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Brooklyn Suit Seeks to Recover Stopped Payments for Structured Settlement Investors

by Structured Settlement Watchdog

Investors Fighting to Get Back Money They Paid to Sellers For Structured Settlement Payment Rights

In 2001 Brooklyn New York residents Michael Okebiyi and Shirmine Okebiyi settled a medical malpractice lawsuit as parents and natural guardians of their infant son, Nicholas Okebiyi.  Part of the settlement was structured with an annuity issued by Hartford Life Insurance Company as the qualified funding asset. The terms of the annuity provided for periodic payments of $6,769.89  per month, from July 16, 2014 to and including June 16, 2056, with payments increasing at 4% per year.

On September 13, 2013, the Okebiyi's entered into a structured settlement annuity sale and assignment agreement with Freedom Financial Services LLC in which they agreed to sell 84 monthly payments of $6,769.89, with an annual increases  of 2% per year. , starting July 16, 2014 through and including June 16, 2021 {" Assigned Payments". In exchange the Okebiyis were to receive $402,753.10 in a lump sum.

Freedom Financial Solutions, LLC is a structured settlement factoring company based in Hypoluxo Florida/Boynton Beach and managed by John K Woods, according its most recent annual report filed with and published by the Florida Secretary of State at sunbiz.org

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Side Bar It is the structured settlement payment rights that are sold or transferred not the annuity itself

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Freedom Financial acted as a broker/originator on the transaction and asked Somerset Wealth Strategies, LLC, an Oregon company offering wealth management and retirement planning services to locate investors to fund acquisition of the Assigned Payments upon securing a qualified court order pursuant to New York G.O.L. 5-1701 et seq. As readers know, at the time Somerset also ran a number of websites marketing factored structured settlement payments streams such as " SecondaryMarketAnnuities.com"

Somerset arranged for certain clients, namely Dennis Deiasi and Ann Marie Diasi, acouple from Florida and Brian Greig and Patricia Greig, a couple from California, to purchase the Assigned Payments. In anticipation of buying the Assigned Payments, these Somerset clients wired money to their escrow agent Anne E. Sety-Rosevear.

Freedom Financial and the Okebiyis filed a petition by Order to Show Cause in the New York State Supreme Court County of Kings, seeking approval of the transfer of structured settlement payment rights. On February 28, 2014 the transfer was approved by Order of Justice Bernadette F. Bayne and the Assigned Payments were assigned to the clients of Somerset. Payments were serviced by Allied Servicing Corporation which  in turn split the payments between the respective assignees.

On February 6, 2015, Okekbyis entered into a new structured settlement annuity sale and assignment agreement with Freedom Financial where thet agreed to sell an aggregate of $2,140,611.96 of periodic payments to Freedom Financial.

A new petition by order to show cause was filed in Kings County Supreme Court by Nicholas' father Michael Okebiyi bearing index 501670/2015, whereupon the Petiton was heard by Justice Debra Silber. Judge Silber denied the 2015 petition on April 30, 2015 because the Michael Okebiyi did not have standing without a Court appointing him as guardian of Nicholas.

Investors Get Shafted on "Silber Platter"

On November 9, 2015, Justice Silber, stepped in in loco parentis and recalled her April 30, 2015 and on November 9, 2015 issued an Amended Order and Restraining Order. Despite the Assigned Payments from the 2014 Order having NOTHING to do with the April 30, 2015 Order, the investors Dennis Deiasi, Ann Marie Diasi, Brian Greig and Patricia Greig have not received ANY payments they bargained for beginning December 16, 2015 and ongoing to today. At the time the current suit was filed investors were out $389,148.87 and at the time of this writing the number is over $400,000. And the aforementioned payees are due payments through June 16, 2021.

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Sidebar   " Surely You Can't Be Serious"

In the November 9th Amended Order and Restrating Order Judge Silber referred to Freedom Financial Solutions LLC as  "vectoring company" , inspiring the late renowned aviator Clarence Oveur to roll over in his grave muttering "What's your vector Victor, I mean Silber?", but that's not important right now...

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Despite having knowledge of the Restraining Order, and despite having received the Purchase Price contemplated by the 2013 Purchase and sale ratified in the February 28, 2014 Order, the Okebiyis have not returned the funds to the investors and have instead retained the full $402,653.10 even though the Assigned Payments have  ceased since the issuance of the Restraining Order in 2015.

The investors subsequently filed suit in the Supreme Court State of New York County of Kings  in a matter captioned Dennis Deiasi, Ann Marie Diasi, Brian Greig and Patricia Greig, Plaintiffs v Michael Okebiyi and Shirmine Okebiyi, Defendants  519239/.

The investors allege

Unjust Enrichment and Conversion with damages accruing on $286,213.71 alleged at the time the Complaint was filed February 11, 2020. The investors have had to incur attorney fees and costs

Where it stands now

A stipulation to extend the  time Covid-19 related delays extends the Defendants' response until June 30, 2020.   See Dennis Deiasi, Ann Marie Diasi, Brian Greig and Patricia Greig, Plaintiffs v Michael Okebiyi and Shirmine Okebiyi, Defendants  519239/2019

Somerset Wealth Strategies also seeks to recover the $101,354.92 commission retained by Freedom Financial Solutions as part of the 2013 structured settlement transfer for breach of implied contract and unjust enrichment alleging that the 2015 Petition was  the cause of the disruption of the Assigned Payments to Somerset's clients.

Yet Another Example of Why Factored Settlement Payment Streams Are Not Annuities

This type of stuff just doesn't happen when you buy a regular annuity.  Factored structured settlements carry more risk than a legitimate annuity. Think about it, you invest money in an investment in 2014, you receive the payments for  a period of time, money that you are counting on and then the payments stop in December 2015 and you haven't been paid since. to the tune of hundreds of thousands.

 

 

Can You Act in Adverse Parties' Best Interest on Both Sides of a Structured Settlement Factoring Deal?

by Structured Settlement Watchdog

When I asked John Bair "how do you resolve the conflict of interest?" in June 2018, John Bair insisted on a Non Disclosure Agreement, which included a multi-year non compete and a liquidated damages clause. I demurred.

Having noticed today the text of the Google Adwords solicitation from CrowFly (see image below), the company founded and for whom Bair serves as Director

One Face This Way and One Face That Way

and blogger, it seems reasonable to ask the same open question  adding one word " How do you resolve the obvious conflict of interest?"

