Shite" Discombobulated Structured Settlement Purchasing Company Fraud Claims

by Structured Settlement Watchdog

The editorial standards at Annuity.org continue to slip with Alanna Ritchie caught in a case of abject "cite shite". in "Structured Settlement Sellers Sue Purchasing Companies, Claim Fraud", a post from April 17, 2015 that was just updated in September 16, 2020.

Alanna Ritchie is a staff writer for Annuity.org, which in turn is a paid shill {"lead generator") for CBC Settlement Funding and Fortune Settlement Solutions. The recently "updated" article contains:

• No updates about the Michael Lafontant and Terrence Taylor cases and in the case of Taylor, the gaffe prone Ritchie is well wide of the mark. 
• Under "cited research articles", Ritchie erroneously cites that the Taylor case was filed in the Southern District of New York, when it was filed in the Eastern District of Virginia. What would lead Ritchie to her erroneous conclusion if she actually read the title page of the original complaint, that she cites as research in April 2015, or when the post was updated in September 2020?
• Ritchie erroneously cites that Michael Lafontant was filed in the Eastern District of Virginia when it was filed in the Southern District of New York.  What would lead her to her erroneous conclusion if she actually read just the title page of the complaint, cited in her research in April 2015 or when updated in September 2020?
• Ritchie says in the updated post, "In a billion-dollar industry in which 7,000 to 9,000 pre-purchased annuities change hands annually, two sellers say they were misled by corporate buyers into transferring money that was supposed to last them a lifetime". This is structured settlement blockhead territory.  If Ritchie demonstrated that she knew what the company who pays the company the pays her actually did, she would know that annuities do not change hands when structured settlement paymen
  

  It's about as true as floating about above London using one's umbrella without losing one's bonnet
  t rights are purchased.
• In doing the September 16, 2020 update, Ritchie's failure to grasp the significance of the Taylor case, which, together with the Baltimore City Access Funding debacle, played an important role in raising national awareness of abusive business practices in the secondary market, leading to reforms of structured settlement protection acts in a number of states, including Maryland, Florida and Virginia.
• Taylor's case remains pending with little to no activity after 5 years between judge recusals and legislative privelege taken by defense counsel and, more recently, the Covid delay.  It is one of the worst cases of annuitant abuse in the United States. Yet Ritchie missed 11 transactions approved in 2 years. A separate class action lawsuit has been pending since 2017 

Ironically Annuity.org purported editorial standards appear in "Poppins" font above the "shite cites"

 

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

-Poppins Font

 

 

 

 

Is It Necessary to Go Offshore for Attorney Fee Deferrals Using Annuities?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A video produced by a settlement planner circulating on Facebook and other social media, claims that annuity based attorney fee deferral programs require  the money to go offshore. The settlement planner's claim is simply inaccurate. 

There is no absolute prerequisite for money to go offshore for attorney fee deferrals using annuities

The following insurance companies will fund structured attorney fees with domestic qualified assignment companies with no need to go offshore.

• American General Life Insurance Company   (Q and NQ)
• Berkshire Hathaway Life Insurance Company of Nebraska  (Q)
• Independent Life Insurance Company  (Q)   [offshore assignment required if not qualified assignment]
• Metropolitan Tower Life Insurance Company  (Q and NQ)
• National Indemnity Company  ( Reinsurance Q and NQ cases)
• New York Life Insurance Company  (Q)
• Pacific Life Insurance Company (Q)
• Pacific Life & Annuity Company  (Q)
• The Prudential Insurance Company of America  (Q)
• United States Life Insurance Company in the City of New York  (Q and NQ)
• USAA Life Insurance Company  (Q)

Q=  attorney fees on cases involving personal physical injury, wrongful death, or workers comp)

NQ=attorney fees on case that do not involve physical injury, wrongful death, or workers comp, or fees on certain portions of qualified cases where the

With low interest rates, some attorneys having suitable risk tolerance, have been responsive to market based attorney fee deferral programs to help build their wealth. There are domestic programs such as Jurisprudent and OptCapital, which are similar to deferred compensation programs you might see at a Fortune 500 companies for key executives.

There are other established programs that do involve Barbados or Ireland assignments. 

