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Settlement Agreement Language to Protect Annuitants From Structured Settlement Protection Act Abuse

by Structured Settlement Watchdog

Connecticut attorney Edward Stone who has provided legal advocacy for structured settlement annuitants who have been victims of structured settlement

Help avoid bad secondary market outcomes. Consider this protection clause for structured settlement agreements

factoring companies suggests some language that he says should be inserted in settlement documents to better protect structured settlement annuitants.

"You do this by stating, ‘Neither the beneficiary of this structured settlement nor any other assignee shall have the power to assign the periodic payments to any third party without a genuine hardship and even then only with the advice of counsel.  Any purported assignment in violation of this provision shall be void ab initio. This provision has been inserted at the insistence of plaintiff’s counsel to protect the periodic payments described in the structured settlement agreement from dissipation.”

Stone, who is a supporter of structured settlements and says "Structured settlements are an excellent way to ensure long-term financial stability. But there are bad apples in every industry. Accident victims and their attorneys must protect themselves".

Eddie Stone is quoted from an article by H. Dennis Beaver, Esq, an attorney from Bakersfield California published by Kiplingers painting a dire picture of the bad apples of the structured settlement secondary market.

"We have all seen television, radio or internet ads which urge cashing in structured settlements.  There are times when it makes sense to sell a small part of the structured settlement payment stream, but what I find so cruel are companies that buy every last dollar from someone with serious injuries, very poor judgment, and little or no financial experience who then winds up as a ward of the state.

"Families need to always keep in mind that the structured settlement was created to provide a stream of tax-free payments over many years to help the injury victim live as normal a life as possible. It was not intended to help someone with no business experience, who has had serious injuries and possible mental impairment, put that secure tax-free income stream at risk in a business venture.”

Settlement Planners, Who Led the Charge For the "Right to Factor" in Settlement Documents Should Adjust Their Focus

In my opinion, settlement planners, led by failed AIG antagonist Richard B. Risk, Jr. who led the charge in 2003, to add "IRC 5891 enabling language" to somehow protect an annuitant's right to factor (and reduce malpractice exposure to plaintiff attorneys, to the point where it is now standard language in settlement documents and qualified assignments),  must now shift the focus to better advise and protect their clients in light of a reality of massive rip offs. Some have recommended that annuities be paid into trusts to accomplish the protection. 

Here's an excerpt from how Risk stated his case in an SSP QuickTopic communication from March 3, 2003 (extracted from the Internet in 2005)

"10/09/2005

Dick Risk 03-03-2003 07:46 PM ET (US)
SSP Press Release 2 - QuickTopic Document Review Page 5 of 10
http://www.quicktopic.com/19/D/dytdpCAFxHckn?inline=1 10/9/2005
1. Notifying claimants of their structured settlement rights;
14
2. Complying with all federal and state laws impacting structured settlement claimants;
15
3. Supporting the public policy behind structured settlements.
16
This would include, as a minimum:
1) Every assignment company has a duty to inform every payee of new rights under section 5891. (I suspect
many of the assignees take the position that there were no new rights granted if the contract prohibits the sale
of future payments.)
2) Acknowledging the rights granted by 5891 in the settlement agreement and in the "uniform" QA documents".

"Protect Them By having Structured Settlement Paid Into a Trust"?

While structured settlements into trusts might be a viable solution depending on the circumstances, it might add significant costs depending on the trust company that may render the solution unreasonable.

California Attorney Notification Rule

Stone's suggestion is of the same mind as the California law which requires that the plaintiff lawyer of record be notified of any attempt to sell structured settlement payment rights within 5 years of the establishment of a structured settlement.

Investor Benefits

Too many naive and unsophisticated people waive their rights to independent professional advice sometimes through the encouragement of unethical and what may sometimes be illegal activities of structured settlement factoring origination firms and their representatives. Grooming such structured settlement annuitants for financial rape and inducing them to commit fraud about where they live is unfortunately more common than a few isolated incidents. This potentially puts investor money in jeopardy. Acquisition of structured settlement payment rights might be a bit safer if Stone's suggestion is implemented at the time a structured settlement is established.

 

J. J. Edwards' Mixed Bag About Structured Settlements

by Structured Settlement Watchdog

J.J. Edwards of Lithonia Georgia is a mixed bag about structured settlements.  Some good, some unfortunately misinformed. 

A "mixed bag". The J.J. Edwards blog about structured settlements is misinformed as I explain in this blog

1. J.J. Edwards states in a still published July 5, 2018 blog that "Structured settlements are governed by both federal and state laws and must be closed under court order".

Fact: Only certain structured settlements must be approved by a Court, not all of them. An example of where a structured settlement would need to be approved by a Court is where the payee is a minor or not mentally competent.

2.  J.J. Edwards  is at sixes and sevens with the Periodic Payment Settlement Tax Act of 1982 saying "to encourage their use, the new law made any interest or capital gains earned on the annuity within a structured settlement tax free". 

Facts:  The type of damages paid as consideration for the release of liability is the locus of taxation. Damages are the name of the game. An annuity is merely a funding vessel on which damages travel to the plaintiff/payee. A structured settlement annuity is the most common type of so-called "qualified funding asset", a term defined under IRC Section 130(d). IRC Section 130 was established as part of the Periodic Payment Settlement Act of 1982. A plaintiff cannot own the annuity funding his or her structured settlement.   Read Qualified Assignments 101  What is a Qualified Assignment? and Periodic Payment Settlement Tax Act of 1982.

32. J.J. Edwards then appears to jump to the factoring or sale of structured settlement payments, but gets that wrong by saying  "The process is highly regulated by the courts. Some states also require the hiring of an attorney as a precondition to acquiring a structured settlement annuity".

Facts:  "Courts interpret the law by explaining or clarifying what the law means. A court might interpret law from a constitution, a statute, or an agency regulation. Courts also make laws when they determine the validity of laws"  Source: GeorgiaLegalAid.Org, retrieved 9/5/2020.

