Beware of Structured Settlement Secondary Market Scams!

Scams in the structured settlement secondary market abound.

If you are the recipient of a structured settlement annuity and receive a phone call from someone who says “I work with your insurance company and you are owed money” just hang up the phone.  The caller doesn’t work with your insurance company, and you aren’t “owed any money.”  The caller wants you to sell your annuity payments, and will likely offer you just pennies on the dollar.

Likewise, if you receive a phone call from someone who says “I work with your insurance company and we can restructure your annuity” just hang up the phone.  The caller doesn’t work with your insurance company and they can’t “restructure” your annuity.  The caller wants you to sell your annuity payments, and will likely offer you just pennies on the dollar.

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Structured Settlement Secondary Market Fraud in Illinois

A recent Appellate Court opinion from the 4th District in Illinois highlights more structured settlement factoring fraud.  In this instance, Stone Street Capital, LLC purchased payments in four separate transactions from 2010 – 2013 filed in Sangamon County, Illinois.  Stone Street filed four transfer petitions seeking to purchase structured settlement annuity payment streams from a “seller”, each of which was granted by the Sangamon County Circuit Court.  The fraudulent transfer petitions were filed by Chicago attorney, Brian Mack.  In the petitions, Mack failed to inform the court that the “seller’s” annuity contract contained an anti-assignment provision. As it turned out, the real recipient of the structured settlement annuity knew nothing of the transactions.  The signatures on the affidavits and petitions were forged by the seller’s mother, and falsely notarized by a friend of the seller’s mother.

In 2016, the victim of this fraud filed lawsuits claiming the Sangamon Circuit Court orders were void ab initio due to lack of jurisdiction and fraud on the court. Despite the evidence, it was 17 months before Stone Street agreed to vacate the transfer orders and return the funds to the “seller.”  After the settlement the court retained jurisdiction to adjudicate any petition filed for sanctions pursuant to Illinois statute.  The victim filed a motion for sanctions against Stone Street in September, 2017,, which was denied.  On appeal, the trial court’s decision was reversed.

The Appellate Court stated:

We find the trial court abused its discretion in denying the motion for sanctions on this issue.  Since 1999, the Illinois Appellate Court has repeatedly held that where a structured settlement agreement contains an anti-assignment provision, that provision must be enforced an renders any attempt to assign structured settlement payments void.  Stone Street cannot plead ignorance of this case law as attorney Mack was heavily involved in many of those cases.  More importantly, Stone Street was thus bound by that case law when it presented its petitions to the trial court. However, in its first two petitions, Stone Street did not reference the possible existence of an anti-assignment clause, suggesting an attempt to  hide this fact from the court. Such conduct cannot be countenanced.

Given the totality of Stone Street’s conduct in connection with the four petitions at issue in this appeal, we find sanctions under Supreme Court Rule 137 (eff. July 1, 2013) are appropriate. As the trial court abused its discretion in denying [the victim’s] motion for sanctions, we remand for further proceedings on her motion.

Not all of the fraud here can be blamed on the factoring company – Stone Street.  The victim’s mother had a hand in this as well. However, it is the duty of the petitioner – Stone Street to comply with the Illinois Structured Settlement Protection Act (215 ILCS 153/1 to 35 (West 2010)).

Fraud in the structured settlement secondary market is rampant. If you have a been a victim of fraud, please call us at (203) 504-8425 or (646) 933-3143.

 

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Access Funding Fraud in Maryland – Update

Access Funding is back in the news in a January 21, 2019 article in The Washington Post. The recent settlement of a class-action lawsuit brought by two of Access Funding’s former customers would provide about $750,000 for victims of the company.  Under the terms of the settlement, the victims released claims filed by Attorney General Brian Frosh which means that they cannot receive any additional restitution.  Attorney General Frosh’s office has appealed the lawsuit “in the hopes that it will be able to win back money for the victims.”  Access Funding is accused of targeting victims of lead paint poisoning, many of whom are mentally impaired and pressuring them into selling their structured settlement periodic payments.  The Washington Post has actively sought to expose structured settlement scams, in 2015 publishing a feature article by Terrence McCoy, “How companies make millions off lead-poisoned, poor blacks” that highlighted the problems plaguing the structured settlement factoring industry.

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Structured Settlement Factoring Companies Sue Each Other

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In late November, 2018 DRB Capital, LLC filed a lawsuit in Palm Beach Circuit Court, Florida against several other secondary market, factoring companies, including Rightway Funding LLC, BTG Advisors LLC, Sempra Finance LLC, Greenwood Funding LLC, and JLC Capital Funding LLC alleging that these companies interfered with DRB’s business in violation of the Florida Deceptive and Unfair Trade Practices Act by employing “a parasitic approach to obtaining customers from which to purchase the transfer of structured settlement rights.” The defendants have filed a motion to dismiss the lawsuit.