For the in-between there is an index linked annuity payment adjustment available through Pacific Life that is established by way of a qualified assignment, that affords some upside with downside protection. 

Different horses for different courses. For a discussion of your attorney fee deferral options please call 888-325-8640.

Different horses for different courses. A menu of attorney fee deferral options are available. Powerful financial solutions for contingency fee attorneys

 

 

 

Can a Parent Sell A Minor Child's Structured Settlement to Buy an ATV for the Minor?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

With birthdays and holidays, it's not uncommon for parents to want to do something special for their children.  But does that include selling a minor's structured settlement to buy an ATV recreational vehicle?   

So what happens if a 10 year old child appeals to the parent for something like an ATV and the parent would get it for them if they could afford it right now, can the parent and guardian reach out to a structured settlement buyer and sell the minor's structured settlement payments earmarked for college, for cash now, to buy an ATV? If they could, would the deal make financial sense?

Would a judge approve the sale of minor's structured settlement to buy an ATV for a minor?

Structured settlements are common in settlements involving minors and are preferable to blocked accounts or the court's registry. Blocked accounts and the court's registry will earn little-to-no interest from the date of the settlement until the child reaches the age of majority.  Upon reaching the age of majority, the child has unrestricted access to the entire amount of the settlement, at a time when he or she might not be financially responsible enough to make smart decisions about a substantial amount of money. 

So what happens if a 9 1/2 year old child appeals to the parent for something like an ATV and the parent would get it for them if they could afford it right now, can the parent and guardian reach out to a structured settlement buyer and sell the minor's structured settlement payments earmarked for college, for cash now, to buy an ATV? If they could, would the deal make financial sense?

Settlement Agreements and Qualified Assignments Contain a Prohibition, Unless...

If you review any settlement agreement and release or qualified assignment agreement you will see a paragraph that looks something like this:

"Acceleration, Transfer of Payment Rights. None of the Periodic Payments and no rights to or interest in any of the Periodic Payments (all of the foregoing being hereinafter collectively referred to as “Payment Rights”) can be

i.  Accelerated, deferred, increased or decreased by any recipient of any of the Periodic Payments; or

ii. Sold, assigned, pledged, hypothecated or otherwise transferred or encumbered, either directly or indirectly, unless such sale, assignment, pledge, hypothecation or other transfer or encumbrance (any such transaction being hereinafter referred to as a “Transfer”) has been approved in advance in a “Qualified Order” as defined in Section 5891(b)(2) of the Code (a “Qualified Order”) and otherwise complies with applicable state law, including without limitation any applicable state structured settlement protection statute."

Why the Restrictions?

• Tax Reasons Setting aside the part of the paragraph that deals with Section 5891, the the foundation of this language is the tax law that supports the tax exemption afforded structured settlement payees who are receiving periodic payments as damages. 
• Protection   If someone wants to sell their structured settlement payments, the transaction must be approved by a state court judge, in compliance with the settlement protection act in the state where the payee resides.  It's not a perfect system but as the Barber case shows, one cannot always rely on structured settlement factoring companies (and sometimes parents) to be trustworthy.

Does It Make Sense?

1. Unlikely to be Approved by Judge It is highly unlikely that a judge would approve the sale of minor's structured settlement payment rights for pennies on the dollar to make a discretionary purchase such as an ATV for a minor.

Special needs may be considered, but only if there are no other sources available, such as insurance. Settlements involving minors must be approved by a court and can only be changed by court order, for good cause shown, and of course the petitioning party would have to convince the judge that any change is a necessity for the minor.

2. Selling a structured settlement, or part of it, to pay for an ATV for a minor makes no financial sense

Many states have laws about what types of ATV’s are approved for what ages.  For instance, in Kentucky, any operator under the age of 12 must have a helmet, parent supervision and cannot operate an ATV that has an engine size of 70 cubic centimeters (cc).  Harry Sheen addresses the subject in a 2019 article posted on Axle Addict says "When it comes to shopping for a brand new 70cc ATV, there are a lot of different models to consider from a range of different brands. ATVs this size are generally intended for kids around the ages of 6 to 10, but I would definitely recommend that you:

• check your four-wheeler manufacturer's recommended age guide)
• check for any local and state age limits for ATV riding.