One Face to Structured Settlement Investors

CrowFly LLC purchased a Google Adword ad in which the copy says "Purchasing Structured Settlements as Investments CrowFly is Committed to acting in Your Best Interest, Because You Deserve a Better Deal"

Another Face to Sellers of Structured Settlement Payments

On the other side of the beak  CrowFly says to Sellers  "Expect a different experience with us. We believe our clients value a trustworthy, straight-forward, and transparent partner with their best interests in mind"  [ Source: CrowFly website 5/25/2020]

Commitment v Belief

Isn't there a difference between being "committed to acting in your best interest and a "belief" in what sellers value?

Commitment "an engagement or obligation that restricts freedom of action",  synonyms are devotion, allegiance, loyalty...  [ Oxford English Dictionary]

Belief  "an acceptance that a statement is true or that something exists".  [Ibid.]

But then, the conflict surfaces...

One Face Two Face  (To Both Buyers and Sellers)

"At CrowFly, we are committed to acting in your best interest. Always"

Whether you’re a seller or a buyer, you deserve a better deal".

If each person deserves a better deal, can you act in seller's best interest and squeeze every living "penny on the dollar" out of the buyer after you've committed to acting in the best interest of the buyer?

Definition of Always    1.  at all times; on all occasions. 2. as a last resort; failing all else.  [Ibid.]

CrowFly LLC Says It is Committed to Acting in Buyer's Best Interest. If So, How Can They Act in the Seller's Best Interest?

Milestone Consulting Trashes Annuities in Annuity Market Stare Down,

by Structured Settlement Watchdog

I've been provided with a copy of a Milestone Consulting email blast to trial lawyers that states  "Eliminate annuities from your client portfolios and settlement plans". 

So you want to  play chicken?

A Game of Chicken?

The Buffalo, New York firm is tripling and quadrupling down on its assault on annuities while upon information and belief, it retains the appointments with all   but 3 of the life insurers issuing structured settlement annuities.  Milestone is not appointed by USAA Life Insurance Company, United States Life Insurance Company or American General Life Insurance Company. One wonders whether Milestone's leadership is simply playing a game of chicken with Metropolitan Tower Life, Independent Life Insurance Company, Pacific Life Insurance Company, Berkshire Hathaway Life Insurance Company of Nebraska, United of Omaha and Prudential gambling that they won't terminate his appointment and/or he fancies himself as a poor man's Ken Fisher.

It seems with a number of things written and posted by Milestone these days, that the devil is in the details.  Readers may wish to review some of my posts within the last few months that provide what is, in my opinion, essential critical commentary.

Intellectual dishonesty?

Milestone says "Who wants to pay a 4% commission for an asset that yields 1.7%?  Milestone provides no cite of start date or duration, rated age, or context. One clue. In his January 11, 2020 blog, Milestone CEO John T. Bair used 1.6% and indicated it was for a 10 year immediate annuity. What would be the yield over a longer period of time?  Milestone's headline says it all. The example Milestone uses for justification is intellectually dishonest in my opinion. When you start adding up the costs of Milestone and affiliated companies' qualified settlement fund, the cost of the assignment fee, the asset management fees, the trustee and/or custodial fees, what is the effective cost?

Today the 10 year bond is at 0.55, 20 year bond is 1.04% and taxable. One of my colleagues recently got a 3% IRR from New York Life with a daily rate and I have a quote for an 11 year old boy, with no rated age, on a 30 years certain and life that is 2.95% IRR. 3%, 2.5% and even 1.7% betters an investment in the S&P 500 from January 1, 2000 to December 31, 2019 by someone who missed the 20 biggest trading days in the market, according to data compiled by JP Morgan in its 2020 retirement guide. That's the 20 biggest days over 20 years folks!  See How Structured Settlements Compare.

As to the 4%, if Bair stated in January 2020 that "we have placed $2 billion+ worth of structured settlement annuities". If that can be substantiated, with a few pro bono special exceptions that would mean that Bair and/or the companies he is/was affiliated with, earned about $80,000,000.  in the alternative, some might argue that the an annual asset management fee of 1.5% annually for an unmanaged portfolio is overkill. Who wants to pay 1.5% annually for something like a factored structured settlement payment stream that earns a gross rate in the neighborhood of 3%?

You Say You Want a Revolution? 

This statement by Milestone Consulting makes no sense   "We believe that clients benefit greatly by directly owning the stocks in their portfolios, which includes their structured settlements and settlement plans"

• Is Milestone stating that structured settlements are securities?
• Is Milestone stating that settlement plans are investments?
• If a plaintiff or attorney were to directly own the funding assets of their structured settlement, what are the tax consequences to them?  Where are the tax rulings that substantiate this?

The words "eliminate annuities from your client portfolios and settlement plans", compounded by the fact that Bair has admitted in writing to being a factoring originator, begs the obvious question about whether Milestone is itself, or together with entities of common ownership ,  seeking to cannibalize or  churn its own business. Milestone has been heavily promoting the commonly owned factoring firm CrowFly LLC and factored structured settlement payments streams to investors using the tertiary structured settlement market scam label "secondary market annuities" as part of its FeeMaster campaign.

In the words of Lennon and McCartney:

"Well you know
We all want to change the world
You tell me that it's evolution
Well you know
We all want to change the world
But when you talk about destruction
Don't you know you can count me out"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Do Annuity Policies "Change Hands" When Structured Settlement Payments Are Sold?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

When a structured settlement is factored to raise cash for a Payee, no annuity policy changes hands.  As set forth in Subparagraph (A) of paragraph 3 of

Annuities don't "change hands" either

subsection (c) of 26 U.S.C. 5891 The term “structured settlement factoring transaction" means a transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration. It's a very basic fundamental. However it has not stopped structured settlement secondary and tertiary market actors from making misleading statements.

"With zero regulatory oversight, the factoring industry (or secondary market industry) flourished by ripping off annuitants and paying pennies on the dollar for what is considered to be a very valuable investment asset.  The annuity policies that changed hands were the guaranteed annuity policies from major insurers like New York Life, Metropolitan, Prudential, MassMutual, John Hancock and others. "  John Bair Milestone Consulting and Director of factoring originator CrowFly, LLC March 5, 2018.