In the United States, federal laws are enacted by Congress. In order to make the laws work on a day-to-day level, Congress authorizes certain government agencies, to create regulations. The 10th Amendment to the United States Constitution, ratified in 1791, stating that the federal government has only those powers delegated to it by the Constitution, and that all other powers not forbidden to the states by the Constitution, are reserved to each state, or its people. To that end, each state's legislative branch enacts state statutes, an executive branch that promulgates state regulations pursuant to statutory authorization, and a judicial branch that applies, interprets, and occasionally overturns both state statutes and regulations, as well as local ordinances.

An annuity is neither acquired by a payee when a structured settlement is established as part of the the consideration for the settlement of a legal dispute, nor is an annuity acquired if structured settlement payment rights are transferred and acquired by structured settlement factoring cmpany or its assignee/investor. While an annuity is purchased when a structured settlement is established it remains owned by the qualified assignment company, or in rare circumstances where there is no qualified assignment, remains owned by the Defendant, or its insurer. Factored structured settlement payment streams are not qualified funding assets.

Some states mandate that putative sellers of structured settlement payment rights obtain Independent Professional Advice

4. J.J. Edwards then gets this wrong too "In most cases, structured settlement holders only sell part of their annuity. Typically, the funder will ask for a discount rate of between 6% and 29% of the settlement’s value. There are other costs, including surrender charges of as much as 10%, and if you sell the annuity before you reach the age of 59 ½ you will pay federal tax penalties"

Facts:  Holders of structured settlement payment rights cannot sell part of the annuity. They have no control or ownership of the annuity itself. They may only sell/transfer the rights to the structured settlement payments under certain circumstances. There are no surrender charges or pre age 59 1/2 penalties with structured settlements.  You cannot surrender an annuity contract which you do not own.  All profit is based on how greedy or generous an entity with a pennies on the dollar value proposition wants to be to get the business, its cost of money, what investors are willing to pay and the company's expense load.

A discount rate is component of an equation to determine the present value of future cash flows. The "cart" does not come before the "horse".  However you interpret it, as 6%-29% of the present value or the future value, the result using the J.J. Edwards purported methodology from its blog is a high octane grade of "rat turd" for your money.  As much as I have been critical of business practices in the structured settlement secondary market over the years, I have to come to their defense here because the J.J. Edwards blog's explanation is just downright absurd.

5. J.J. Edwards does get something partially right however!  "Before selling a structured settlement, policy holders should weigh the financial losses they might incur against the need they have for an immediate payout"

Exactly!  You will never make money by selling your structured settlement payments, you will lose money 100% of the time.

6.  J.J. Edwards has some good ideas here, but... "Check on line to learn if the broker has customer complaints, and check that the broker is listed with the Better Business Bureau. Determine that the funder has never defaulted on a settlement purchase, has been in the business at least three years, is registered to do business in all 50 states and is based in the United States"

Fact:  Few, if any, structured settlement factoring companies are registered to do business in all 50 states. 

Being listed with the BBB is easy. One now defunct factoring company whose questionable business practices were exposed and later cited in findings by a Federal judge, listed contacts that didn't even exist on the BBB of Maryland listing for the company.  They were aliases for the owner of now defunct Sovereign Funding, who admitted such in a sworn deposition in a legal matter where he was found liable. Multiple aliases were used on social media sites such as LinkedIn. The aliases even endorsed each other, LOL. David Springer was forced to admit the aliases, shortly after the aliases were noticed for depositions.  That's not something you would know by checking the BBB.  Fortunately for consumers the Structured Settlement Watchdog makes an effort to connect the dots, as he has for going on 15 years.

Updated October 4, 2020

 

 

Pennsylvania Man Turns 18, Learns Structured Settlement Was Pillaged by Factoring Companies While He Was Still a Minor

by Structured Settlement Watchdog  

An Unthinkable Story of Structured Settlement Factoring Predation With a Cautionary Tale For Investors in Structured Settlement Payment Rights

This is an unthinkable story of structured settlement factoring predation that must be told.  A minor's structured settlement was pillaged, starting

Factoring sharks raid Pennsylvania boy's structured settlement while he's still a minor

from when he was 10 years old. Instead of receiving periodic payments to assist with college this month, he is fighting a legal battle as the structured settlement factoring companies attempt to starve this young man for years in litigation when he should have been receiving his structured settlement payments. On other side, one of the unfortunate parties adverse to the now young adult in the unfolding dispute, is a an investor who invested hundreds of thousands of his retirement money in one of the deals.  This is yet another cautionary tale for investors in structured settlement payment rights, including those settlement planners who have placed, or are contemplating advising their clients into structured settlement payment rights. 

Background 

Minor Received Structured Settlement From Settlement of Lawsuit Arising From Auto Accident That Killed His Mother and Unborn Brother

Zach Barber was in an auto accident when he was under 3 years old. The accident claimed the lives of his mother and unborn brother.  As part of the settlement of the lawsuit that was filed after the accident Zach was to receive a series of structured settlement payments funded with annuities from Travelers Life & Annuity  (now Brighthouse Financial) and The Prudential Insurance Company of America with a combined total payout of $2,700,000.00. His father also received a structured settlement.

Minor's Father Sold Off Most of His Own Structure

His father sold off most of his own structured settlement to Stone Street Capital  4 petitions between 2007 and 2012, each filed in Butler County Pennsylvania, with the last filed and approved in 2012. In 3 of the petitions the father was to pay off a loan with the final petition to start a business. Barber contends that upon information and belief Pittsburgh attorney Ron Reitz of Margolis & Edelstein was the attorney representing the factoring company in all of those transactions. Then the financial rape of the minor began.