Sheen says " considering your child's age and experience on a four-wheeler, you might want to get a 50cc four wheeler or even smaller for your kid".  

An ATV for child aged 10 or under, would set you back perhaps $2,500 with a helmet and all the gear.  If you have a structure with payments earmarked for college, you wouldn't want to touch that at all. Say your child has a lump sum at age 21 or 22,  the ATV would have a net cost of at least double that to net out the $2,500 after the costs and profits of the factoring company are taken into account.

Whatever you do, do not call structured settlement buyers for advice about your minor's structured settlement

If you engage any structured settlement buyers by email, phone, text or other form of communication,  you may be speaking with someone who is both unlicensed and unqualified to give advice. Furthermore, your child's information will go into their database, leaving your child open to abuse later. Stay safe. 

According to the 2018 Annual Report of ATV-Related Deaths and Injuries, published by the U.S. Consumer Product Safety Commission in February 2020, children under 12 made up 48% of child fatalities and 52 % of the injuries involving ATVs in 2018 and 44% of the fatalities over the 37 year period from January 1, 1982 to December 31, 2018.

 

 

 

Annuity.org Partners With Company That Serves The "Chateaubriand of Total B.S."

by Structured Settlement Watchdog

In Fortune Settlement Solutions, Annuity.org has chosen a partner that serves up the " Chateaubriand of Total B.S.",  the fiction that Fortune can get a fortune

The Fortune teller tees up your dollars for pennies. "Great deal"

for your structured settlement.  Unless you are a Lilliputian in "Gullibles Travels", pennies on the dollar is not a fortune. Thus Fortune's value proposition is a lie. And that, is the foundation for a business partnership with Annuity.org?  Good grief!

Fortune Settlement Solutions | Where "Get a Fortune for Your Structured Settlement Payments" is Pennies on The Dollar  January 19, 2019

"Retread Carefully" JD Supra Article About Genex Capital Imbroglio with Investors and Intermediaries

by Structured Settlement Watchdog

A Matter of Public Interest to Investors in Structured Settlement Payment Rights and Those Advising Them

Two senior partners of the Philadelphia law firm of Cozen O' Connor PC, have weighed in on the Genex Capital imbroglio with investors in structured

"Retread Carefully"

settlement factored payment streams and intermediaries. Their commentary underscores that the Genex Capital lawsuit is a matter of public interest to investors or potential investors in structured settlement payment rights.  In addition to JD Supra the Cozen partners' commentary appears on the Lexology website.

_________________________________________________________________________________________

Maricopa County Superior Court

CV2020-00495 Genex Capital Corporation v NEAA et al
CV2020-013796 Keefer v Genex Capital Corporation, Genex Strategies, Inc., et al.

__________________________________________________________________________________________

The Michael Miller and Stephen R. Harris authored post says that " sometimes these transactions are called “retreads. And for good reason. The downstream investors, who are often unsophisticated non-accredited individual investors, may be left with no actual rights to the annuity payments and instead may be simply unsecured creditors of the factoring company — in which case these downstream investors are hoping and depending on the good faith and solvency of the factoring company to make good on these payments".  [ Miller, Harris  “Retread” Blowouts Create Hazards for Investors ]

"The defendants have responded to the allegations, and one of them also moved for a preliminary injunction to prevent Genex from reassigning these payment streams that they say are already owned by the downstream investors. Much to the chagrin of the defendants and the investors, however, the preliminary injunction motion was apparently filed too late — because, according to recent court filings, in response to the defendants allowing the periodic payment streams to be resold, Genex allegedly did the same thing (i.e, resold or assigned the periodic payment streams to other investors). Thus, each of the structured settlement payment streams has now gone from the payee to Genex; from Genex to the investor; and then from the investor to another investor. And now, Genex has allegedly sold or assigned those same payments to yet a different investor!" [ Cozen,  Ibid]

Miller and Harris  say that "the Genex cases confirm the potential hazards faced by individual investors who buy “retreads.” They say that investors run the risk that they will be deemed to be merely unsecured creditors with no actual annuity rights. Further, as the Keefers learned the hard way, if they seek to resell the payment rights they think they bought, a lot of bad things can happen, including (as they allege) the disaster scenario where the seller declares they are in breach and decides to again sell the same payment rights (whatever they are) to yet another investor".  [Ibid.]