In a structured settlement exchange, no annuity policy changes hands, just the rights to payments. The individual receiving structured settlement payments representing his or her damages is no more the owner of an annuity contract than the investor.

The terms Secondary Market Annuity, Secondary Market Annuities, SMA and SMIA are 4 of the biggest lies to investors in the unregulated structured settlement tertiary market. With continuing commentary, some actors in the tertiary market remain militant in their use of the deceitful terms, while some have backed off a little by admitting the usage was simply engineered for marketing purposes.

 

 

 

Biggest Lies Told By Structured Settlement Buyers and Structured Settlement Payment Rights Peddlers

by Structured Settlement Watchdog

Biggest Lies Told By Structured Settlement Buyers

1. There are no hidden fees
2. That's a pretty good deal, maybe I can give you $500-$1000 more
3. The quote annuitants receive represents the full amount
4. You can get all of your money now
5. You've got a step-grandmother you haven't seen in 20 years living in Tarpon Springs?  Then You live in Florida my bruh!
6. Sell your structured settlement and you can get 11% with...
7. Selling Structured Settlements for Maximum Lump Sum Payouts ( by a company that shafted a Long Island NY man for over $1 million)

Comments

1. The originator will probably not let you know what they are making. It is not unheard of for even a purportedly staunch plaintiff advocate to buy structured payments from an annuitant and then make a significant profit spread when the payment rights are resold to investors.
2. Without knowing the profit spread you can be scammed into think you are getting a good deal, but the $500-$1,000 extra vig to you could still leave a lot of fat in the deal. One source indicated that of the deals they see there's  a 70% chance there's at least $10,000 of fat in the deal and a 50% chance there's at least $100,000 of fat in the deal. The Cedric Martez Thomas case involving Novation Funding and the Lauren Nesbitt case involving Seneca One are two examples of cases I've covered here where the financial rape was in excess of $1 million!
3. The "quote annuitants receive" is never the full amount, it is net of the spread, which may or may not be disclsoed.
4. You can never get all of your money now, or ever.
5. Forum shopping with structured settlement factoring may be illegal. And if you are victimized the presiding judge may be prejudiced by your participation in the fraud.
6. Scam that has been used by a number of South Florida structured settlement factoring companies. The 11% rate is a total scam. No investment adviser, much less an unlicensed unregistered huckster at a factoring company can legally promise any rate. That a company uses the scam rate to induce an unwitting annuitant to part ways with their valuable asset for pennies on the dollar is at the heart of the scam.
7. Novation Funding's scam marketing claim that was invalidated forever by the tragic financial rape of Cedric Martez Thomas in October 2015 for in excess of $1 million profit spread.

Biggest Lies Told by Peddlers of Factored Structured Settlement Payment Streams

1. A "Secondary Market Annuity"
2. A " Secondary Market Income Annuity"
3. " SMA"
4. "SMIA"
5. "May be covered by state guaranty funds but no warranties or representation are made in this regard"
6. "These are life insurance products"
7.  Interested in these “super bonds”?' 

Comments

1-4. They're all lies because what they are selling is not an annuity. It's an engineered term used by licensed insurance agents who know what an annuity is and choose to ignore the truth for marketing purposes to make a buck off investors.

5-7. In John T. Bair's March 12, 2020 published claim, with his Director of CrowFly, LLC factoring origination hat on,  " Can Recycled Structured Settlement Annuities Replace U.S. Treasuries in Your Portfolio?",  Bair recklessly claimed "These assets are life insurance products, guaranteed by the issuer, and in most states by the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). Are these regulatory safety nets as good as Uncle Sam?"  Bair unfortunately tells multiple lies that misinform potential investors and reflect poorly on himself and his company. 

Factored structured settlement payment streams are not annuities according to the National Association of Insurance Commissioners and even some of Crowfly's structured settlement tertiary market competitors.  Factored structured settlement payments streams are not super bonds. Bonds are securities, not insurance products. Insurance products are generally not securities. Variable annuities are securities and under FINRA's jurisdiction.  Bair then undermined his own lies, in my opinion, by (1) lying about statutory protections and (2) who provides them. If they were insurance products as he claims, there would be a prohibition on discussing the statutory protections in his blog solicitation of investors. Why someone who engages in cocksure preening about ethics would leave themselves exposed in such a way raises an eyebrow to say the least.

 

How IRC 130 Failure Could Cause Major Tax Hit to Qualified Assignment Company, or Payee

by John Darer CLU ChFC MSSC CeFT RSP CLTC

The failure to satisfy IRC 130 could have crushing financial consequences to a qualified assignment company or Payee in certain circumstances. IRC 130

An IRC 130 failure could result in a big tax hit 

provides a tax exemption to the qualified assignment company subject to certain conditions. Without the tax exemption the qualified assignment company must declare income that it receives (the money intended for the annuity premium or cost of treasury obligations plus the qualified assignment fee). 

It's not hard to satisfy IRC 130, But...over stretching could cause you to "split your plans" with the IRS

In the typical qualified assignment there is substitution of obligors for periodic payment obligations to plaintiffs who have suffered personal physical injury, physical sickness, are wrongful death survivors, or workers compensation. 

(a) In general
Any amount received for agreeing to a qualified assignment shall not be included in gross income to the extent that such amount does not exceed the aggregate cost of any qualified funding assets.

(b)Treatment of qualified funding asset In the case of any qualified funding asset—
(1)the basis of such asset shall be reduced by the amount excluded from gross income under subsection (a) by reason of the purchase of such asset, and
(2)any gain recognized on a disposition of such asset shall be treated as ordinary income.

(c) Qualified assignment For purposes of this section  (i.e. Section 130 in its entirety) , the term “qualified assignment” means any assignment of a liability to make periodic payments as damages (whether by suit or agreement), or as compensation under any workmen’s compensation act, on account of personal injury or sickness (in a case involving physical injury or physical sickness)—
(1)if the assignee assumes such liability from a person who is a party to the suit or agreement, or the workmen’s compensation claim, and (2)if—
(A)such periodic payments are fixed and determinable as to amount and time of payment,
(B)such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments,
(C)the assignee’s obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability, and
(D)such periodic payments are excludable from the gross income of the recipient under paragraph (1) or (2) of section 104(a).
The determination for purposes of this chapter of when the recipient is treated as having received any payment with respect to which there has been a qualified assignment shall be made without regard to any provision of such assignment which grants the recipient rights as a creditor greater than those of a general creditor.

