by Structured Settlement Watchdog
Bronx Supreme Court Approved Structured Settlement Transfer, Payment Rights Transferred to Buyer's Assignee, But The Buyer Did Not Comply With Order
If you are thinking about investing in factored structured settlement payment streams, you should read about this case which highlights the dangers to investors, as well as sellers.
Jeremy Alcantara was receiving structured settlement payments from a Metropolitan Life ("MetLife") structured settlement. Then he met Dan Cevallos of Advanced Funding LLC.
Cevallos/Advance Funding LLC agreed to buy Alcantara's remaining structured settlement payment rights. The Transfer Petition was heard by Judge Mary Ann Briganti in Bronx Supreme Court in a matter captioned:
ADVANCE FUNDING LLC, Petitioner, For Judicial Approval of a Transfer Agreement with JEREMY ALCANTARA. In accordance with New York General Obligations Law § 5-1701 et seq., v JEREMY ALCANTARA, METROPOLITAN LIFE INSURANCE GROUP, and METLIFE TOWER RESOURCES GROUP, INC. Index 20842/2014E
Judge Briganti was apparently not convinced that Alcantara knew what he was doing, yet bizarrely approved the transfer of structured settlement payment rights and she ordered that $20,000 be advanced to Alcantara, but that $295,000 be paid into the Court until further proceedings took place to determine how the proceeds of the sale would be distributed to Alcantara.
June 23, 2014 "ORDERED that Advance Funding will deliver Twenty Thousand ($20,000.00) Dollars to Respondent JEREMY ALCANTARA within ten (10) days of the date hereof and deposit the remainder of the Purchase Price ($295,000.00) with the Court whereby the further distribution of these proceeds will be released to Respondent JEREMY ALCANTARA subject to further approval and order of this Court.” But Advance Funding DID NOT deposit the $295,000.00 with the Court.
February 27, 2017 A So-Ordered Stipulation required Advance Funding to pay to Alcantara's attorney, the sum of $305,000.00 on or before March 9, 2017 required Advance Funding to pay to Jeremy Alcantara's lawyer the sum of $305,000.00 on or before March 9, 2017 and the sum of $25,000.00 on or before May 9, 2017, and that Mr. Alcantara’s release of Advance Funding would be held in escrow by Alcantara's lawyer until receipt of the final payment on May 9, 2017.
March 9, 2017, Advance Funding makes only a partial payment of $105,000 on March 9, 2017
March 2017 Alcantara' lawyer then Petitioned the Court (1) to vacate FOUR court orders. and direct MetLife that all future periodic payments due under the MetLife annuity contract be paid to Alcantara beginning with the March 31, 2017 payment; (2) Direct that the parties to the Transfer, Jeremy Alcantara and Advance Funding be restored to their economic positions before the July 23, 2014 Order was issued; (3) Direct that the sum of $69,826.96 shall be immediately released to the attorney for Jeremy Alcantara, the sum representing the periodic payments made to Advance Funding LLC’s assignee, Hub Business Trust #HUB-B021214D, from March 31, 2015 through and including February 26, 2017 in the total amount of $77,001.96 less the $20,000.00 delivered to JEREMY ALCANTARA pursuant to Judge Briganti's July 23, 2014 Order, together with interest at the statutory rate of nine percent (9%) in the amount of $12,825.00; (4) Direct that all of the costs and expenses associated with this matter shall be borne by Advance Funding, including Jeremy Alcantara’s reasonable attorneys’ fees in the amount of $30,000.00 and expenses in the amount of $815.04 be paid to Alcantaras's lawyer out of the March 9, 2017 payment made by Advance Funding;
May 22, 2017 Judge Briganti (1) vacated the orders, including the June 23, 2014 transfer order. (2) Orders METROPOLITAN LIFE INSURANCE COMPANY and METROPOLITAN INSURANCE & ANNUITY COMPANY (the qualified assignment company that owns the annuity) to deliver and make payable all
payments due under annuity contract to JEREMY ALCANTARA beginning with the payment due on June 30, 2017; (3) Directs ADVANCE FUNDING LLC to pay $67,062.46 to Alcantara, representing the periodic payments transferred to Advance Funding's assignee (Hub Business Trust) under the July 23,
2014 Order that has been vacated in the amount of $87,062.46 less the $20,000.00 advanced to Alcantara in July, 2014; (4) Directs ADVANCE FUNDING LLC is to pay $5,000.00 in interest to Alcantara; Directs ADVANCE FUNDING LLC to pay Alcantara's reasonable attorneys' fees inn the amount of $18,885.75; (5) Directs Advance Funding LLC to pay any additional costs and reasonable attorneys' fees as may be incurred by JEREMY ALCANTARA in the action; (6) Directs the $105,000 escrow held by Alcantara's attorney to first pay $67,062.45 owed to Alcantara (back payments that were paid to Hub Business Trust), then the interest payments of $5,000 , the $18,885.75 in attorney fees for representing Alcantara and the balance to Sacco & Fillas, the attorneys for Advance Funding.