Is There a Circular "Firing Squad" in the Future Between Two Sets of Investors With Genex Capital in the Middle? 

Quotable quote from the Genex Capital Receivables Purchase Agreement [Ver4 RPA 7-12  p 8 paragraph 8.5  Genex Complaint Exhibit B]

"This Agreement may be amended, modified, superseded or canceled only in writing signed by each party. Notwithstanding the foregoing, Genex may amend this Agreement or the Buyer’s Guide by giving Genex at least 30 days’ Notice of any such amendment. If Buyer continues to purchase Annuities or otherwise deal with Genex after the effective date of any amendment, Buyer will be deemed to have accepted the amendment and will be bound thereby".  (emphasis added)

 

 

 

 

MD Law Professor Advocates for Elimination of Structured Settlement Factoring Excise Tax Exemption

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Good tax policy would eliminate the exemption from the excise tax on structured settlement factoring transactions, which would reduce one of the many ways that disabled people, caregiving women and poor communities of color are deprived of resources asserts Karen Czapanskiy. a professor at University of Maryland Carey School of Law in Baltimore Maryland.

What are Structured Settlement Factoring Transactions?

The term “structured settlement factoring transaction” means 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.  [see IRC §5891 (c)(3)(A)]   

Excise Tax on Structured Settlement Factoring Transactions Explained

IRC section 5891(a) imposes a tax equal to 40% of the factoring discount on any person who acquires directly or indirectly structured settlement payment rights in a structured settlement factoring transaction that does not qualify for exemption under conditions that are specified in section 5891(b). The tax was implemented by the Victims of Terrorism Tax Relief Act of 2001, December 21, 2001, Public Law 107-134.

In general, section 5891 applies to structured settlement factoring transactions entered into on or after February 22, 2002. The amount of the excise tax is 40% of the excess of (1) the aggregate undiscounted amount of the payments being acquired, over (2) the total amount actually paid to acquire them. The 40% excise tax does not apply, however, if the transfer is approved in advance in a final order, judgment or decree that: (1) finds that the transfer does not contravene any Federal or State statute or the order of any court or responsible administrative authority, (2) finds that the transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents; and (3) is issued under an applicable State statute by an applicable State court or, if applicable, by a “responsible administrative authority” with exclusive jurisdiction over the claim or proceeding resolved by the structured settlement.  [Source : Internal Revenue Service | Structured Settlement Factoring Audit Technique Guide p5]

Rationale for Good Tax Policy  Per Professor Czapanskiy

• It’s time for some good tax policy opines Czapanskiy, in a paper published October 27, 2020 and cited below. 
• The excise tax applicable to (structured settlement) factoring transactions provides a significant disincentive to investors who might otherwise want to buy the stream of income generated in a structured settlement.
• Exempting the transactions from the excise tax means that factoring companies can, with little difficulty and little cost, strip assets from disabled people, their families and their communities.
• Even if public benefits might make up some of the lost income, which is unlikely, access to such benefits, as a practical matter, is uneven and unpredictable.
• Further, a stream of income payable over a period of years rather than for (just) the lifetime of the payee is an inheritable asset, so it provides stable support for the injured parent and some wealth for the uninjured child. A regular source of income for the payee relieves a supporting parent of some level of financial anxiety and may permit a mother to develop assets of her own. A custodial parent may be able to provide more for her child if the payee has the resources to pay child support and to cover other expenses to enhance a child’s development.
• Finally, the community where many payees live can see them as a source of growth rather than as a source of problems. The profits gained by investors in structured settlement factoring transactions are substantial. The benefits that would be gained if the assets remained in the ownership of community members, on the other hand, would be even more valuable. Young people of color who, because of childhood lead exposure, were deprived of the capacity to earn a living, will not need to live hand to mouth, without the dignity of a regular and predictable source of income. Mothers who won a judgment for their children to provide a substitute for their lost earnings will not need to provide for them financially throughout their adulthood. Children of payees and caregiving mothers and kin of those children will not suffer the loss and anxiety that accompany irregular and low monthly income. A community that has more than its share of disability, imposed by a history of discriminatory practices in employment, housing and transportation, will not also see the assets of some of its most vulnerable members stripped away in exchange for pennies on the dollar.
• Good tax policy, asserts Czapanskiy, would eliminate the exemption from the excise tax, which would reduce one of the many ways that disabled people, caregiving women and poor communities of color are deprived of resources.