Important Pro Tip:  IRC 130(c) is a definition of what a qualified assignment is, in the context of what a qualified assignment does from a tax standpoint.   The terms of IRC 130(c) and the other parts of IRC 130 are not mutually exclusive.  This is recognized in so many words by Rev. Proc. 93-34, at Section 3 "Scope",  wherein it expressly states "an assignment by a designated or qualified settlement fund of a liability to make periodic payments must also satisfy all the other requirements of section 130 to be a qualified assignment. ..."  A Revenue Procedure is an official statement of a procedure published in the Internal Revenue Bulletin that either affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code and related statutes, treaties, and regulations or, although not necessarily affecting the rights and duties of the public, should be a matter of public knowledge. – Rev. Proc. 89-14, 1989-8 I.R.B. 20

(d) Qualified funding asset   For purposes of this section, the term “qualified funding asset” means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States, if—
(1)such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment,
(2)the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
(3)such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
(4)such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

Despite being easy to satisfy, most qualified assignments have an out clause for the qualified assignment company

Here's how the Model Qualified Assignment and Release reads

Failure to Satisfy Section 130(c).  If at any time prior to completion of the Periodic Payments, the Settlement Agreement is declared terminated in a final, non-appealable order of a court of competent jurisdiction (or in the case of a workers’ compensation settlement, a final order of the applicable workers’ compensation authority) or if it is determined in any such final order that the requirements of Section 130(c) of the Code have not been satisfied in connection with this Agreement: (i) the assignment by Assignor to Assignee of the liability to make the Periodic Payments, Assignee’s acceptance of such assignment and the release by Claimant(s) of Assignor’s liability shall be of no force or effect; (ii) Assignee shall be conclusively deemed to be acting as the agent of Assignor; (iii) the Annuity shall be owned by Assignor, which shall retain the liability to make the Periodic Payments; (iv) Assignee shall have no liability to make any Periodic Payments; and (v) the parties hereto agree to cooperate in taking such actions as may be necessary or appropriate to implement the foregoing.

Under the typical qualified assignment, provided no constructive receipt has occurred, the Settlement Agreeement and Release establishes a future periodic payment obligation as consideration for the type of damages that fall within the meaning of IRC 130(c) and where the assignment company is affiliated with annuity issuer, there really is no chance that the assignment company is going to fail the IRC 130(d)  qualified funding asset statutory requirement, because the qualified funding asset is an annuity.

But what of the independent qualified assignment companies?  Independent qualified assignment companies have been used to inject other investments into the mix, including factored structured settlement payment streams, which are not annuities. What would happen under the unwind clause in the qualified assignment document of one such company.

A settlement planning firm which attempts to use other investments including factored structured settlement payment streams it calls "secondary market annuities", which are not annuities, raises concerns on many levels. 

Have you seen this in a qualified assignment agreement that you've signed for an attorney fee deferral funded with factored structured settlement payment streams or other investments?   9.  " In the event the Settlement Agreement is terminated by a court of law or in the event that Section 130(c) of the Code has not been satisfied, this contract shall terminate.  _______Assignment Company shall then assign ownership of any "qualified funding asset(s)" purchased hereunder to Claimant and/or Payee, and Assignee's liability for the Periodic Payments shall terminate"

If a factored structured settlement payment stream, or any other investment, that does not fall squarely within IRC 130(d),  were mischaracterized, or misrepresented, as a "qualified funding asset", if it was not a qualified funding asset,  the qualified assignment company could lose its tax exemption on the transaction and have a significant taxable event. And if that happens, where is money to pay the IRS going to come from? 

Under the above Paragraph 9 "out clause",  the settlement planner's qualified assignment company could assign ownership of the asset to the Claimant and/or a Payee who happens to be a trial lawyer who believed they had structured and deferred their fees. Any attorney payees could face a potentially monster tax hit as a result.  If the Payee is the former Plaintiff then the Plaintiff has a tax hit on the interest on the funding asset that he/she or his or her trust would now own. One way or another it has the potential to be a huge mess. This would be compounded if this was created in connection with a Qualified Settlement Fund controlled by the settlement planner's firm or an affiliate, which would potentially invalidate the assignment for not meeting the terms of Rev. Proc. 93-34.

I have lingering doubts following a webinar on QSF's delivered by Milestone CEO John T. Bair last week which misrepresented Rev. Proc. 93-34* as "black and white" permission to use investments other than annuities (and obligations of the United States) as "qualified funding assets'. His assertion was not supported from the plain reading of either Rev. Proc. 93-34,or IRC 130(d).

*According to the transcript Bair said at
29:52
"I've talked to lawyers and they assume
29:55
that if they're gonna do a fee deferral
29:58
then it has to be an annuity and that is
30:02
not the case it can be backed by
30:05
investments we have a revenue procedure
30:08
ruling from 2003 that says that you know
30:12
if you create a proper periodic payment
30:14
then it can be backed by investments so
30:17
that it's black and white" 

 

 

 

 

 

 

 

 

Is a Factored Structured Settlement a Qualified Funding Asset?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Do you have a structured settlement or structured attorney fee sold to you by a settlement planner, sourcing the money from a qualified settlement fund, using the settlement planner's qualified assignment company and funded with someone else's structured settlement payments?  If so you may want to check the papers and perhaps speak with your accountant.

The Apparent Steps in the Purported Qualified Assignment

• Defendant, or its Insurer, has paid money in to a qualified settlement fund in exchange for a general release. 
• A periodic payment obligation is created based on the availability of other people's structured settlements offered for sale in the structured settlement secondary market.
• A Qualified Assignment and Release is executed by the Plaintiff/Payee or Attorney/Payee, the settlement planner's Delaware based qualified assignment company and the qualified settlement fund (related, unrelated or possibly administered by the plaintiff's settlement planning firm)
• The Qualified Assignment Release represents that the" Qualified Funding Asset" is Annuity
• The Qualified Assignment and Release  represents that the "Issuer of Qualified Funding Asset" is a Life Insurance Company that issues structured settlement annuities that the settlement planner's firm holds an agency appointment with.
• The Qualified Assignment and Release states  "In exchange for "legal payment rights" pursuant to 5891 of the IRC, to the Periodic Payments specified in Paragraph ____, Claimant hereby  releases and forever discharges the defendant/s and/or the Respondents with regard to the Periodic Payments and agrees only to look to (Name of Settlement Planner's Delaware qualified assignment company) for satisfaction of the obligation to pay periodic payments.
• But the Qualified Assignment and Release also states " In the event of notice of an application to any court for the transfer of payment rights established under this agreement, (Name of Settlement Planner's Delaware Qualified Assignment Company) reserves the right to effectuate a transfer of ownership of the " Qualified Funding Asset(s) to the Claimant/Payee. Upon the transfer of ownership to Claimant and/or Payee, this contract shall terminate.

