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Bronx Structured Settlement Cash Now Scam by Convicted Felon | Bad News For Investors

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

Really Bad News for Investors in Structured Settlement Receivables

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?

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Side Bar 

What SMA Hub said was an elephant sized portion of Total BS, 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, it is a stuctured settelment receivable.

SMA Hub, Inc. was a Lake Oswego, Oregon based financial firm that serves as a wholesale intermediary between structured settlement factoring companies and investment planning professionals.

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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

Advance Funding and Dan Cevallos | Was It a Ponzi Scheme?  May 11, 2018

Sell Your Structured Settlement But You Have to Sign a Non Disclosure Agreement?  December 13, 2015

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 50 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 Structured Settlement Receivables ( 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.

 

 

 

 

 

Factored Structured Settlement Payment Streams "Safer Than United States Treasuries"?

by Structured Settlement Watchdog

A structured settlement factoring origination firm associated with a New York structured settlement primary market agency seem to suggest to investors, that factored structured settlement payment streams have the same risk profile as United States Treasury Bonds.  Is this an Ice to Eskimos moment, or is it grounded in reality?

6 Big Reasons Why Factored Structured Settlement Payment Streams May Not Have The Degree of Safety Suggested by the Picture Below

1. A factored structured settlement payment stream is not backed by the full faith and credit of the United States of America, which has been "in business" independently for 243 years
2. Factored structured settlement payment streams are not annuities or insurance products according to the National Association of Insurance Commissioners.
3. Investments in factored structured settlement payment streams bear transactional risk to the investor that could result in a loss of money.  There are documented cases where investors in such instruments (which again, ARE NOT annuities) have lost money.
4. Factored structured settlement payment streams are very likely not covered by State Insurance Guaranty Funds in the event of the insolvency and liquidation of the obligor.  More and more states are amending their state guaranty laws to remove any doubt. 
5. Factored structured settlement payments streams are not liquid like equities, corporate or treasury bonds.
6. 12 month CDs are available for up to 2.3% at time of posting. That's more than double what is represented in the chart below. On further inspection the company that published the chart cites a source that ends with April 2016 rates.  30 Year Treasury's have lower yields. The cited link is to current yields which differ. The Equities chart cited a 50 year average ending in 2009,  a decade years prior to the publication of the chart. Are we looking at  Comparison by Discombobulation" or  " Apples to " Kumquats"?
   

The picture below is a screen shot of part of a web page used by the firm in question, to solicit investors in factored structured settlement payments streams.

Comparison by Discombobulation? 

Do you think this is a Reasonable and Accurate Depiction of Risk?

On September 28, 2019 I published a blog post in which we found that the structured settlement calculator on the site in question suggested a 6.9%-7.5% discount rate on two hypothetical deals to the seller. Thus one can deduce based on the test cases we ran, that the margins are between 1.9-3.4 % on the low side and  2.5%-4% on the high side.

Don't be baffled or bamboozled by impressive looking charts.  Factored structured settlement payment streams are what they are.

 

 

Certified "Used Annuity" Is Another Lie to Befuddle Retirees | Don't Fall For It

by Structured Settlement Watchdog

Kerry Pechter, the editor and publisher of Retirement Income Journal, published an article in September 14, 2017 entitled  "On the Case: Income from a ‘Certified’ Used Annuity". Pechter appeared to be humping for a tertiary market company. The National Association of Insurance Commissioners has opined IS NOT an annuity [ see draft Statutory Issue Paper No. 160 December 2018, finalized April 6, 2019]

Retirement Income Journal Was Irresponsible and Misled Its Readers about Investing in SMAs

'SMAs, if you’re new to them, are the “used” contracts referenced in our headline' wrote Pechter. These are income streams or lump sum payouts that were originally awarded to individuals as monetary awards in wrongful injury suits. The recipients of these annuities have the option of keeping them or selling them to investors for lump sums.

Part of the problem with some financial writers and editors is that they don't do their research. Pechter belly flops because:

1. An SMA is not an annuity. SMA is a scam label for structured settlement receivables (factored structured settlement payment streams).