Czapanskiy cites as examples:

• Terrence McCoy "How Companies Make Millions off Lead-Poisoned, Poor Blacks" Washington Post 2015-08-25; and
• Michelle M. Marcellus, Note, "Resolving the Modern Day Esau Problem Amongst Structured Settlement Recipients"40 HOFSTRA L. REV. 517, 536–38 (2011) (history of excise provision)

Czapanskiy, Karen, Tax Policy, Structured Settlements and Factoring: Making Exploitation Easy and Profitable (October 23, 2020). 93 University of Detroit Mercy Law Review 455 (2020), U of Maryland Legal Studies Research Paper No. 2020-19, Available at SSRN: https://ssrn.com/abstract=3717751

I would expect that the structured settlement secondary market players would argue that starving the money supply by increasing the excise tax might actually hurt the people that it proposes to help through increase costs. That being said, the track record of the secondary market is not very good. The last 7 years have brought to light some questionable transactions with horrible optics. The National Association of Settlement Purchasers has seen a company associated with its President front and center in multiple contested transactions involving the pillaging of a minor's structured settlement a Pennsylvania case named Barber, the essence of which is captured in this meme. 

Zach Barber was about to turn 18 and found a substantial part of his structure had been pillaged in 3 factoring deals while he was still a minor and without his knowledge

 

Are Factored Structured Settlement Payment Streams Viable in Domestic Non Qualified Assignments?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Could factored structured settlement payment streams be useful settlement planning tools in certain types of cases if the transactional risks can be

It is not necessary to go offshore for a non qualified assignment

minimized/eliminated and are fully understood by buyers and certain settlement planners and other merchants stop misrepresenting them as annuities? Factored structured settlement payment streams are not annuities according to the National Association of Insurance Commissioners, whose members regulate the sale of annuities and insurance products. The NAIC's Statutory Issue Paper 160 dismisses the notion that acquired structured settlement payment rights are annuities or insurance products.

Offshore Non Qualified Assignment Companies Were The Norm

For many years the fulcrum for non qualified assignments was an offshore assignment company. Offshore assignment companies filled a void where the type of damages that the future payment obligations represent did not fall within the IRC 130 exclusion which applied to qualified assignment.  Initially such assignment companies were established in Barbados, to support the needs of clients of appointed agents of Liberty Life Assurance Company of Boston (now Lincoln Life Assurance Company of Boston) Allstate Life Insurance Company, Prudential Insurance Company of America and briefly, American General, in Bermuda. Various independent assignment companies followed, mostly in Barbados and one in the Republic of Ireland. There are a number of solutions that are only available using an offshore assignment company.

Domestic Non Qualified Assignment Companies

MetLife introduced a domestic non qualified assignment program as an excellent option for settlements comprised in whole or in part with taxable damages, settlements that otherwise to do not qualify for IRC 130 (such as wrongful imprisonment), or for structured installment sales. Payments must begin  within a year. The design for the funding asset, an immediate annuity issued by Metropolitan Tower Life Insurance Company, requires compliance with IRC 72(u).  IRC 72(u) is also known as the "non natural person rule" 

Treatment of annuity contracts not held by natural persons

(1)In general, If any annuity contract is held by a person who is not a natural person—

(A) such contract shall not be treated as an annuity contract for purposes of this subtitle (other than subchapter L), and

(B) the income on the contract for any taxable year of the policyholder shall be treated as ordinary income received or accrued by the owner during such taxable year.

For purposes of this paragraph, holding by a trust or other entity as an agent for a natural person shall not be taken into account.

