by John Darer CLU ChFC MSSC CeFT RSP CLTC
The petitioners in six cases recently before the Alabama Supreme Court were brothers Michael Todd Scoggins and Matthew Tyler-Crimson Scoggins in a sad 
case of "fiduciary doody" and a system that failed them.
In May 2002, four structured settlement annuities were established for the brothers as part of the settlement of a wrongful death case; their father died in an industrial accident when they were children. The annuities provided for periodic payments and lump-sum payments on various dates and for each brother were split funded between two annuity issuers, MassMutual Life Insurance Company and American General Life Insurance Company.
For Michael, from MassMutual:
- $125/month from Nov. 1, 2009, to Oct. 1, 2010
- $25,000 due Nov. 1, 2010
- $4,000 semi-annually from July 1, 2013, to June 1, 2017
- $500/month from July 1, 2013, to June 1, 2017
- $125,000 due Nov. 28, 2018
- $375,000 due Nov. 28, 2020
- $657,745.80 due Nov. 28, 2023
For Michael, from American General:
- $125/month from Nov. 1, 2009, to Oct. 10, 2010
- $25,000 due Nov. 1, 2010
- $4,000 semi-annually from July 1, 2013, to June 1, 2017
- $500/month from July 1, 2013, to June 1, 2017
- $125,000 due Nov. 28, 2018
- $375,000 due Nov. 28, 2020
- $830,307.38 due Nov. 28, 2023
For Matthew, from MassMutual:
- $125/month from Nov. 1, 2009, to Oct. 1, 2010
- $30,000 due Nov. 1, 2010
- $4,000 semi-annually from July 1, 2015, to June 1, 2019
- $500/month from July 1, 2015, to June 1, 2019
- $125,000 due May 31, 2020
- $375,000 due May 31, 2022
- $804,292.38 due May 31, 2025
For Matthew, from American General:
- $125/month from Nov. 1, 2009, to Oct. 10, 2010
- $30,000 due Nov. 1, 2010
- $4,000 semi-annually from July 1, 2015, to June 1, 2019
- $500/month from July 1, 2015, to June 1, 2019
- $125,000 due May 30, 2020
- $375,000 due May 30, 2022
- $1,004,762.82 due May 30, 2025
It was a good structured settlement which, if established in 2002, would have had an estimated return north of 5.65% income tax free ( the 20 Year US Treasury rate on July 1, 2002 Source: Treasury.gov)
Some years later, when the brothers were teenagers, all hell broke loose!
Petition to Name Grandfather Conservator, Who Then Petitioned to be Able to Sell the Minors' Structured Settlement Payment Rights
In 2010 (when Michael was 16 and Matthew was 15), the brothers' paternal grandfather Thomas Scoggins (through an attorney) petitioned to have Thomas named conservator for the brothers in order to "reopen" the wrongful-death action for the purpose of obtaining a ruling that a sale of the structured settlement-payment rights (for pennies on the dollar) was in the best interests of the brothers. In March 13, 2012, a structured settlement transfer hearing was held. The annuity issuers were given notice, but the brothers were not, according to Court documents cited below.
The payments were sold to Strategic Capital, a Toronto Canada based company that claims not to advertise but sponsors (i.e pays money to) a number of trial lawyer associations around the United States which in turn have given endorsements which Strategic Capital then posts on its website. Stratcap assigned the payment rights to its assignee The Suzanne Farver Charitable Trust, based in Denver Colorado.
The stated purpose of the sale was alleged "because Michael and Matthew wish to use the immediately available funds to provide them acomfortable and safe home, provide each of them reliable transportation when each reaches age 16, increase their standard of living, provide adequate funds for their college education, and provide the needed medical services that both boys are presently foregoing for lack of money"
Scoggins' Grandfather's Authority to Sell Structured Settlement Payment Rights Disputed, Unfortunately After The Fact
But Court documents would later reveal that the brothers' grandfather did not have authority to sell the payment rights, and that the attorney their grandfather hired to help with the payment rights paid himself from the brothers' trusts with "nearly every single disbursement .... made to himself with virtually no money being paid to the beneficiaries, Michael and Matthew."