My first reaction was "Holy Conflated Musical Chairs Batman!" If you have entered into one of these agreements, perhaps you should simply be asking "What the F*** is going on?"

Before we dig deep into that, let's get into the background of qualified assignments and what should be happening when there is a qualified assignment.

What is a Qualified Funding Asset?

Background

For the purpose of this discussion let's assume that we are speaking about a structured settlement which represents payment of damages for personal physical injury or physical sickness. [i.e. qualifies for the income tax exclusion under IRC 104(a)(2)]. Most structured settlements are created via what is known as a qualified assignment. The following chart displays the sequence of events that take place when a typical structured settlement is created.

The term "qualified funding asset", is defined at Internal Revenue Code (IRC) Section 130(d), which states:

"For purposes of this section, the term “qualified funding asset” means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States, if—

• such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment,
• the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
• such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
• such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment".

Why I Am Concerned About the Settlement Planner's Methodology. Should You Be?

• The settlement planner's own assignment company's  Qualified Assignment and Release document referred to releasing the Defendants  or Respondents. For defendants, an important element of a qualified settlement fund is that it can remove them and their insurers from decisions that must be made post settlement [the "resolve or satisfy rule"]. The qualified settlement fund allows for the defendants to pay cash into the fund in exchange for a general release. Thus, post General Release,  why would they need to be released again in the Qualified Assignment and Release?
• Internal Revenue Code Section 5891 refers to structured settlement payment rights not "legal payment rights". Structured settlement payment rights are defined at IRC 5891(c)(2) as "rights to receive payments under a structured settlement". The term "legal payment rights" appears nowhere in IRC 5891.
• A structured settlement factoring transaction does not involve the sale of an annuity.
• A structured settlement factoring transaction is defined at IRC 5891(c)(3)(A) as a "transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration"
• Structured settlement payment rights are also known as " factored structured settlement payment streams". Acquired structured settlement payment rights  are not an annuity according to the National Association of Insurance Commissioners in Statutory Issue Paper 160. 
• Beside the NAIC exclusion of acquired structured settlement payments as not being a covered annuity contract, none of the cash flows are filed with the Department of Insurance in your state. The Departments of Insurance specifically don't regulate factoring because the purchase and sale of cash flows is not the business of insurance.
• If the settlement planner's Delaware qualified assignment company, the taxpayer intended by the statute, has "designated" such factored structured settlement payment stream "an annuity contract" when it isn't, as appears to the case here "(in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment", then wouldn't, or shouldn't, there' be an IRS concern? 

A 2017 legal decision in Delaware, the domicile of the settlement planner's qualified assignment company, supports an opinion that the settlement planner's representation of factored structured settlement payment streams as an annuity is a bald- faced lie:

In a March 29, 2017 decision in Greenwald v Caballero-Goehringer, Delaware Superior Court C.A. No. K14C-04-027 JJC. a Delaware Superior Court judge rejected an attempt to portray structured settlement payment rights as an annuity in a minor's prove up hearing, stating. "The proposed "structured settlement" was described in the Third Petition as a structure to be purchased through a third party to be facilitated by a Houston, Texas law firm. The "annuity" proposed by the Petitioner was in fact a "receivable purchase agreement" which involved purchase of the rights of payment of a structured personal injury settlement from a California injured party having nothing to do with this case. In other words, the annuitant in the proposed plan facilitated by the Texas law firm was the California claimant, not the Minor. Furthermore, despite the Petitioner describing The Hartford as providing the annuity, the seller of the receivable purchase agreement was Genex Capital. No rating was provided for that entity in the petition. The Court denied the Third Petition, without prejudice" .  Also see my post Greenwald v Caballero-Goehringer | Judge KOs Portrayal of Structured Settlement Derivatives as Structured Settlement

Is March 2010, Thomas D. Begley, Esq. of the Begley Law Group in Morristown, NJ wrote "The companies do not buy the structured settlement annuity itself, but rather buy the right to the income stream". 

If structured settlement payment rights are not an annuity (or an obligation of the United States), then they cannot be a "qualified funding asset". 

Then the prongs of IRC 130(d) ALL potentially fail.

For purposes of this section, the term “qualified funding asset” means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States FAILS because a factored structured settlement payment stream is not an annuity contract, but a receivables purchase agreement under Caballero--Goehringer. Settlement Planner's qualified assignment company is not a company licensed to do business as an insurance company. , if—

1. 
   such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment, FAILS because a  factored structured settlement payment stream is not an annuity contract, but a receivables purchase agreement under Caballero--Goehringer. Settlement Planner's qualified assignment company is not a company licensed to do business as an insurance company.
   2,.the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates, (FAILS because a factored structured settlement payment stream is not an annuity contract, but a receivables purchase agreement under Caballero--Goehringer. Settlement Planner's qualified assignment company is not a company licensed to do business as an insurance company.
   3. such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, FAILS because a factored structured settlement payment stream is not an annuity contract, but a receivables purchase agreement under Caballero--Goehringer. Settlement Planner's qualified assignment company is not a company licensed to do business as an insurance company. and
   4. such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment". FAILS because a factored structured settlement payment stream is not an annuity contract, but a receivables purchase agreement under Caballero--Goehringer. Settlement Planner's qualified assignment company is not a company licensed to do business as an insurance company

Now lets go back to IRC Section 130  (if IRC 130(d) fails,  is there a greater tax issue of an attempt to characterize factored structured settlement payments streams as qualified funding asset?

IRC 130(a) In general  Any amount received for agreeing to a qualified assignment shall not be included in gross income to the extent that such amount does not exceed the aggregate cost of any qualified funding assets.  Does this now FAIL because there has been no purchase of a qualified funding asset?  Was the settlement planner's qualified assignment company entitled to a tax exclusion under IRC 130, or did they report the income on its tax return?