 

(3) Exceptions  This subsection shall not apply to any annuity contract which—

(A) is acquired by the estate of a decedent by reason of the death of the decedent,

(B) is held under a plan described in Section 401(a) or 403(a), under a program described in section 403(b), or under an individual retirement plan,

(C) is a qualified funding asset (as defined in section 130(d), but without regard to whether there is a qualified assignment),

(D) is purchased by an employer upon the termination of a plan described in section 401(a) or 403(a) and is held by the employer until all amounts under such contract are distributed to the employee for whom such contract was purchased or the employee's beneficiary, or

(E) is an immediate annuity.

 

What is an immediate annuity?

Per IRC 72(u)(4), the term "immediate annuity" means an annuity

(A) which is purchased with a single premium or annuity consideration,

(B) the annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the purchase of the annuity, and

(C) which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period.

 

Funding Agreement is Not an Annuity Contract

 

In August 2020 American General introduced its Funding Agreement Structured Settlement which can be used with it domestic non qualified assignment company to fund non qualified structured settlements with a deferred start date. How is this possible?

 

The New York State Department of Financial Services provides some excellent resource material that I have excerpted below.

 

Funding Agreement Not An Annuity Contract. Section 3222(a) states that the issuance or delivery of a funding agreement shall not be deemed to be doing a
kind of business authorized by §1113 of the Insurance Law or engaging in any business authorized by §1714 of the Insurance Law.

 

1. In 1982, the term “annuity” was defined to mean “all agreements to make periodical payments where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends on the continuance of human life”, except payments made under the authority of
§1113(a)(1) (i.e., optional modes of settlement of life insurance proceeds (a) As such, a funding agreement could provide for periodic payments over a
period certain for individuals in structured settlements or in cases where an annuity with life contingencies was not wanted.
2. In 1985, the term “annuity” was amended by adding the phrase “for a period certain or” following “periodical payments” in the definition of annuity. See §1 of Chapter 864 of the Laws of 1985. As such, an agreement to make “periodical payments for a period certain” could now be considered to be an
annuity as defined in §1113(a)(2). (a) The sponsor’s memorandum in support of Chapter 864 of the Laws of 1985 states that the bill would bring New York into conformity with approximately 38 other states that permit period certain contracts to be written for a period of years rather than for a period dependent on the continued life of the annuitant.
3. Funding agreements sold to entities are not annuities because:
(a) Annuitant must be a natural person. There is nothing in the bill jacket of Chapter 864 of the Laws of 1985 to suggest that the change in §1113(a)(2) was intended to broaden the class of purchasers beyond annuitants (i.e., natural persons).
(b) Installment payments at maturity of a guaranteed interest contract does
not make the contract an annuity. There is nothing in the bill jacket of Chapter 864 of the Laws of 1985 to suggest that the change in §1113(a)(2) was intended to expand the scope of such contracts to include unallocated funding agreements, such as fixed rate, fixed maturity guaranteed interest contracts that provide for installment payments at maturity rather than a lump sum payment. An unallocated guaranteed interest contract is either a funding agreement or a group annuity contract depending on whether the contract provides for or permits the purchase of annuity payments dependent on the continuance of the lives of more than one person. See §4238(a).
4. In addition, a period certain annuity is not a funding agreement because the issuance or delivery of a funding agreement cannot be deemed to be doing a kind of business authorized by §1113.
(a) It has been argued that structured settlements providing for periodic payments to individuals can be considered annuity contracts. However,
because §3222(b)(iv) specifically refers to agreements “ providing for periodic payments in satisfaction of a claim”, we continue to classify such
agreements to be funding agreements for review purposes.
(b) Agreements that provide for lump sum payments at maturity are considered to be funding agreements.

 

The Utility of Factored Structured Settlement Payment Streams

 

The settlement planners who misrepresent factored structured settlement payment streams as annuities are not only misleading their clients, but potentially shooting themselves in the foot. If indeed they were annuities, which they aren't, wouldn't their ownership by a domestic assignment company (a non natural person) possibly violate IRC 72(u)? Factored structured settlement payment streams are often the result of a "slice and dice" of some other person's structured settlement payment streams. Payments are not substantially equal and/or have deferred start dates.   