Portrait of Financial Rape of a Minor

According to the Second Amended Petition for Citation to Show Cause filed in The Court of Common Please in Allegheny County Pennsylvania, "at various times while Zach was still a minor, Respondent Pinnacle Capital, LLC ("Pinnacle") and Sempra Finance, LLC ("Sempra"), engaged in a scheme of predatory tactics designed to obtain Zach's annuities at a significant discount. Pinnacle and Sempra's only goal was to make a profit for themselves - demonstrating a complete disregard for Zach's financial future". According to online records maintained by the Florida Secretary of State, Pinnacle Capital, LLC is managed by Frederick Love, who also happens to be General Counsel to Sutton Park Capital, LLC and the sitting President of the National Association of Settlement Purchasers (NASP).  Upon information and belief Sempra Finance, LLC is one of the business entities associated with Rightway Funding, formerly known as BTG Advisors.

Filed on behalf of Zach Barber in the Second Petition for Citation to Show Cause If Any, Why Court Should Enforce Its July 6, 2005 Order in the matter of Jeffrey Barber Administrator of the Est. of Linda Lee Jenkins , a/k/a Linda Lee Barber, deceased v Bruce E. Stanko; North Hills Pharmacy Services, LLC; Pacercheck, Inc.; et al.  Orphan's Court Division No. 4037 of 2005

Summary, according to the Citation to Show Cause at paragraph 5, Pinnacle and Sempra's predatory tactics include the following:

a. Pinnacle and Sempra targeted Zach's father with the intent of pressuring him to sell Zach's annuities  (" structured settlement payment rights"), knowing Zach was a minor and that the sales were not in his best interest.
b. Pinnacle and Sempra each filed petitions to purchase Zach's annuities at a substantial discount. In doing so, Pinnacle and Sempra knowingly undermined a 2005 order of the Allegheny County Court that approved a guaranteed $2.7 settlement for Zach.

c. While Zach was a minor, Pinnacle and Sempra knowingly and intentionally deprived the Allegheny County Court of the opportunity to scrutinize four different petitions to sell his guaranteed settlement payments.
d. Neither Pinnacle nor Sempra ever sought approval from the Allegheny County Court for the requested sale and purchase of Zach's guaranteed settlement payments as required by the Pennsylvania Structured Settlement Protection Act. See 40 P.S. § 4003(a)(5)(i)(B).

e. Neither Pinnacle nor Sempra ever purchased a bond as required by the Pennsylvania Structured Settlement Protection Act. See 40 P.S.
§ 4003(a)(5)(i)(A).
f. In December 2012, when Zach was 10 years old, Pinnacle asked Judge Yeager (Butler County) to approve a sale of $600,000 of Zach's settlement for $307,673.41 in order to pay his father's mortgage. Judge Yeager denied the first petition and held that the sale was not in Zach's best interest  [Butler County Case No. 12-40246].   Upon information and belief, Pinnacle thereafter advised Zach's father to obtain a Beaver County address to use for a filing in Beaver County. Pinnacle used that address to file a petition in Beaver County that was nearly identical to the petition Judge Yeager denied just 41 days earlier.

g. In the January 2013 petition, Pinnacle asked Judge Kwidis (Beaver County) to approve a sale of Zach's settlement in order to pay his father's mortgage. This is the second time Pinnacle gave that justification to a court. Pinnacle failed to notify Judge Kwidis that Judge Yeager (Butler County) had already denied a sale of Zach's settlement for the purpose of paying his father's mortgage. Judge Kwidis approved the petition to sell $600,000 of Zach's settlement for $307,673.41, without knowledge of Judge Yeager's order.   [Beaver County Case No. 10155-2013]

Furthermore,  Barber alleges that Pinnacle made false allegations of the father's address for purposes of obtaining jurisdiction in Beaver County. The father and son never lived in Beaver County and the address used belonged to someone else at all material times relevant to the proceeding (a copy of the deed of the someone else accompanies the recent Court filing). The Petition was filed by Attorney Ron Reitz of Margolis & Edelstein, the same attorney who the court paper's allege handled the father's petitions for Stone Street Capital.  The recent filing alleges that Attorney Reitz sent mailing to the Beaver County address and the deeded owner returned it saying that the father did not live there. The recent filing also alleges that Attorney Reitz, on a Beaver County covers sheet, stated that the father and Zach Barber resided at the now rubbished Beaver County address.  Barber alleges that Pinnacle knowingly allowed the Beaver County Court to believe the 2013 submission was a case of first impression when it wasn't.

Barber contends that the 2013 Beaver Order is void ab initio. That being said, It was represented to the Court that the mortgage was to be paid off in full and the deed held in trust for Zach.  It further provides that the sums were for medical treatment and tutoring of Zach. No deed was ever delivered to Zach according to the papers. The property was foreclosed in 2014. A copy of the foreclosure was attached to the recent submission as Exhibit 9.  Zach has not required any significant medical treatment and has not had substantial tutoring during his minority.

In 2014 and 2015, Pinnacle, through Attorney Reitz, submitted Petitions to buy the father's remaining annuities, again in Beaver County, knowing that the father did not live in Beaver County. The alleged reasons were to "buy property and pay certain debts". These were approved in uncontested hearings.

h. In October 2015, when Zach was 13 years old, Pinnacle asked Judge Kunselman (Beaver County) to approve a sale of Zach's settlement in order to pay his father's mortgage. This is the third time Pinnacle gave that justification to a court. Pinnacle failed to notify Judge Kunselman (Beaver) : (1) that Judge Yeager (Butler County) had previously denied a sale of Zach's settlement for the purpose of paying his father's mortgage; (2) that Judge Kwidis had already approved the sale of $600,000 worth of Zach's annuities for the purpose of paying his father's mortgage; and (3) the mortgage had still not been paid. Judge Kunselman approved the petition to sell $250,000 of Zach's settlement for $175,000 without knowledge of Judge Yeager's order or Judge Kwidis' order.  

The Order was approved in January 2016 by Judge Kunselman  [ Beaver County  Case 11476-2015]. Judge Kunselman's Order makes no specific provision how  the sale of Zach's structured settlement will benefit Zach, who was 16 and still a minor when this last transfer occurred.