IRC 130 (b)Treatment of qualified funding asset In the case of any qualified funding asset—

(1)the basis of such asset shall be reduced by the amount excluded from gross income under subsection (a) by reason of the purchase of such asset, and
(2)any gain recognized on a disposition of such asset shall be treated as ordinary income.

But what about the term "obligation" as  a "qualified funding asset"under Internal Revenue Code 130(d)?  Reading the express language of the statute one can clearly see that It refers solely to an obligation of the United States.

This is Qualified Assignment 101 folks. One wonders how many qualified assignments were done this way and what an IRS audit of the books  and tax records of the qualified assignment company would turn up?

2. Securities and Exchange Commission/ FINRA investor alert 2013-86 also warns investors who might be attracted to the yield offered by buying the rights to someone else’s pension or structured settlement to be aware that:

• Investors may encounter commissions of seven percent or higher. [Our note:  the fees/mark up may or may not be disclosed. There are places to hide fees. Always ask to avoid a steep mark up] "Not surprisingly, the amount paid by the second plaintiff for the recycled payment stream is much greater than what the factoring company paid to the original payee. The factoring company markets the recycled payment stream based on its apparently attractive yield. However, because the recycled payment stream is taxable and also fraught with risk, the deal is not as good as advertised" -Stephen R. Harris, Esq.  Cozen O'Connor " Recycled Annuities" a Bad Alternative for Funding a Structured Settlement American Bar Association Journal December 17, 2018. 
• Pension and structured settlement income-stream products may or may not be securities and likely are not registered with the SEC.  
• These products could be difficult to sell if you need money and want to sell the product.
• Your “rights” to the income stream you purchased could face legal challenges

To jury rig the Qualified Assignment and Release document and misrepresent acquisition of someone else's structured settlement payment stream as a "Qualified Funding Asset(s) is outrageous, to say the least!

• "The settlement planner recently promoted a glossy attorney fee deferral brochure which also refers to these instruments by the tertiary market scam label " secondary market annuities.
• On the one hand, the same glossy brochure cites the seminal case of Childs v Commissioner, in which "the Petitioners never had the right to receive immediate payment, and non fund or property was set aside for petitioners which they could draw on at a time of their choosing", yet the glossy brochure says  "Change your investment at any time during deferral". Ohhhhkay.....
• Without the IRC 130 exclusion, If the attorney fee deferral is for more than one year and the factored structured settlement payments were an annuity, which they are not, is there any adverse consequence to the qualified assignment company?
• Again what the settlement planner is peddling as an annuity is not an annuity/ are not annuities.

Worth Reading ‘Recycled Annuity’: A Misleading Phrase For A Risky Investment That No One Should Confuse With A Structured Settlement by Pete Vodola.  Vodola is a Connecticut attorney who is intimately familiar with structured settlement factoring tranactions having consulted with and litigated on behalf of annuity issuers on compliance issues related to structured settlement protection acts thrroughout the United States for more than 15 years.

 

 

 

 

 

 

 

 

 

CrowFly Founder Misleads in Pitching Factored Structured Settlements as Life Insurance Products to Replace Treasuries

by Structured Settlement Watchdog

Why is Milestone Consulting CEO and CrowFly Board Member Misrepresenting Non Insurance Products as Insurance Products To Investors?

In January 2020, in his Milestone Consulting hat, Milestone CEO John T. Bair claimed that structured settlements were irrelevant. He doubled down in a post in February. Now in March 12, 2020, with his CrowFly, LLC factoring origination hat on, CrowFly Board member published  " Can Recycled Structured Settlement Annuities Replace U.S. Treasuries in Your Portfolio?"

Bair sets up the misrepresentation with a nod to Bob Dylan "The times, they are a-changing. War, pandemic, inflation, recession, oil shortages, housing markets, liquidity in the markets. These and thousands of other factors can make the stock market a wild ride for some, and downright devastating for others.

I'll tee up my touche with a quote from "Bare" Naked Ladies "Hold it now and watch the hoodwink As I make you stop,  and think"*

Bair says 'replace your low-yielding corporates and Treasuries in exchange for a 20-year guaranteed structured settlement that yields 4.5 percent — a value proposition if you’ve ever seen one. Interested in these “super bonds”?' 

Bair, proposes that "there is, on average, $2 billion worth of assets that are made available every year as people with structured settlements face life circumstances and need to sell at a slight discount". He says these assets are life insurance products, guaranteed by the issuer, and in most states by the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). Are these regulatory safety nets as good as Uncle Sam? No, but they are the next best thing in terms of credit. The ratings of the companies whose paper circulates in this market are Berkshire Hathaway, MetLife, New York Life, Prudential, Pacific, and others — all A+ and A++ A.M best rated insurers. Their guarantees have held up through major wars and other global calamities. So, it’s secure paper in my opinion.

Let's take Bair's statements one by one show why, in my opinion, they are wholly misleading:

1. What Bair calls " Recycled Structured Settlement Annuities" are not in fact annuities, they are factored structured settlement payment streams.  Life insurers buy individual streams or securitizations of factored structured settlement payments streams as investments, but they are not permitted to account for them as annuities or insurance products pursuant to the NAIC's Statutory Issue Paper 160.
2. The buyer of a factored structured settlement payment stream (such as that being peddled by Mr. Bair as a Treasury alternative) is not buying an annuity or a life insurance product per Statutory Issue Paper 160. 
3. One has to pose a big question WHY Bair fails to refer to the instrument he is pitching to investors truthfully and accurately. Instead of " factored structured settlement payment streams"  (NAIC) or "structured settlement payment rights  (Internal Revenue Code), in the most recent publication he uses " recycled structured settlement annuities and "super bonds".   He has also used in other published sales pitches, the tertiary market scam label "Secondary market annuity".
4. One wonders how securities regulators view the use of the term "super bonds".  Factored structured settlement payment streams are not bonds. Another former heavy user of "secondary market annuity" settled a FINRA complaint against him and a former employee for an aggregate $105,000  [Cooper v Somerset et al.]
5. Bair's published statement, "These assets are life insurance products, guaranteed by the issuer, and in most states by the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). Here Bair is lying to investors.  31 states have adopted the Life  & Health Guaranty Fund Model Act (#520) which at Section 3A(5) expressly does not cover "a person who acquires rights to receive payments through a structured settlement
   factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.
6. Factored structured settlement payments streams are not insurance products according to the National Association of Insurance Commissioners as set forth in Statutory Issue Paper 160. Furthermore, in a January 26, 2009 opinion letter addressed to me, subsequently published by the New York State Insurance Department (now Department of Financial Services),  the Office of General Counsel concluded in answer to my quesion, that N.Y. Insurance Law Section 7718 broadly prohibits the existence of LIGCONY for the purpose of selling, soliciting or inducing the purchase of annuity contracts. Thus a statement that "state insurance guaranty funds provide an additional layer of protection for future structured settlement recipients", which is aimed at New York residents, runs afoul of Insurance Law,  Can Mr. Bair, who individually and through Milestone is licensed as an insurance agent in the State of New York and many other states legally make (1) the false claim that factored structured settlements are life insurance products in the inducement to buy/invest and (2) draw a conclusion from the false claim in (1), in inducing the purchase of factored structured settlement payment streams,  that they are guaranteed by NOLHGA
7. Bair and his agency continue to be appointed by many, but not all of the life insurers issuing structured settlement annuities.

