by John Darer® CLU ChFC MSSC RSP CLTC
News of another Ponzi scheme that purported be about structured settlements and wasn't. Watch the video!
Watch John Darer discusses the Rockford ponzi scheme in News
Read the blog!
SEC opens "The Rockford Files", Thwarts Another "Structured Settlement Funding" Ponzi Scheme.
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by Structured Settlement Watchdog®
The Securities and Exchange Commission says in a December 8, 2009 press release that Rockford Group LLC used cold calling and a Web site to raise at least $11 million from more than 200 investors in 41 different states and Canada since March 2009. Rockford Group falsely touted itself as a leading private equity firm with an $800 million pipeline of investments and many Fortune 500 companies as clients, and told investors their money would be safely invested in structured settlements in private lawsuits.
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, Rockford Group LLC does not appear to engage in any investment activity that would generate any returns for investors, let alone its claimed returns of at least 15 percent annually. Instead, dividend payments made to investors have been funded by other investors' contributions, and Rockford Group transferred most of the money collected from investors to banks in Latvia and Hong Kong.
IMPORTANT TO OUR READERS AND ANYONE WHO HAS OR IS CONSIDERING A STRUCTURED SETTLEMENT.
The SEC further alleges that Rockford Group HAS NO STRUCTURED SETTLEMENT ASSETS and does not appear to engage in any investment activity that would generate returns for investors.
Genadi Yagodayev the sole member of the Rockford Group LLC, is the latest person to be charged with fleecing investors in purported structured settlement funding, following closely on the tails of the recent Scott Rothstein ponzi, which was found not to have anything to do with legitimate structured settlements.
The good thing I take from this news is that structured settlement scams appear to be on the SEC's radar screen.
The important thing for attorneys, judges and personal injury victims is that legitimate structured settlements funded with annuities can only be placed by life insurance agents who are licensed in your state with life insurance companies that are also licensed in your state. It is very easy to go to your state's insurance department web site to verify is the person you are speaking to is indeed licensed in your state.
These scams victimize investors NOT tort victims who are receiving structured settlement payments as part of the settlement of their law suits.
The potential exists however, for tort victims to be caught in one of these scams if a financial advisor suggests that they, or a trust in which they are the beneficiary, invests in the factored structured settlement payments of another tort victim, particularly in private deals. Extreme caution should be exercised in such circumstances. Consider some of the SEC allegations about Rockford:
An opportunity exists for factoring companies and their trade association, National Association of Settlement Purchasers (NASP) to publicly address how their offerings to investors differ from the scam meisters. It's also an excellent time to revisit a licensing standard which would be beneficial to sellers of structured settlement payment rights and investors alike as well as improve the industry's overall reputation.
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by John Darer CLU ChFC CSSC RSP
SEC Rule 151A is the culmination of a decision by the Securities Exchange Commission to reclassify indexed annuities as securities. Effective January 12, 2011 annuity issuers will be required to file their products with the SEC. Solicitation will have to be by prospectus. Currently such products are under the jurisdiction of state life insurance regulators.
S 1389 is a Senate bill introduced by Ben Nelson D-Nebraska, a companion to House bill H.R. 2733 introduced by Gregory Meeks D-New York and Tom Price R-Georgia. Both bills seek to reverse the SEC decision to regulate indexed annuities as securities.
In addition to the two bills, the National Association of Insurance Commissioners has sued the SEC to block its action on indexed annuities (see American Equity Investment Life Insurance Company, et al, vs. SEC, No. 09-1021 U.S. Court of Appeals for the D.C. Circuit) The suit contends that the SEC action “constitutes injury per se” to each state insurance regulator.
Will the efforts Nelson, Meeks, Price and the NAIC do THIS to SEC Rule 151A?
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by John Darer® CLU ChFC CSSC RSP
The Jews have Bernard Madoff and now the Catholics have Richard S. Piccoli in the latest despicable chapter of screwing your own".
Piccoli, 82, of Amherst, New York, a poor man's version of Bernard Madoff who even bears an odd resemblance, was charged on January 8, 2009 with running a multi-million dollar Ponzi Scheme that allegedly defrauded hundreds of Buffalo, New York area investors, many of whom were Catholic priests, parishes and parish members.