____________________________________________________________________________________________

2017 Bankruptcy Filing by Zach's Father and Step Mom

On September 14, 2017 Zach's father and his wife filed for bankruptcy  [ Western District of Pennsylvania Bankruptcy Court Case 17-23688 ]  The home address is listed in Butler County not Beaver County!  Furthermore the bankruptcy filings list the home as the father's asset, not Zach's, and the property was still heavily mortgaged. Zach never received a deed to any real estate.

____________________________________________________________________________________________

2018  The Sempra Finance Deal

According to the allegations, after obtaining two orders from Beaver County approving the sale of Zach's for more than a million dollars of Zach's settlement payments, Pinnacle's attorney notified Sempra's attorney that Zach had additional annuities that could be purchased. In doing so, it has been alleged that Pinnacle's attorney knew that Sempra would engage in further predatory tactics to buy Zach's annuities at a discount. Upon information and belief, Sempra knew about Judge Yeager's 2012 order, Judge Kwidis 2013 order, and Judge Kunselman's 2015 order. More specifically, Sempra's attorney reviewed all of Zach's annuities and knew that Zach's father had already sold the annuities with the earliest maturity dates (i.e., February 2020). Therefore, Sempra offered to purchase the annuities with later maturity dates.  On  February 5,  2018, Sempra filed a petition in Butler County  (where Zach and his father actually resided)  [ Butler County Case 2018-40027]  and falsely represented to the court that there had not been any prior petitions to approve the purchase of Zach's structured settlement payment rights. The attorney for Sempra verified the 2018 Butler County Petition.  Sempra attempted to justify the sale by stating that the proceeds would pay off Zach's father's mortgage. This is the fourth time the same justification was offered to a court.

According to the docket, there was no hearing in the 2018 petition. The Judge's Order makes no specific provision about how the sale of Zach's structured settlement would benefit Zach.

Other irregularities

Despite none of the periodic payments in Zach Barber's structured settlements coming due while Zach was a minor, the father's affidavit in support of each of the transfer petitions stated that the father was the recipient of certain guaranteed payments under a structured settlement date on or about July 6, 2005 and that he agreed to sell and assign payments due to him. He stated that he understands that he (the father) will forego receipt of the Assigned payments. None of payments were actually due until Zach Barber was of the age of majority.

Zach's Grandparents File Emergency Motion With Allegheny County. Structured Settlement Payments Are Frozen

On January 31, 2020 Zach's grandparents filed a motion with the Allegheny Court that had jurisdiction over the original settlement on an emergency basis to prevent further dissipation of Zach's structured settlement. On the same day Judge Lawrence O' Toole entered an order freezing all payments under Zach's structured settlement until further Order of the Orphan's Court Division. Zach Barber reached the age of majority in February 2020 and filed an Amended Petition. 

Investor in Factored Structured Settlement Payments in Good Faith, Is Adverse to the Minor in This Mess

It is alleged in multiple Court documents that an individual investor is the purported assignee of some or all of Pinnacle's purported payment rights. His acquisition of any such purported rights is subject to the Settlement Approval Order, Judge Yeager's Denial Order, Judge Kwidis' Approval Order, and Judge Kunselman's Approval Order, the Pennsylvania Structured Settlement Protection Act, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. 

The individual investor is adverse to Zach Barber, the innocent who was systematically financially raped in this unfortunate mess, beginning when he was only 10 years old.  In this case, knowing the value of structured settlements from experience, the investor invested  hundreds of thousands in Zach Barber's structured settlement payments for his retirement plan. There is nothing in the Court papers to suggest that the investor knew anything about the financial screwing of Zach Barber at the time he invested. It is not clear who advised the investor to buy the Zach Barber structured settlement payment stream that he did, or whether any due diligence was done on his behalf prior to his investing. 

Regardless of the outcome of this Matter, the story for the investor (which is similar to that of the Wall family, who were ironically from Pittsburgh), should be yet another cautionary tale for investors in structured settlement payment rights. The Wall investors ended up losing their entire investment after a fraud in the origination was discovered two years after the fact and a court found in favor of the original annuitant. The Wall litigation against the intermediary failed and their only recovery was against their financial adviser.

Relief Sought by Zach Barber

Barber seeks relief in the form of continuing the Order directing that all of Zach Barber’s structured settlement payments may not be distributed without further Order of the Court in Allegheny County which had jurisdiction over the settlement of the legal action over the death of Zach's mother and gave rise to the establishment of Zach's structured settlement, an order declaring that the May 21, 2013 Beaver County Order of Court relating to the sale of Zach’s Structure Settlement Funds is void ab initio and is of no effect in addition to the same relief for Orders of Court dated January 25, 2016 in Beaver County and April 18, 2018 in Butler County, and seeks an award of compensatory damages, counsel fees and expenses, punitive treble, statutory and exemplary damages as any other such equitable relief the court deems appropriate.

COUNT 1 Equitable Relief sought against Pinnacle Capital, LLC and its assignees

While Pinnacle and its assignees assert that the Beaver County Orders  are valid and enforceable, Barber contends that:

a. The Beaver County Court lacked jurisdiction to enter Judge Kwidis' Approval Order because Father and Zach were never domiciled in Beaver County.

b. The Beaver County Court lacked jurisdiction to enter Judge Kunselman's Approval Order because Father and Zach were never domiciled in Beaver County.

c. Judge Kwidis' Approval Order was procured by fraud on the court. Specifically, Judge Kwidis was falsely informed by Father and by Attorney Reitz that Father and Zach were domiciled in Beaver County. Further, Father and Attorney Reitz each intentionally concealed Judge Yeager's Denial Order from Judge Kwidis. Even further, Father and Attorney Reitz falsely informed Judge Kwidis that the proceeds would be used to pay off a mortgage, knowing that Judge Yeager had determined that expenditure not to be in Zach's best interest.