Don't misconstrue this sharply word piece. Bair is a maverick and he does a lot of good things like End Distracted Driving and other pro bono work, but Bair sometimes just leaves you scratching your head with a reckless disregard for the truth such as here. It's just not necessary. Substitute olive oil for the snake oil. It's a lot healthier.

 

*from Barenaked Ladies " One Day" , 1999 Reprise records, written Ed Roberston

 

 

Life Settlements vs Structured Settlement Factoring Transaction Underscores "Secondary Market Annuity" Marketing Fraud

by Structured Settlement Watchdog

By examining the difference between a life settlement transaction and a structured settlement factoring transaction we can continue to home in on why the use of the term "secondary market annuities" to market factored structured settlement payment streams is a marketing fraud on investors.

What is a Life Settlement?

The sale of a life insurance policy is called a life settlement.  A life settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit. In a life settlement transaction, the policy’s owner transfers ownership of the policy to the buyer in exchange for an immediate cash payment and, in some instances, a reduced interest in the death benefit for the policy’s beneficiaries. The buyer of the policy pays all future premium payments and receives the death benefit upon the death of the insured (when the policy matures). A life settlement is different from a viatical settlement in that the individual insured on the policy has a longer life expectancy. In a viatical settlement, the life expectancy of the insured is 24 months or less.

Step 8 in the Life Settlement Process "The insurance carrier is notified of the change of policy ownership and beneficiary to the new owner, the provider."

[ Source: Life Insurance Settlement Association]

What is a Structured Settlement Factoring Transaction?

The term “ structured settlement factoring transaction "means a transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration". [ Source:  IRC 5891(c)(3)(A)]

IRC 5891 (c)(3 (B) Exception Such term shall not include—
(i)the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution in the absence of any action to redirect the structured settlement payments to such institution (or agent or successor thereof) or otherwise to enforce such blanket security interest as against the structured settlement payment rights, or
(ii) a subsequent transfer of structured settlement payment rights acquired in a structured settlement factoring transaction.

Fundamental differences between a life settlement and a structured settlement factoring transaction

1. Life settlement involves the sale of an actual policy. A structured settlement factoring transaction does not.
2. A structured settlement factoring transaction involves the transfer of structured settlement payment rights not the transfer of annuity ownership
3. A subsequent transfer of structured settlement payment rights is not a structured settlement factoring transaction or a transfer of annuity ownership since the annuity ownership was not transferred in the first place.

Licensing

Life settlements are typically under the purview of state life insurance departments. In Connecticut for example, life settlement is a line of authority under an insurance license. The state regulator has the power to fine, suspend or revoke the authority. By contrast regulation of authority to engage in structured settlement factoring transactions, solicit annuitants, solicit investors in factored structured settlement payments streams is the exception rather than the rule.

 

 

  

 

 

Why Is Milestone Consulting Pitching Factored Structured Settlement Payment Streams as Annuities When They're Not?

by Structured Settlement Watchdog

MIlestone Consulting states that it is boycotting the National Structured Settlements Trade Association "because of its ties with insurance companies" and because of its failure to protect plaintiff rights, while 

The secondary market "annuity" puzzle

 

upon information and belief, the Milestone CEO uses, benefits from and has not renounced his NSSTA CSSC designation on his LinkedIn profile(at time of publication) and  Milestone is contracted and appointed  with some but not all NSSTA member companies issuing structured settlement annuities, who are being "tarred and feathered" at the expense of the Factored Structured Settlement Payment Rights Milestone touts using the tertiary market's scam label "Secondary Market Annuities" while Milestone uses the names of the companies to market the alleged safety of the investment on its blog.

"If you are dead set on having a guarantee from a major insurance company for payments," they say "then consider a secondary market annuity, or structured settlement that is being transferred or sold by another. These annuities offer yields of four to six percent and are guaranteed by the same insurance companies that offer brand new ones through their brokerage distribution channels. By being a buyer of someone else’s structured settlement, you are giving yourself an actual competitive yield, and helping another family who for whatever reason is being forced to sell".   MIlestone blog 1/11/2020

" After all they are issued by the very same insurance companies that issue all structured settlements like Metropolitan, Prudential and Berkshire Hathaway"  Milestone Legal Examiner 1/17/2020 by Milestone CEO

" So how can tort victims with purchasing power fix the structured settlement industry? They can be buyers of structured contracts and structured settlement annuities that are bought and sold every day" Ibid.