According reports in the Buffalo News and the Wall Street Journal, Piccoli claimed he could provide high returns by investing in discounted real estate portfolios consisting of safe "seasoned" mortgages. According to the SEC complaint SEC v. Gen-See Capital Corp. and Richard S. Piccoli, 09 CV 0014 S (W.D.N.Y.), the Defendants relied heavily on advertisements in newsletters published by churches and dioceses. The Catholic News Agency reports that one of Gen-See's Ads used the tag line Earn More Worry Less, Your Money Deserves the Best" (a tag line more deserving of a pizza box, in the opinion of this author).
Federal prosecutors and the SEC said the scheme had operated for more than 30 years, draining investors of their life savings, college savings and retirement savings.
It is not known whether any tort victims or plaintiff attorney money was entrusted to Piccoli's Gen-See Capital Corporation, however the story clearly is just another example of "if it appears too good to be true", it may very well not be true. Our thoughts go to all of the victims of this horrible tragedy.
Click right for the SEC Release SEC Brings Emergency Action to Halt Ponzi Scheme and Affinity Fraud Targeting Clergy, Catholics And Senior Citizens
Click right for the Buffalo News Story on Richard S. Piccoli
Click right for Catholic News Agency's "Alleged Multi-Million dollar Ponzi scheme targeted Catholics" January 9, 2009
Richard PIccoli was sentenced to 20 years in prison for his crimes and is destined to die in jail.
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by John Darer CLU ChFC CSSC
The Securities and Exchange Commission (SEC) today approved adopting rules on a 4-1 vote based on SEC proposed Rule 151A**, which is intended to regulate equity indexed annuity products as securities, rather than the non-securities treatment they have received to date. The effective date appears to be January 2011. Additional details are forthcoming.
Structured settlement consultants who are currently selling equity indexed annuities to tort victims will need to obtain the appropriate licenses and affiliations to be able to sell the product in the future.
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The buzz phrase "Mark To Market" dominated the financial press in the last few weeks. The Federal bailout bill gives the United States' Securities Exchange Commission (SEC) the power to suspend the mark-to-market accounting rule. But what is "mark to market" and what does it mean in terms of long term financial security?
The Financial Accouting Standards Board (FASB) has been delegated the authority to establish standards of financial accounting and reporting for private-sector entities, including business and not-for-profit organizations. The Norwalk, Connecticut based FASB standards are recognized as generally accepted and authoritative and are intended to be decision useful.
FASB Statement 157 requires companies to disclose how much of their financial instruments are valued using quoted market prices, how much are measured using valuation models, and how much come from models using inputs that aren't observable in the market.
Under FASB Statement 157 many companies had been forced to make large mark downs of the value of mortgage backed securities due to their inability to sell them, resulting in margin calls from investors, even when cash flows from the securities suggested a much higher value. The SEC has recently acknowledged the market for mortgage backed securities is not "orderly" and fair value standards can be more liberally applied to reflect the expected cash value.
On September 30, 2008 the SEC issued clarifications (Release 2008-234) regarding the implementation of fair value accounting, to help address concerns regarding the impact of fair value measurement on financial institutions holding mortgage backed securities. The new SEC guidance helps clarify that forced liquidations are not indicative of fair value, as this is not an "orderly" transaction. Further, expected cash flows from such instruments are an appropriate means of valuation, subject to applicable adjustments for default risks.
Commentary exists on both sides of the issue
On April 1, 2008 Slate.com commented "you'll notice that they never made that argument back when markets were irrationally optimistic, as they were from 2003-2006. No hedge fund manager ever told a bank that it should lend him less money because the value of the collateral he was putting up was clearly a product of unwarranted optimism or that he shouldn't collect management fees based on the assets under management because their value was clearly inflated. Nobody ever complains about the market's ruthlessness and inefficiency when it's making them money".
Washington Post Op-Ed "SEC Clarification May Help Markets" September 30, 2008
Thee International Accounting Standard Board said on Friday it would immediately consider changing its own rules, followed by all European banks, to match the US standards according to a report in London's Financial Times on October 4, 2008.
It would be helpful if the National Association of Insurance Commissioners NAIC) issued a statement concerning the valuation of mandatory insurance reserves.
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