d. Judge Kunselman' s Approval Order was procured by fraud on the court. Specifically, Judge Kwidis was falsely informed by Father and by Attorney Reitz that Father and Zach were domiciled in Beaver County. Further, Father and Attorney Reitz each intentionally concealed Judge Yeager's Denial Order from Judge Kwidis. Even further, Father and Attorney Reitz falsely informed Judge Kwidis that the proceeds would be used to pay off a mortgage, knowing that Judge Yeager had determined that expenditure not to be in Zach's best interest and that Judge Kwidis had approved the an earlier sale of Zach's settlement for the purpose of paying the mortgage (which was not done).

e. During the pendency of the 2013 Beaver County Petition, Pinnacle was not registered to conduct business in Pennsylvania.

f. During the pendency of the 2015 Beaver County Petition, Pinnacle was not registered to conduct business in Pennsylvania.

g. Judge Kwidis' Approval Order contravened the purpose of the Settlement Approval Order, and it was not supported by the requisite approval from the Allegheny County Court of Common Pleas. 40 P.S. § 4003(a)(5)(i)(B).

h. Judge Kunselman's Approval Order contravened the purpose of the Settlement Approval Order, and it was not supported by the requisite approval from the Allegheny County Court of Common Pleas. 40 P.S. § 4003(a)(5)(i)(B).

COUNT 2 Equitable Relief sought against Sempra Finance, LLC and its assignee

a. Judge Yeager's Approval Order was procured by fraud on the court. Specifically, Father and (Sempra's) Attorney Dugalic each concealed Judge Yeager's Denial Order, in which he specifically determined that the payment of Father's mortgage was not in Zach's best interest. Further, Father and Attorney Dugalic each intentionally concealed the fact that Father had sold a substantial portion of Zach's settlement through petitions to the Beaver County Court of Common Pleas.

b. During the pendency of the 2018 Butler County Petition, Sempra was not registered to conduct business in Pennsylvania. 
c. Judge Yeager's Approval Order contravened the purpose of the Settlement Approval Order, and it was not supported by the requisite approval from the Allegheny County Court of Common Pleas. 40 P.S. § 4003(a)(5)(i)(B).
d. Sempra did not obtain a bond as required by 40 P.S. § 4003(a)(5)(i)(A).
e. Zach's settlement could not be sold without his written consent, because he was 16 years old. Pa.R.C.P. 2039(b)(2). Zach did not provided such consent.

COUNT 3  Violations of the Pennsylvania Structured Settlement Protection Act Against Pinnacle Capital, LLC

a. By filing petitions in Beaver County without being registered to conduct business in Pennsylvania,
b. By seeking judicial approval of the sale of Zach's structured settlement payments without obtaining requisite approval of the Allegheny County Court of Common Pleas. 40 P.S. § 4003(a)(5)(i)(B).
c. By seeking judicial approval of the sale of Zach's structured settlement payments without posting a bond. 40 P.S. § 4003(a)(5)(i)(A).. In 2013 and 2015, by seeking judicial approval of Zach's structured settlement for the stated purpose of paying his Father's mortgage, while knowing it had been judicially decreed that such a sale was not in Zach's best interest.
e. In 2015, by seeking judicial approval of Zach's structured settlement for the stated purpose of paying his Father's mortgage, knowing that a previous court had already authorized the sale of a portion of Zach's settlement for the purpose of paying the Father's mortgage.
f. In 2013 and 2015, by failing to disclose to the Beaver County Court that there had been prior petitions to sell Zach's annuities.

COUNT 4 Violation of Pennsylvania  SSPA and UTPCPL v Sempra Finance

a. By violating the SSP A.
b. By making false, deceptive, and misleading representations to the Beaver County Court, which has been described in detail above.
c. By concealing material facts from the Beaver County Court.
d. By engaging in fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding, which has been described in detail above.
e. By encouraging Sempra to violate the SSPA.
f. By encouraging Sempra to pressure Father into selling Zach's annuities for a substantial profit.

COUNT 5 Alleges Conversion Against Pinnacle, Sempra, and their assignees

COUNT 6 Alleges Conversion Against Sempra and its assignee

What Can Be Learn From The Barber Case So Far?

1. The gaps in enforcement of structured settlement factoring regulation need to be shored up in Pennsylvania and in other places to assure that a travesty like what happened to Zach Barber does not happen again.
2. Clearly the non disclosure of prior structured settlement factoring deals played a big role in the financial rape of Zach Barber when he was a minor. There appears to have been a massive disconnect between the 2012 Butler petition denied by Judge Yeager and the 2018 petition approved by Judge Yeager. If all the dots were connected regarding his prior denial in Butler and the Beaver County transfers and the purported reason for transfer, would the rape have been exposed earlier?
   
3. How will the National Association of Settlement Purchasers respond given that one of the central figures in this matter is an entity controlled by its President?  On its website NASP says NASP is "dedicated to ensuring the secondary market for structured settlement transfers remains fair, competitive, and transparent."  Having a petition submitted on your behalf in a county where someone does not live and failing to disclose material information about prior transfers and attempts to transfer seems to run contrary to that statement, in my opinion.  How do you feel readers?
   

 

 

JG Wentworth Bests JLC Funding By More Than 32.8K as Shopping Around For Better Deal Pays Off for 22 Year Old Jersey Girl

by Structured Settlement Watchdog

Being patient and alert enabled a 22 year old young adult from New Jersey to do a better structured settlement factoring deal with J.G.Wentworth at 5.78% discount rate. The structured settlement arose out of the settlement of a wrongful death case, her father passing when she was a minor.