2. A factored structured structured settlement payment stream is not a used contract. It is a transfer of structured settlement payment rights. It is a receivable In a structured settlement factoring transaction. No sale of an annuity takes place.
3. A structured settlement is not an award. A structured settlement is not awarded. That's why it's called a settlement.
4. The investor in a factored structured settlement payments stream is not buying an annuity. they are buying a receivable not an annuity. Original annuitants cannot sell the annuity that funds their structured settlement because they do not own the annuity.
5. There are characteristics of an annuity that DO NOT exist with structured settlement receivables.
6. Factored structured settlement payments streams have more risk than buying an annuity. Kerry Pechter failed to recognize, the threat to investors in factored structured settlement payment streams as evident in Wall v Corona Capital  (known in Feb 2017, before Pechter published), the 150+ investors waiting for payments that may never arrive from investments in scam labeled " SMA" (known in Feb 2017 before Pechter published)

Before Pechter writes any more articles about SMAs he should speak with Barry Cooper who at the time of posting had an open FINRA complaint against a tertiary market company from Oregon. Cooper's claim against one party alleges breach of fiduciary duty, negligence, negligent supervision, common law misrepresentation, breach of contract and unauthorized trading. Transaction at issue occurred in 2013, and involved a Factored Structured Settlement "FSS" payment stream through an approved Outside Business Activity "OBA" and seeks $150,000.00 in damages. The FINRA claim was subsequently settled a monetary penalty was levied according to public disclosure available on the FINRA website for the reps involved.

 

Pennsylvania Court Rules Against Retiree Investors in "Secondary Market Annuity"

by Structured Settlement Watchdog

Why Are Retirees Investing in Structured Settlement Receivables Allowed to Be Victimized?

The Walls invested almost $153,000 of retirement money in factored structured settlement payment streams that were scam labeled annuities by those that sold them on the investment. Now after more than two years of litigation and a big legal bill, the Walls have $0, as the Western District of Pennsylvania has granted summary judgment in the favor of Altium Group on April 30, 2019. Download Wall v Altium Summary Judgment in Favor of Altium Group

This is the same investment that Altium Group advertised to the masses as having "Unparalleled Safety of Principal"  (see below,  Source: Internet Archive) 

The Wall's Retirement Money | From Unparalleled Safety of Principal to $0 and Big Legal Fees

Corona Capital originated the deal in Florida, the factored payment stream was marketed to the Walls as a Secondary Market Annuity despite the fact that the investment was not an annuity.

It turned out that the Corona originated deal was procured by fraud and the court order creating the factored structured settlement payment streams was vacated when the original annuitant filed suit.

Now after a two year odyssey in which they are left with nothing but a pile of legal fees for their $153,000 investment one wonders what better job the legislatures around the country can do about regulating the structured settlement secondary and tertiary markets?

Maybe the FTC can look into claims against those advertising annuities that are not annuities.

As a result of the Wall case, Altium began to includes disclosures on its website. it no longer says "unparalleled safety" as they and others have done. But Altium, like a few other militants continues to use the scam label "secondary market annuities". In December 2018, the  National Association of Insurance Commissioners opined that factored structured settlement payment streams are neither annuities no insurance products.

If you are thinking about investing in Factored Structured Settlement payment streams, think twice!  

 

Recycled Structured Settlements | Financial Advisor Talks of His Nightmare | Confused Thought He Was Buying Annuity

by Structured Settlement Watchdog

Even Financial Advisors Are Not Fully Informed About Structured Settlement Investments

Allan S. Roth is the founder of Wealth Logic, an hourly-fee financial-planning firm in Colorado Springs, Colo. In 2012 he published the story of his experience buying a structured settlement annuity as an investment, or so he thought. His experience, although 6-7 years ago is instructive historically, relevant today and a statement about just how uninformed even financial advisors appear to have been about what they were buying and might have been recommending to their clients.

Roth mentions many times that he "purchased a so-called structured-settlement annuity". He didn't.

He purchased structured settlement payment rights or receivables. An annuity on the other hand, is an insurance product sold by licensed insurance agents.

Structured settlement payment rights are neither an insurance product or an annuity as the National Association of Insurance Commissioners opined in a statutory issue paper in December. 

