by Structured Settlement Watchdog
The 11th Circuit of the United States Court of Appeals has pulled the plug on Lujerio Cordero's Serial Structured Settlement Factoring Case, following the majority opinion in the New York Court of Appeals in April 2023.
What is Serial Structured Settlement Factoring?
Serial Structured Settlement Factoring refers to actions by individuals who have engaged in multiple structured settlement factoring transactions, sometimes in a short time frame, leading in some of the worst cases to erosion of the financial security that was established at the time of settlement.
The Cordero Serial Structured Settlement Factoring Case
Over the course of just twenty-two months, plaintiff-appellant Lujerio Cordero—a childhood victim of lead poisoning—assigned his rights to nearly one million dollars in structured settlement payments to factoring companies for pennies on the dollar. Through six transfer agreements that he lacked the capacity to understand, Cordero relinquished his rights to monthly payments with a total aggregate value of $959,834.42 spread over the course of about twenty-six years for a series of immediate lump-sum cash payments that amounted to $268,130. Source: 11th Circuit Court of Appeals opinion filed June 16, 2023. LUJERIO CORDERO, Plaintiff-Appellant, versus TRANSAMERICA ANNUITY SERVICE CORPORATION, a.k.a. Wilton Re Annuity Service Corporation, Defendant-Third-Party Plaintiff-Appellee,TRANSAMERICA LIFE INSURANCE COMPANY, Defendant-Cross Claimant-Appellee, on Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:18-cv-21665-DPG
Mother Helped Him Sell?
"At the urging of his mother, he gave up his right to the $1 million over the next three decades — in exchange for lump-sum payments of about $268,000, the court documents indicate", said Insurance Journal Structured Settlement Cash-out Left Impaired Man with Little. Transamerica Not Liable (insurancejournal.com) June 22, 2023
Cordero's acted on his behalf in the establishment of the structured settlementin the first place.
11th Circuit Notes That Cordero DID NOT Sue the Structured Settlement Factoring Companies
After Cordero exhausted his cash payments, he endeavored to recover the money that he assigned to the factoring companies. But, instead of suing the factoring companies or attempting to void the transactions, Cordero sued Transamerica Annuity Service Corporation and Transamerica Life Insurance Company (collectively,“Transamerica”), the entities that issued and funded his periodic payments before he assigned them. Cordero asserted two claims against Transamerica: one for breach of contract under New York law, and the other for exploitation of a vulnerable adult under Florida’s Adult Protective Services Act (“FAPSA”), Florida Statute § 415.111 Source: Ibid.
The wording of the 11th Circuit decision in the immediately above referenced section needs clarification in the opinion of this author.
Transmerica Annuity Service Corporation (TASC) was the Qualified Assignment Company and Transamerica Life Insurnace Company was the Annuity Issuer of the annuity that funded the periodic payment obligation that TASC
TASC did not issue the periodic payments TLIC did not fund the periodic payments. The Defendant or its insurer made a promise to pay the future periodic payments, the obligation to make the payments was assigned to TASC along with money and TASC then funded the future periodic payment obligation it assumed by way of the qualified assignment and funded it with a structured settlement annuity it purchased from TLIC.
For details of the sequencing, please visit this link and the flow chart on the page. How Structured Settlements Work | Structured Settlements Explained 4structures.com)_
Cordero's Strategy | Attack Structured Settlement Annuity Insurers Not Factoring Companies
Thirteen months earlier, on May 18, 2022, Cordero's counsel was quoted in Do insurers have duty to question possibly ‘abusive’ annuity cashouts? | Reuters
“Because this is an important question without a clear answer, we certify it to the New York Court of Appeals,” the 11th Circuit said in a per curiam opinion by the three judges who heard argument in March (2022). Cordero’s lead lawyer, Brenton Ver Ploeg of Ver Ploeg & Marino, called the court’s question “perfectly appropriate.”
“This crucially important issue concerning abuses in the structured settlement industry is without a definitive opinion from New York’s highest court and long overdue for resolution,” Ver Ploeg said in an email, Reuters' Barbara Grzincic reported at the time. We now know the answer.
The 11th Circuit Appeals Dismisses All
This appeal followed the district court’s with-prejudice dismissal of Cordero’s claims and the New York
Court of Appeals answered a reformulated version of a question that we certified for its review. See Cordero v. Transamerica Annuity Serv. Corp., 34 F.4th 994 (11th Cir. 2022), certified question answered, No. 21, --- N.E.3d --- (N.Y. Apr. 25, 2023).
Given its guidance from the New York Court of Appeals that "such allegations (by Cordero) do not state a cognizable cuase of action for breach of an implied covenant (under New York law), we affirm the district
court’s with-prejudice dismissal of Cordero’s breach of contract claim.
Cordero's Florida Adult Protective Service Act (FAPSA) Claims Failed
Cordero’s FAPSA claim fails under the plain language of the statute. In his operative complaint, Cordero does not allege that Transamerica intended to deprive him of the use of his funds. See id. § 415.102(8)(a). Instead, Cordero asserts that Transamerica “allowed” (or “facilitated”) his exploitation by the factoring companies, which resulted in an unauthorized taking of his assets. Based on the facts that Cordero pleaded, Transamerica’s actions simply do not amount to “exploitation” as that term is defined in FAPSA.Because Cordero has failed to state a violation of FAPSA, we affirm the district court’s with-prejudice dismissal of his FAPSA claim.
FAPSA § 415.102(8)(a) “Exploitation” means a person who:
In the footnotes the 11th Circuit remarked:
The facts as Cordero has alleged them are truly troubling. They describe a situation where it appears an industry is able to systematically victimize individuals who are not in a position to protect themselves. See Cordero, slip op. at 30 (Rivera, J., dissenting). But given the governing law, we cannot grant Cordero the relief that he seeks based on the claims that he asserted against Transamerica.
Attorney Ver Ploeg's comments from an email to a reporter published in May 18, 2022 and cited above, makes a false equivalency by commingling of the primary structured settlement market with the secondary market.
- Insurance companies are regulated in each state that they do business.
- Insurance companies are required to use statutory accounting priniciples (SAP) when preparing their financial statements. Insurers in all states are required to use a special accounting system when filing annual financial reports with state regulators.
- Licensing of insurers, brokers and agents is mandatory.
- Having professional liability insurance is customary
- In addition to licensing many participants have industry professional designations and may hold additional professional licenses such as securities licenses.
- There is no requirement for professional licensure in any state.
- A few states require registration of structured settlement transferees. Those that do have often been legislatures reaction to shockng stories exposure of misdeeds that appear in regional and national news media. However there is no licensing standard in the way that life settlements are regulated and how other fiancial professionals are regulated. One can onlyhope and continue to advocate for such a standard. But the almost universal lack of such standard is on state legislatures who have had 22 years to get it right.
- Probably one of the most notable statements in the New York Court of Appeals part of the case was Cordero's attorney's explanation of why Cordero did not go after the structured settlement factoring companies, which were referred to as " fly by night". This meme just about sums it up, figuratively speaking of course.
- While one can understand why a lawyer such as Mr. Ver Ploeg,would attempt to go for a perceived deep pocket. Nobody works for free, right? Instead of shaking down life insurance companies that issue structured settlement annuities, while ignoring the bad actors, perhaps another avenue is those who are investing in reprobate structured settlement secondary market companies. Who is loaning the reprobate companies money to do what they do? If they can go after Jeffrey Epstein's bank, why not the deep pocketed investors in naughty structured settlement factoring companies? Perhaps it would be worthwile to explore those that finance serial structured settlement factoring transactions?
Last updated June 24, 2023