Original structured settlement transfer case:
JLC CAPITAL FUNDING LLC v. BRIGHTHOUSE LIFE INS
Superior Court, Morris COUNTY
L-000476-20

Payments being sold:

6.21.23 $25k

6.21.27 $35k

6.21.31 $69,852.77

Total Aggregate: $129,852.77

Purchase Price: $48,486.79

Discount Rate was over 13%

Case was Dismissed*

New Deal

J.G. Wentworth v. GRAMBY S
Superior Court, Essex COUNTY
L-002774-20

Same Payments being sold:

6.21.23 25k

6.21.27 35k

6.21.31 69,852.77

Total Aggregate: $129,852.77

Purchase Price: $81,362.87

Rate: 5.78%

$32,876.08 MORE money to accomplish this young lady's education goals.

Case was Approved

If you are considering selling your structured settlement payments, ALWAYS take a deep breath, stop and think. Read what you need to know about selling

Heretick is Non-Believer in Dockery v Heretick et al Structured Settlement Factoring Class Action Venue Fight

by Structured Settlement Watchdog

Defendant Stephen Heretick, a structured settlement factoring company lawyer and elected official of the Virginia house of delegates is the sole objector to keeping the Dockery class action in the Eastern District of Pennsylvania.

Lead plaintiff and other defendants want the case to remain in the Federal Court Eastern District of Pennsylvania (above)

The Dockery class action lawsuit, filed September 14, 2017, alleged Portsmouth Virginia Circuit Court judges were complicit in an "Annuity Fraud Enterprise" scheme, in which a Virginia lawyer and 79th District delegate Stephen E. Heretick was the central figure, representing JG Wentworth, Seneca One, 321 Henderson Receivables and other settlement purchasers, that allegedly violated the rights of thousands of structured settlement annuitants.   See  Del. Stephen Heretick and Portsmouth judges diverted millions owed to sick and injured people, lawsuit claims

According to the Complaint,  Heretick hatched the scheme, which was designed entirely to defeat a regulatory scheme designed to protect structured settlement annuitants), and to enable sales of the income streams from SSAs on terms that:

a would never be accepted by a beneficiary of an SSA if the beneficiary had been advised by a well-informed and objective advisor; and
b. would never be approved after meaningful judicial review.

The scheme evaded the state and federal requirements, according to the Complaint, by creating what was, in name only, a judicial review process but which was, in reality, a rubber stamp for virtually every transaction brought before complicit judges by Defendant Heretick  (numbering in the thousands!).

Now Heretick wants to move the proceedings to the Eastern District of Virginia, close to his Portsmouth base, a judicial circuit that saw 10 deals approved in 2 years for Terrence Taylor. The litigation in Taylor v Structured Asset Funding/ 123 Lump Sum has been pending for nearly 5 and one half years, in large part to due Heretick's making overly judicious use of legislative privilege. The lead plaintiff and all of the other defendants say no, so we'll see what the Court's decision is.

Update  September 3, 2020

Plaintiffs and Defendants JG Wentworth and 321 Henderson  requested assignment of a magistrate for purpose of exploring if a settlement can be achieved The court granted the request today as long as it wa sin good faith and not an excuse to delay.  Defendant Steve Heretick did not appear to be part of the looming settlement discussions.

 

How Private Investments in Structured Settlement Payment Rights Become Public News

by Structured Settlement Watchdog

Privacy is Not Something You Can Count On If You Invest in Structured Settlement Payment Rights

Despite recent advertising to the contrary, buying someone else's structured settlement payment rights is not always a private transaction. Selling structured settlement payment rights requires a petition filed with a Court.  The name of the Buyer's Assignee is often part of the Court record for anyone to see.The originating factored company assigns the rights to Payments by Court Order to its Assignee or Assignees.  Those names appear in the structured settlement transfer order. Even if it is a private transaction, matters outside of the investor's control could make it very public.

Buying Structured Settlement Payment Rights is Buying Into an Unregulated Morass

While licensed insurance agents, stock brokers and financial advisers and insurers are subject to laws to protect clients, the structured settlement factoring industry has been allowed to evade regulation of sales practices for its entire existence. This impacts investors when the deals that were "heavily vetted" end up being litigated for one reason or another and it ends up coming at a heavy cost to investors. At best they have to incur legal fees to protect their investments which will drive down the effective return on those investments and may even turn a winning investment into a losing one. If you proceed, proceed with caution and with your eyes wide open.

The Downside is "Cray Cray"

The Okebiyi case  (Ongoing)

Take the crazy pending in Kings County New York right now, where a judge denied a structured settlement tranfer petition in April 2015, but then WITHDREW and amended the order in November 2015 stopping all payments including the legitimate transfer Order approved by a different judge in 2014. Download 519239_2019_Dennis_Deiasi_et_al_v_Michael_Okebiyi_et_al_EXHIBIT_S__33

The investors in the 2014 deal had nothing to do with the 2015 deal, but the factoring company Freedom Financial Solutions was represented by Paris & Chaikin, a New York law firm whose paralegal was indicted in September 2015, the paralegal having been alleged to have forged more than 100 structured settlement transfer orders (and subsequently convicted). It gave Judge Silber pause. The investors have been in limbo for almost 5 years! The sellers, the Okebiyis will not give up the payments that the investors paid them for. Now the names of two retired couples are in open Court records. Probably not what the investors signed up for. See Dennis Deiasi, Ann Marie Diasi, Brian Greig and Patricia Greig, Plaintiffs v Michael Okebiyi and Shirmine Okebiyi, Defendants  Supreme County State of New York County of Kings Index Number 519239/2019.

The Wall case

Wall v. Altium Grp., LLC, CIVIL ACTION NO. 16-1044 (W.D. Pa. Jul. 12, 2019). The Walls, who ended up losing all their investment, spent money on their own attorney fees and then had to pay the attorney fees of the people they sued, because they lost. All the information about their case is online. The Walls, retirees from Pittsburgh might have thought they were buying a safe, secure sleepy retirement investment when they did business with Altium Group of New Jersey.

Quotes from Judge Kearney's Memorandum Decision that will haunt investors ...