 

How Not Being an Annuity Presents an Advantage Under Certain Circumstances

 

Given that factored structured settlement payment streams are not annuities, according to the National Association of Insurance Commissioners, under the right circumstance with proper disclosures and acceptance of risk, they may be viable as part of the solution for certain clients. The risks associated with factored structured settlement payment streams include:

• transactional risk  (see ongoing cases Barber case and Keefer v Genex Capital et al. as well as  Alcantara, Wall v Altium investor lawsuit, State of Maryland Attorney General Consumer Protection Division v Access Funding et al. and  Crystal Linton et al v Maryland Consumer Protection Division,   Barry Cooper v Horn, Hamlin et al. FINRA Complaint)
• the possible lack of statutory protections in the event of the insolvency of the issuer of the underlying annuity as set forth in the model act adopted by an increasing number of states.

 

 

    

Structured Settlement Investors Sue Genex Capital Corporation and Genex Strategies, Inc., Allege Conversion and Resale of Their Payments

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

Seniors are suing Genex Capital (note this image is not of the Keefers)

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:

1. 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.
2. 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.
3. Each Investor Assignment Agreement provides for the assignment of “all of [Genex’s] right and interest it may have” in specific structured settlement payments.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
   
10. 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
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.

 

 

 

Pre-Sentencing Character Reference to Joe Gargan Purported to Come from Mrs. Kennedy was Mistaken

by Structured Settlement Watchdog

Counsel for the Park Agency, Inc., the family office of the descendants of Joseph P. and Rose F. Kennedy have refuted the attribution of a letter addressed to Judge Rossie Alston in support of the now convicted felon to Mrs. Robert F. Kennedy. The September 30, 2020 letter to Judge Alston, states " From press clippings and public filings we have become aware of a letter addressed to you filed as part of the above-captioned matter. The letter is purported to come from Mrs. Kennedy. We believe that any attribution to Mrs. Kennedy is mistaken. Mrs. Kennedy , her children, and her administrative staff were not aware of the letter until reading it in the case file".

United States of America v Joseph Edward Gargan, Case Number 1:20-cr-110-RDA  Document 36

3 Misleading Terms Used in Advertising By Structured Settlement Factoring Companies, Originators and Rights Sellers

by Structured Settlement Watchdog

Here are three misleading terms that one encounters when solicited by structured settlement factoring companies and rights sellers, including one or two glib settlement planners.

1. Selling a Settlement

Why is "selling a settlement" misleading?

All is not what it seems

• A settlement is the end of a civil action brought about by agreement between the parties. [Source: Black's Law Dictionary Free Online Legal Dictionary 2nd Ed. ]
• A structured settlement is a negotiated stream of periodic payments, paid as damages in exchange for a release of liability, that is customized to the needs of a particular plaintiff or plaintiffs.
• A settlement agreement sets forth the terms of settlement including, but not limited to the consideration for the plaintiff's release of liability. Part of that consideration could include a structured settlement and/or cash, disposition of liens, indemnification, confidentiality and so on.
• A structured settlement factoring transaction is a means to raise liquidity for someone who is receiving structured settlement payments, where there is no other viable means, via the transfer of structured settlement payment rights.  A qualified court order is necessary for the buyer of structured settlement payment rights to avoid a 40% excise tax on the factoring discount.

2. Secondary Market Annuity

The use of the term secondary market annuity by certain merchants to solicit an investor to buy structured settlement payment rights is self indulgent twaddle. The National Association of Insurance Commissioners in its Statutory Issue Paper 160 clearly states that acquired structured settlement payment rights are not an annuity or insurance product.  On January 11, 2020 one New York individual with an insurance license, even crowed that "these assets are life insurance products, guaranteed by the issuer, and in most states by the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA).  When you invest in structured settlement payment rights you are simply not buying an insurance product. 

3. "Super Bonds"

A deceptive sale pitch to rope in investors.  A bond "is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time. When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it "matures," or comes due after a set period of time".  [Source: U.S. Securities and Exchange Commission]

There is no loan in a structured settlement factoring transaction. The rights to periodic payments are transferred.  You are essentially buying a derivative of a regulated product, the derivative instrument being not regulated by anyone. Investors can lose, and some have lost hundreds of thousands.