"The Court was not made aware that the petitioner grandfather Mr. Bailey represented had no authority from the Probate Court to receive or manage any funds on behalf of the wo minor brothers at that time. To the contrary, Mr. Bailey led the Court to believe that his client was fully empowered by
the Probate Court to act on behalf of the minor brothers seeking the sale of the annuities previously established for their benefit. Believing Mr. Bailey's representations to be truthful, this Court considered the petition and ultimately granted the petition allowing the sale for the annuities which had been established to benefit Michael and Matthew Scoggins
[A]n auction was held by Mr. Bailey to sell the (payment rights from) four annuities established for the benefit of Michael and Matthew Scoggins, although neither Mr. Bailey nor his client, Michael Thomas Scoggins, had any authority whatsoever over the annuities in question. None of those deficiencies were
reported to this Court and the Court is now aware that none of these events were reported back to the Probate Court as it had ordered in its grant of limited conservatorship. Instead, Mr. Bailey requested that the funds resulting from the sales of these annuities be paid over to the trust[s] that he had
established outside the purview of this Court"
According to Court documents, Bailey testified that by November or early December 2018, Bailey had spent all of the funds that he had received in the trusts he established. That's only 6 years from the sale of the structured settlement payment rights in question!
[ see case cite below p.25]
Mr. Bailey testified that he had used some of the money to purchase real estate held in the trust name. Two parcels with houses still remain in the name of the trusts according to Bailey and both are in arrears on taxes. Bailey testified that he also unilaterally appointed other co-trustees including one
who was an employee of his law firm and listed as a trustee on deeds. Other documents admitted during Bailey's testimony show tax records for 'trust' property being directed to Bailey's wife, Cindy. None of the real property is held in the names of Michael or Matthew Scoggins, individually.
"Further, Bailey testified that he had established LLCs to purchase vehicles for the two brothers but admitted neither LLC currently held any assets. In short, according to Mr. Bailey, he had exhausted all the funds with the only remaining assets of the trusts he established being the two
pieces of real estate, specifically: [property in] Helena, Alabama, and [property in] Pell City, Alabama. During Bailey's operation of the trusts he established, he admitted that the funds he received were maintained under his control in accounts over which he was the authorized signor.
Brothers Sue For Mismanagement of Their Trusts
The brothers sought to set aside orders in some of the cases, to intervene in some of the cases, and to order the Circuit Court to permit the interpleader of funds by a third party in one case.
The brothers sued multiple parties relating to the sale of the payment rights and the mismanagement of their trusts. They moved the circuit court to set aside orders that empowered Thomas to sell certain structured-settlement-payment rights. The motion was denied without a rationale for the ruling. The Alabama Supreme Court granted the petition for the writ of mandamus in case number 1200107, which pertained to the circuit court's denial of the brothers' motion to set aside the circuit court's August 11, 2011, and November 21, 2011, orders in the wrongful-death action; the Court denied the petitions for the writ of mandamus in case numbers 1200103, 1200104, 1200105, and 1200106, which pertained to the circuit court's October 7, 2020, order denying Michael's motion to intervene in the Strategic Capital actions; and the Court granted the petition for the writ of mandamus in case number 1200102, which pertained to the circuit court's October 1, 2020, order denying American General's motion for interpleader relief in the 2019 action. The motion for interpleader related to the MassMutual payments was denied on procedural grounds.
What is a Writ of Mandamus?
The writ of mandamus is most extensive in regards to its remedial nature. The object of mandamus is to prevent disorder emanating from failure of justice and is required to be granted in all cases where law has established no specific remedy
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2021
____________________
1200102
____________________
Ex parte Michael Todd Scoggins
and Matthew Tyler-Crimson Scoggins
PETITION FOR WRIT OF MANDAMUS
(In re: Michael Todd Scoggins
and Matthew Tyler-Crimson Scoggins
v.
Stephen J. Bailey et al.)
(Calhoun Circuit Court CV-19-900730)
____________________
1200103, 1200104, 1200105, and 1200106
____________________
Ex parte Michael Todd Scoggins
and Matthew Tyler-Crimson Scoggins
PETITIONS FOR WRIT OF MANDAMUS
(In re: Stratcap Investments, Inc.
v.
Michael Thomas Scoggins, as special conservator for the
estates of Michael Todd Scoggins and
Matthew Tyler-Crimson Scoggins, minors)
(Calhoun Circuit Court, CV-12-900098, CV-12-900099,
CV-12-900100, and CV-12-900101)
____________________
1200107
____________________
Ex parte Michael Todd Scoggins
and Matthew Tyler-Crimson Scoggins
PETITION FOR WRIT OF MANDAMUS
(In re: Michael Thomas Scoggins, as administrator
of the estate of George Thomas Scoggins, deceased
v.
Bobby Blankenship et al.)
(Calhoun Circuit Court, CV-98-996
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