"Individuals purchasing complicated financial investments through investment companies may be aware of their need to carefully examine the governing agreements. But they may overlook language as to attorney's fees incurred in disputes about these agreements. These agreements may require a party unsuccessful in challenging the agreement to pay the reasonable attorney's fees and costs for the other party".

"The Walls signed a complex commercial Master Agreement through which they agreed to pay reasonable attorneys fees incurred by Altium should litigation follow. After extensive litigation, the Walls lost their arguments. They are contractually obligated to pay the reasonable amount of fees and costs. They raise limited objections to Altium's detailed invoices. After careful analysis, we find the Walls are correct on some objections but not others. In the accompanying Order, we enter Judgment in favor of Altium and against the Walls for the reasonable fees and costs of $92,163.23 incurred under the Master Agreement".

Then you have investors who bought a piece of what turned out to be the Access funding mess, or the Advance Funding Ponzi scheme in which injury and lottery victim sellers were scammed into buying into the scheme and lost all their money. In the Bronx New York venued Alcantara case, SMA Hub, an intermediary in the tertiary market was identified although its investors were not.

Structured settlement factoring transactions that originate with factoring companies like JG Wentworth are securitized and sold to institutions. Certain other factoring companies who shill to private investors or other companies that use fly by night LLCs with names like food items such as Dos Nachos (2 Nachos) or "Palantir Packaging" (to capitalize on the hype of a company due to go public), masking the names of the firms at the heart of the transaction.  If some part of the transaction was messed up or the transfer was vacated a some have then it all becomes very public as investors sue to protect their interests  (if they can). Efforts by an intermediary to help  "shield" its investors may not work if the court does not recognize their standing.  The name of the Buyer's Assignee is often part of the Court record for anyone to see.

 

Consumer Affairs Flops Seem to Have No Clue What a Discount Rate is in Relation to a Structured Settlement

by Structured Settlement Watchdog

Consumer Affairs is a pay for accreditation service that a number of structured settlement factoring companies use to elevate their standing for consumers.

Clark Kendall makes a poor attempt to explain the effective discount rate in a structured settlement factoring transaction.  He says:

"The discount rate offered for a lump sum payment on a structured settlement is similar to the interest rate that consumers pay on a standard consumer loan. The company buying the settlement wants to do so at a discount in order to turn a profit. For example, if you have a $100,000 structured settlement, a company may offer you a 20 percent discount rate, meaning you will receive 20 percent less than the value of your settlement, or $80,000.  The explanation belies Clark Kendall's credentials , which lists him as a Chartered Financial Analyst (CFA), Accredited Estate Planner (AEP) and Certified Financial Planner (CFP). He is the president and CEO of Kendall Capital in Washington, D.C., and a member of the Washington Society of Chartered Financial Analysts.

What a Discount Rate Actually Is

Very simply, a discount rate is the rate of return used to discount future cash flows back to their present value. Using the Present Value of a Future Sum Calculator, found at Calculator Soup, one can easily determine that the present value of $100,000 to be received one year from now, assuming at 20% discount rate is $83,333.33. Here's why it would not be $80,000 as Clark Kendall says. If you invested Clark Kendall's exemplar present value of $80,000 and it earned interest of 20% in year one, the future value would only be $96,000  ($80,000 principal plus $16,000 interest).

If we were asked to determine the Present Value of $100,000 to be received in 5 years with a 20% discount rate, the present value would be $40,187.76

It's a shame when people throw their credentials around but lack the sharpness to adequately and simply explain subject matter that their credentials suggest they should have.

 

 

Milestone Misses "Second Base" in Structured Settlement Explanation

by Structured Settlement Watchdog

Milestone Consulting has made a rookie mistake in its explanation of what a structured settlement is.  The only thing is that Milestone Consulting is not a rookie.

"Structured settlements entail the defendant or their insurance company paying the sum of the settlement to a third-party insurer. This third-party insurer will then disburse the payments to the plaintiff according to a pre-determined payment schedule over a set period of time.

Why Milestone Consulting is wrong about what structured settlements entail?

1. What is "the sum of the settlement"?  Take your pick from (a) the total cost of the settlement; (b) the total amount of the payments to be received both now and in the future by the structured settlement payee (c) an uninformed utterance;  (d) a lazy utterance that might suggest that focusing on factoring somewhat dulls fundamental knowledge; (e) the consideration for a structured settlement payable to the qualified assignment company; or (f) the working title of a new legal novel?
2. Here's how a structured settlement actually works: 
   
3. Few structured settlements are established without a qualified assignment.  The funds are paid by check or wire to the qualified assignment company  (Step 2 above)
4. As used in this context by Milestone Consulting, the term "to a third-party insurer" is a misnomer. With one exception, New York Life Insurance and Annuity Corporation, the qualified assignment company is not an insurance company. Indeed, the best we can tell,  neither United States Periodic Payment Assignment Company and Global Periodic Payment Assignment Company (assignment companies related to Milestone Consulting (by way of its holding company Seventh Amendment Holdings) are not insurance companies.
5. The qualified assignment company deducts any applicable qualified assignment fee and then purchases an annuity to fund the future periodic payment obligation  (Step 3 above)

One of the basic tenets of the Structured Settlement Watchdog is that consumers deserve the clearest path to accurate information about structured settlements.

 

 

Annuity.Org | The "Teacher" That Is A Wolf In Sheep's Clothing

by Structured Settlement Watchdog

If you want to learn about structured settlements does it make sense to learn from the stooge of the "animal" that is trying to eat them, leaving very little flesh on the bone of stable secure income? 

Annuity.org is the sheep's clothing for wolf CBC Settlement Funding, and is known for posting some incredibly uninformed things about structured settlements through some incredibly poor research and with stunning breadth across the organization's writers

Annuity.org, a long time stooge of CBC Settlement Funding, and "super spreader" of inaccurate information about structured settlements, has a long list of writers who have a bad case of "don't-know-what-the-eff-they're-talking-about-itis"  when it comes to how structured settlements work.

