by Structured Settlement Watchdog
On September 8, 2022, the first installment was published in a 4 part syndicated bombshell expose about predatory structured settlement factoring that had gone off the rails in South Carolina. [In May 2023 the ship was righted].
The McClatchy newspaper analysis of more than 1,400 of these deals approved between 2014 and 2021 in South Carolina found "sellers received, on average, lump sums worth about 25% of the sold future payments. More than $228.6 million in future payments were exchanged for less than $58 million in lump sums. The discounted present value of those payments — a calculation based on a federal rate that assumes money in the future is worth less than the present — was estimated at more than $157.3 million".
South Carolina Structured Settlement Protection Act Title 15 Chapter 50
South Carolina law requires that each deal be approved by a judge who must find it’s in the seller’s “best interests.” But the newspaper determined that the factoring companies employ a small group of S.C. attorneys who seemed to have developed a specialty in presenting the cases before select judges who approve nearly every deal. Meanwhile, the sellers typically have no lawyer representing them in court. The cases are sometimes heard in courtrooms far from where the sellers live and the structured settlements were reached, McClatchy’s analysis found, raising questions of forum shopping and other aspects of the legality of the deals, said the report.
South Carolina Lawmakers Have Done Little to Police Factoring Companies | Stunned Into Addressing These Issues
State lawmakers have done little to police the industry says McClatchy. While the South Carolina Structured Settlement Protection Act was passed in 2002. it has never been updated, according to the report. Passing a law to protect those with structured settlements 20 years ago and continuing the status quo, despite national news stories in Maryland, Minnesosta, Virginia and Florida that have led to reforms to clamp down on the questionable practices of certain structured settlement factoring companies.
McLatchey's David Weissman reports that South Carolina legislators were stunned by McClatchey's findings and plan to follow the lead of other states in addressing these issues. Let's hope so. This type of story continues to play out over and over and over again all across the country.
Say Her Name
Grace is an African American woman who received a structured settlement for the majority of her proceeds from a train collided with her mother's car when Grace was a child and she suffered a traumatic brain injury.
The structured settlement was due to pay Grace monthly, tax-free installments for the rest of her life. The money would provide her a steady income because her traumatic brain injury was likely to limit her ability to earn her own income in the future, her family was told. Her IQ tested in the first percentile, McClatchy says the court records show. And at home, she had short-term memory loss, which remains one of several challenges.
Grace did her first factoring deal on August 1 2018, the second on August 8, 2018, the third on September 18, 2018 and her 17th factoring deal in November 2021. That's 3 deals in 5 weeks and 17 structured settlement factoring transactions for someone with a first percentile IQ over 3 years. Read that again. McClatchey says all but one of the deals were approved by judges, while another was approved by a special referee. It's a huge WTF regulatory fail South Carolina. In fact it would be a huge WTF anywhere!
Seller's Remorse or Systemic Failure South Carolina?
When you're speaking of someone with a TBI and a first percentile IQ?? Where is the accountability of the judges? Grace's mother said to the reporter "And I thought the whole purpose of her going through a judge was to protect her from stuff like this,” Jocelyn continued. “Obviously it ain’t. The judge didn’t serve a purpose cause anyone with common sense can see that something was happening that wasn’t supposed to. It didn’t make sense. Seventeen times?”
Some judges and referees admit they don’t ask many questions, including why a seller got the settlement in the first place, which may mask traumatic brain injuries and the need for a guardian ad litem, a court-appointed advocate who conducts an independent investigation to make a recommendation about what’s in a seller’s best interest. None of the judges or special referees Grace appeared before asked her about the train crash or her traumatic brain injury, she said, although that could not be verified because there were no transcripts, according to the McClatchy report.
McClatchy found that 94% of the structured settlement transfer petitions that reached a hearing between 2014 and 2021 were approved. McClatchy spoke to several judges and observed that the judicial approval process seemed to be pretty arbitrary. one judge opined that he didn't think it’s depriving … them of something against their free will,” Kimball said. “I don’t like (the deals), just seems sort of sharkish, but if a judge does what I view to be the judge’s job, … (the sellers are) entitled to make a stupid mistake. We’re all entitled to make stupid mistakes.”.
How about someone with a first percentile IQ Judge? Is a person with a 1st percentile IQ with no other means of support, entitled to make 17 "stupid mistakes" and then draw from taxayer funded public assistance? Is that fiscally responsible?
Judge Approved Deal Even With Affidavit From Seller That She Had a Traumatic Brain Injury
McClatchy scrutinized court records and found that an affidavit about Grace's TBI was attached to one of the 3 cases approved by Colleton County Judge Harriet Bonds. Good Lord! Unfortunately Judge Bonds did not respond to arequest for an intrerview according to the McClatchy report.
Special Referee Didn't Know Grace Was in Train Wreck, Asked "Attorney" About Seller's Education Level
Last updated July 15, 2023