What is Hub Business Trust?
According to SMA Hub website (retrieved May 23, 2020) "SMA Hub is far from merely a “middleman” in the process of transferring structured settlement cash flows. We acquire original issue annuities in their entirety using an independent business trust. Then, our experienced, on-staff attorney navigates the complexities of transitioning the financial product into a secondary market annuity. SMA Hub further states "With every payment stream, the Hub Business Trust acts as the principal buyer and commits its capital to purchase each case prior to marketing. We have a deeply vested interest in making sure that the purchased payment streams are meticulously vetted before placing them In Stock. Only after we have painstakingly scrutinized and thoroughly reviewed each payment stream is it made available to your client to fund and close".
One wonders how much "painstaking scrutiny" and through reviewing SMA Hub took place before deciding to deal with FINRA barred and convicted felon Dan Cevallos and Advance Funding LLC in the first place?
Side Bar What SMA Hub says is total bullshit as to structured settlements, because neither SMA Hub, nor Advance Funding, nor any other buyer of structured settlement payments, can buy structured settlement annuities in part, or their entirety. I would, and you should, challenge SMA Hub to provide evidence of a single structured settlement annuity contract they've actually purchased (as opposed to simply "structured settlement payment rights". What SMA Hub calls a secondary market annuity is not an annuity.
SMA Hub, Inc. is a Lake Oswego, Oregon based financial firm that serves as a wholesale intermediary between structured settlement factoring companies and investment planning professionals.
Dan Cevallos= Trouble
Dan Cevallos' lowlights include a convicted felony for which he served prison time and a lifetime ban from FINRA (then NASD). In prior blogs I've highlighted multiple instances where Cevallos and his cohorts solicited structured settlement recipients and lottery winners to invest a substantial portion of the proceeds of the "pennies on the dollar" that Advance Funding offered to pay them in a " fund" that earned 10%. Payments continue for a while seemingly reliable and then like classic Ponzi schemes payments they petered down. But for some reason Cevallos evades more prison time.
Read prior blogs about Advance Funding and Cevallos:
How is Recidivist Dan Cevallos of Advance Funding Not in Jail? February 29, 2020
Seniors' Investment in Advance Funding Lottery Payment Nightmare | No Statements in 2 Years | Slow Pay October 5, 2018
On February 8, 2018, Greenwich CT attorney Edward Stone published the following blog still appearing on his law firm's website.
"Fraud in the structured settlement secondary market appears to continue unabated. One of the latest scams seems to involve transfer companies that obtain court orders authorizing an annuitant to sell his/her periodic payments, and then the company fails to pay the seller. The seller is then faced with chasing down the company or figuring out a way to go back to court and have the court order set aside. This situation is exacerbated by fly by night companies with no track record and no real business.
Not one of the 49 state structured settlement protections statutes allows a company to obtain a court order authorizing the sale of periodic payments and then fail to pay the Seller. This is fraud. Plain and simple".
I will finish this post as I started with the caveat, If you are thinking about investing in factored structured settlement payment streams, you should read about yet another case which highlights the dangers to investors, as well as sellers and underscores how the risk is not on par with regular annuities or as another promoter falsely claims, United States Treasuries.