Despite citing 7 Research Articles, somehow Kim Borwick, writer and editor " Annuity.Org" is the latest writer to fluff their lines in a July 29, 2020 posting whose purpose is expressly to generate leads for CBC Settlement Funding.

Here are six reasons why Annuity.Org is "Annuity.Wrong": 

1. "In general, the IRS taxes only structured settlement money that was negotiated as part of punitive damages or distress that was not caused by a physical illness or injury".

Why Annuity.Org is Annuity.Wrong

In the United States, Article I, Section 8 of the Constitution gives Congress the power to "lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. This is also referred to as the "Taxing and Spending Clause. The IRS does not tax structured settlement money or tax anyone for that matter. The Internal Revenue Service (IRS) is a government agency that is a bureau of the Department of Treasury. The IRS is responsible for collecting taxes and administering the Internal Revenue Code, our main body of federal statutory tax law of the United States. In the United States children learn about the Constitution from grades 4-7.

2. "Liquefy your structured settlement"

Why Annuity.Org is Annuity.Wrong

Liquefy means turning something into a liquid. A structured settlement is not liquified in a structured settlement factoring transaction. The term liquidity means an asset that can readily be converted into cash, such as a savings accounts, stocks and so on. A structured settlement is established by a meeting of the minds between settling parties. The parties agree on a schedule of future periodic payments. The Defendant, and/or its insurer assignment the obligation to make those payments to a qualified assignment company which in turn buys a qualified funding asset (most of the time an annuity) to fund the future periodic payment obligation. The assignment company is the owner of the annuity and the annuitant only has right to receive payments.  It is the structured settlement payment rights, not the annuity that can be sold, or technically, transferred to a third-party buyer in a structured settlement factoring transaction. The terms of settlement that were agreed to when the structured settlement was established remain in place. 

3. "Consult your state attorney general’s office or consumer protection division to confirm that the factoring company you choose has no complaints on file"

To be fair, Annuity.Wrong is protecting its own client CBC Settlement Funding, which has some pretty stinky poop out there that one would never find by going to the Federal or State Attorney General

Like This  CBC Settlement Funding Persists A Year After Structured Settlement Factoring Petition on 19 Year Old Canceled Due to Mental Illness

4. "The court-approval process takes roughly 45 to 60 days, which is why you may want to select a purchasing company that offers cash advances, also referred to as pre-settlement funding" 

Why Annuity.org is Annuity.Wrong

Pre-settlement funding provides you with a cash advance on the future compensation that you expect to receive from a claim. If you need money before your claim settles to cover bills and living expenses, pre-settlement funding is one way to get you the cash you need as quickly as possible. A structured settlement factoring transaction is not a settlement, it is a factoring transaction. 

It's also not a good idea to get hooked on cash advances. Be mindful that for every $1 you get as an advance, it could cost you $2 or more in structured settlement payments, especially at the rip off out of touch rates that Annuity.org cites as a typical discount rate (see #6 below)

5. "If the court agrees that the sale is in your best interest, you will have to decide on the terms of the sale. You can sell some of your payments, a portion of each payment, or your entire structured settlement". 

Why Annuity.org is Annuity.Wrong

The terms of sale and transfer are agreed before the petition goes to the court seeking approval of a structured settlement transfer.

6. "With this formula, the company calculates the “discount rate.” The discount rate is the percentage that factoring companies charge to account for the inherent risk associated with money that they will receive in the future. The discount rate typically falls between 9 and 20 percent".

Why Annuity.org is Annuity.Wrong

The "typical discount rate of between 9% and 20%" would be rip off range in 2020.  It's a #totalbs narrative when CrowFly is advertising an average discount rate of under 7%. I've seen deals done in the 4s 5s and 6s, with others.  Kim Borwick  and Annuity.org are out of touch.

 

CBC Settlement Funding Lawyers in THIRD "Recycled" Structured Settlement Payee Affidavit in Abuse of NY SSPA

by Structured Settlement Watchdog

The Queens New York law firm of Sacco & Fillas has achieved a dubious "trifecta" of recycled structured settlement payee affidavits in a structured settlement transfer petition submitted on behalf of CBC Settlement Funding, LLC.

Apparently Sacco & Fillas "Recycles" Structured Settlement Payee Affidavits for CBC Settlement Funding. Three have been uncovered so far in a short space of time.

The latest "recycled structured settlement payee affidavit" submitted to a New York judge  on behalf of CBC Settlement Funding was submitted in Erie County, New York. The case is still pending in front of Judge Henry Nowak.

Robinson, Raekwon et al vs Pacific Life and Annuity Services, Inc., et al. Erie Supreme court NY Index 807387/2020  Hon. Henry J. Nowak. Order to Show Cause hearing September 10, 2020 930am

#11  "The money I receive from CBC will be used to relocate to St. Louis, MO in order to be closer to my child. The job market in St. Louis better fits my skill based off my previous jobs and my education level...."

#13  " I have considered other means of raising cash and , after weighing the available options, have determined that this transaction the best course for me. This transaction will provide me with a way to improve my daily life and decrease the daily stress and anxiety that I am currently going through and allow me to  better my life, as well as my families (sic) through building this addition to our home"

This very same language appeared in two other petitions involving separate annuitants, separate petitions submitted by Sacco & Fillas on behalf of CBC Settlement Funding in two other New York counties. 

#14 Unless there was a divine miracle the Payee clearly did not write the affidavit, so it makes it all the more comical and pathetic that the law firm would get its own client's name wrong "For these reasons I feel it is in my best interest to sell the Assigned Payments to CBC, Inc. in exchange for an immediate lump sum payment". The actual petition and sale and purchase agreement have the name correct as CBC Settlement Funding, LLC  as does #5 in the cookie cutter affidavit.

Download 807587_2020_Raekwon_Robinson_et_al_v_Raekwon_Robinson_et_al_EXHIBIT_S__6

Judges and their clerks are encouraged to review the Structured Settlement Payee's affidavit for inconsistencies.