And the dead wrong,  "The annuity policies that changed hands were the guaranteed annuity policies from major insurers like New York Life, Metropolitan, Prudential, MassMutual, John Hancock and others".   Milestone Legal Examiner  March 5, 2018 by Milestone CEO

Comments and Questions

1. What Milestone is pitching as an annuity is not an annuity. It's a Factored Structured Settlement Payment Stream.
2. A Factored Structured Settlement Payment Stream is an instrument created by the transfer of structured settlement payment rights in a structured settlement factoring transaction  (defined at IRC 5891(c)(3)(A). With specialist knowledge Milestone knows that neither the annuity itself, nor its ownership, transfers when the rights are transferred. Or perhaps not, based on the March 5, 2018 quote.
3. Insurance companies do not "issue" Factored Structured Settlement Payment Streams, do they?
4. So, if the annuity does not transfer in a structured settlement transfer and remains owned by the qualified assignment company, and Milestone is pitching an annuity, is Milestone creating an annuity? Is any factoring company creating an annuity in a structured settlement factoring transaction or when it assigns the rights to an investor via Court Order? Where is the support that in the secondary market there are "structured settlement annuities that are bought and sold every day?
5. You don't get a closing book when you buy a legitimate annuity and you don't have the transaction risk with legitimate structured settlement annuities that you have with Factored Structured Settlement Payment streams.  5 companies selling (or in the past have sold) factored structured settlement payment streams to investors, have paid hundreds of thousands in legal fees fighting for their clients over claims to their structured settlement investments by lead paint victims arising out of the Access Funding scam in Baltimore  Maryland. Somerset's CEO and one of its former employees paid off one of its secondary market "annuity" to settle a FINRA complaint against them in September 2019 and December 2019 respectively.
6. So a big question is why would Milestone, a company led by a licensed insurance agent, market, or allow for something to be marketed that is not an annuity, as an annuity?
7. The National Association of Insurance Commissioners' (NAIC) Statutory Issue Paper 160 p6, December 2018 Ref #2081-17, said that factored structured settlement payment streams (or acquired structured settlement income streams) are neither annuities nor insurance products. Insurers who acquire factored structured settlement payment streams cannot account for them as annuities or insurance products. "New Footnote 1: This guidance is specific to acquired structured settlement income streams (legal right to receive future payments from a structured settlement) and does not capture accounting and reporting guidance for the acquisition of any insurance product (e.g., life settlement, annuities, etc.)"   and New Footnote 2: Reporting entities that hold qualifying structured settlement payment rights shall report the security on Schedule BA either as an “any other class of asset” or as a “fixed or variable interest rate investment with underlying characteristics of other fixed income instruments” if the structured settlement payment right qualifies for reporting within that reporting line (e.g., NAIC designation)
8. It's bad enough that we have to deal with Annuity.org, a factoring company shill, providing the misinformation, but why Milestone?
9. On the same blog post, Milestone uses contributions to the AAJ endowment as part of its marketing sales pitch  "being the only non-law firm donor to the AAJ Endowment". On September 24, 2007, the Office of General Counsel of the NY State Insurance Department (now DFS) opined in response to a request regarding a similar pitch, that it was unlawful when it appeared in an advertisement for the Milestone CEO's former company and directed at New York Trial Lawyers and members of ATLA (the former acronym for former name of AAJ). 
10. That being said, should donors get a free pass for representing to a lawyer's clients that something is an annuity that is not an annuity, or give reason for lawyers to ignore a client of theirs being sold something that is being called an annuity which is not an annuity.
11.  If you are advising an investor as a fiduciary, don't you need to put their interests above the selling annuitant?  
12. The two largest donors to NYSTLA are members of the National Structured Settlements Trade Association. If you go around the country you will find that NSSTA members are well represented in other states.

A. Following is an excerpt of a published opinion of the Office of General Counsel New York State Insurance Department (now Department of Financial Services) dated September 24, 2007:

"Turning to the question about advertising donations to certain not-for-profit organizations like association of trial lawyers, note as an initial matter that in Opinion of General Counsel No. 07-03-07 (March 12, 2007), the Department stated that “nothing precludes the agent or broker from making charitable contributions so long as the advertising of a charitable contribution as an incentive for new insurance business does not constitute an improper inducement in violation of Insurance Law § 2324.” This statement applies with equal force to life, accident and health insurance policies for which such an inducement would be a violation of Insurance Law § 4224.

The inquiry references an “affinity program” of an association representing trial lawyers. To participate in the program, a business must sign an agreement that provides for certain advertising-related services by the not-for-profit in exchange for a contribution from the participating business. The member businesses are responsible for providing all advertising content. The association urges its members to make purchases from any business that has joined the affinity program.

If this form of arrangement were strictly an exchange of compensation by an agent or broker for advertising services, the Department would regard the contributions as fees paid for permissible advertising, and not donations to a not-for-profit. In that circumstance, the contributions would not constitute an inducement in violation of Insurance Law § 4224.

However, where, as here, an agent or broker advertises that the agent or broker makes contributions to a not-for-profit organization of concern and interest to potential purchasers of insurance or annuities, such conduct constitutes an illegal inducement to purchase insurance that runs afoul of Insurance Law § 4224. Nor may an agent or broker evade the prohibition set forth in the Insurance Law by enlisting the aid of the not-for-profit organization to do what the agent or broker cannot do lawfully"

Sadly that's not all.

The same January 11, 2020 blog posts claims that Milestone "has been at the forefront of advocacy for plaintiffs since our inception in 1999" . Really Milestone?  While the Milestone CEO has indeed been in the business since 1999 where he started with EPS Settlements Group  (now Arcadia), Milestone was only established in 2012 (not 1999), according to its LinkedIn profile.  Second, here is a fax cover sheet from March 5, 2002 sent on behalf of the MIlestone CEO (then with EPS Settlements Group) who was the defense structured settlement broker on a medical malpractice case.  Download FAX cover sheet EPS-John Bair 3-5-2002." Note that Milestone now uses the same FAX number. A December 15, 2003 article in Buffalo Business First promoting his former company Forge Consulting, states that the Milestone CEO "was with EPS Settlements Group for 3 years" and " Bair continues. "It's why I ultimately launched this company  (Forge). It's what drove me personally to seek out a new environment to allow us to represent plaintiffs.Why was it necessary to embellish by "moving the chains" to attempt to bury EPS?  It's not like it can't be found. Why not just say you've been a plaintiff advocate since 2003?

Milestone suggests "educating yourself about non-qualified assignments which allow for tax deferral on the earnings of your settlement, and tax-exemption on the principle. (26 U.S.C. § 130c)" 

1. The word non qualified assignment does not appear in (26 U.S.C. § 130c) or [(26 U.S.C. § 130(c)] or IRC §130(c)
2. All principles are tax exempt

• a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.  Tax exempt 
• a rule or belief governing one's personal behavior.  Tax exempt a-rooney
• a general scientific theorem or law that has numerous special applications across a wide field. Tax exempt a-roni
• a fundamental source or basis of something.  Tax exempt verklempt