Roth reiterates incorrectly that he bought an annuity multiple times in the article.  Apparently of two minds, he also mentioned that he "agreed to purchase a cash stream" from MetLife of Connecticut, which company is(was) MetLife Insurance Company of Connecticut

Colorado Springs Financial Planner Allan S. Roth Concludes He Wouldn't Recommend Investments in Factored Structured Settlement Payments

Roth wrote "So after three excruciating months and dozens of hours of due diligence, I bought my first structured settlement annuity, and the whole process left a bad taste in my mouth. The work by the factoring company, the broker and the external attorney was sloppy at best. It seemed the broker’s sole focus and concern was to close the deal.

If I was successful in catching all the errors in the documents, I bought an attractive cash flow from a highly rated insurance company yielding 5.625% annually. Yet there is a lingering doubt that I didn’t catch everything. Zweig  (author of a 2010 article "Another Can’t-Miss Deal That Can Miss Spectacularly" which ran in the Wall Street Journal July 23, 2010), was absolutely right when he wrote that these deals are complex and can miss spectacularly. If my experience is any indication, that was an understatement. One thing’s for sure: I won’t be recommending them to others"

Consider that it was a financial advisor, pipe lining a deal for structured settlement receivables to Pittsburgh retirees through Altium Group, who had acquired the rights from Corona Capital and the deal in the end was a fraud discovered only 2 years later.

Secondary Market "Annuity Buyers" Totally Screwed as 3rd Circuit Reverses Summary Judgment

by Structured Settlement Watchdog

Buy structured settlement receivables labeled "secondary market annuity" at your own peril investors.

That is the message in the November 23, 2018 decision by the 3rd Circuit Court of Appeals in overturning a 2017 summary judgment decision in favor of a Pennsylvania couple who, on the advice of their adviser, bought what was marketed as a secondary market annuity by Altium Group, LLC with retirement funds.

Pennsylvania retirees Lost Big Money on  their investment in structured settlement receivables  

The term secondary market annuity is a massive untruth, a scam label for structured settlement receivables that uses the cachet of annuities to attract investors.

The scam labeled investment that was the subject of Wall vs Altium, turned out to have been originated in a Florida fraud. 

The Third Circuit erred on the facts by referring to transfer of structured settlement payment rights as the transfer of a structured settlement annuity.

Nothing could be further from the truth.  The purchase of a structured settlement receivable is not the equivalent to a structured settlement annuity.

As I reported in February 2017. Altium Group, LLC advertised that 'Secondary Market Annuities are a High Yield, Low Risk financial investment vehicle. The Holmdel New Jersey company also claimed to " provide you safe, insured returns up to 8.00%. Invest in your future'"

Structured Settlement Receivables have been intentionally misrepresented as annuities by a number of actors in the structured settlement tertiary market 

The actors knew that structured settlement receivables were NOT in fact annuities, and in doing so, may attempt to 'disclaim liability for legal, accounting, tax, financial or other advice or guidance of any kind to purchaser" as has become evident here.  These middlemen also solicit settlement planners and financial planners, some of whom choose to perpetuate the intentional misrepresentation, in selling the receivables to their clients as has happened with the Walls with their Pittsburgh based financial adviser..

In the Wall case, the receivables were originated by Corona Capital in Florida and then was offered up to investors on the shelf by Altium, which is a middle man, or stop on the distribution supply chain if you will. The only problem was that the underlying origination was subject to a fraud by the wife of a structured settlement payee who forged his signature. When the payee found out he moved to vacate the order. This led to a cascading effect on the Wall's " low risk financial investment vehicle" that was "safe and insured" and they've needed to spend thousands of dollars to try and protect their interests.

Altium claimed they were a victim too and, to its credit, introduced court order vacate insurance in May 2017. Court order vacate insurance is a policy that provides limited protection to investors in structured settlement receivables. Collucio tells me that they require all the brokers who buy from their shelf must perform and have the client sign a suitability analysis the same way one is legally required when annuities are sold by insurance agents. Not very vendor of structured settlement derivatives does.

Unfortunately Altium was uninsured for the loss and the best that the Walls could hope for from their "low risk financial investment" is that the District Court rules in their favor on the unjust enrichment claim against Altium that was reinstated by the 3rd Circuit in its November 23, 2018 decision and there are assets to collect if a judgment is eventually rendered in their favor.