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Annuity Sold – Structured Settlement Factoring Scam

On January 8, 2018, Maryland Attorney General Brian E. Frosh announced that Maryland’s Consumer Protection Division had entered into a settlement resolving an investigation into  deceptive marketing  practices by Annuity Sold, LLC and its many affiliated companies:  Uber Funding,LLC; Bendermere Capital Solutions, LLC; Axis Funding, LLC; Stonebridge Capital, LLC; Greenspring Funding, LLC; LSG, LLC; Preak Street, LLC; ILILIL2010, LLC; Palantir Packaging, LLC; and JRR Funding, LLC.  Annuity Sold and its affiliates were in the business of purchasing structured settlement payment streams for lump sums.

The deceptive marketing practices employed by Annuity Sold and its affiliates included letters written on behalf of a fictitious judge and a fictitious law firm, letters containing the logo of the Baltimore Ravens football team, letters stating that the recipient qualified for a zero percent interest loan, and letters from non-existent insurance companies.  An article in The Baltimore Sun reported that Annuity Sold disagreed with the allegations, but settled “to avoid the cost and uncertainty of litigation.”

Annuity Sold and its affiliates have been banned from doing business in Maryland for seven (7) years,  ordered to pay civil penalties, and make restitution to annuitants who sold their structured settlement payment streams to Annuity Sold and its affiliates.

Maryland has one of the strongest structured settlement protection acts, and Attorney General Frosh has taken a strong stand against deceptive practices in the structured settlement secondary market.  Earlier posts on this subject can be found here, and here.

 

 

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Structured Settlement Fraud Continues

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Fraud in the structured settlement secondary market appears to continue unabated. One of the latest scams seems to involve transfer companies that obtain court orders authorizing an annuitant to sell his/her periodic payments, and then the company fails to pay the seller.  The seller is then faced with chasing down the company or figuring out a way to go back to court and have the court order set aside.  This situation is exacerbated by fly by night companies with no track record and no real business.

Not one of the 49 state structured settlement protections statutes allows a company to obtain a court order authorizing the sale of periodic payments and then fail to pay the Seller.  This is fraud. Plain and simple.

If you are a “Seller” and did not receive payment pursuant to a transfer order, please contact us at (203) 504-8425 or via email at eddie@edwardstonelaw.com.

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Broward Attorney Jose Camacho Sentenced

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On August 3, 2017, the Miami Herald reported that Jose Camacho, the Broward County attorney who specialized in filing structured settlement transfer petitions was sentenced to one year in jail, and ten years of probation.  He plead guilty to 14 felony charges after forging over 100 judicial signatures beginning in 2012.

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Edward Stone Speaking at SSP Annual Meeting

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Edward Stone will be a guest speaker at the Society of Settlement Planners Annual Conference in Las Vegas on March 2, 2017.  Edward Stone and John Darer will participate in a panel discussion on current developments in the structured settlement secondary market.

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CFPB Files Suit Against Access Funding

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The Consumer Financial Protection Bureau (CFPB) has filed suit in federal court in Baltimore accusing Access Funding of violations of the federal Consumer Protection Act.  Access Funding (now Reliance Funding) is a purchaser of structured settlement payment streams whose alleged predatory business practices involving people who had been poisoned by lead paint as children were exposed by investigative reporter Terrence McCoy of The Washington Post last summer.  Rep. Louise M. Slaughter (D-NY); Rep. Elijah E. Cummings (D-Md); Sen. Ben Cardin (D-Md); Sen. Barbara A. Mikulski (D-Md) and Sen. Edward J. Markey (D-Mass) all praised the CFPB effort to protect consumers who may have been victims of financial fraud by companies in the structured settlement industry.

This federal lawsuit follows on the heels of a similar lawsuit filed by Maryland Attorney General Brian Frosh in May, 2016.  The state court action filed by Attorney General Frosh is pending in Baltimore City Circuit Court. Frosh has pledged to work to “prevent vulnerable Marylanders from having their money taken from them through illegal practices.”

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Maryland’s New Structured Settlement Transfer Laws

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Maryland Senate Bill 734, which amends the procedures for structured settlement transfers took effect on October 1, 2016.   Senate Bill 734 requires that factoring companies register with the Maryland Attorney General before filing transfer petitions or applications within the State of Maryland. The bill further requires that factoring companies (known as transferees under the structured settlement protection statute) post a surety bond before doing business in Maryland.   In an effort to prevent “judge shopping” or “forum shopping” the new  law also requires that all transfer petitions be filed in the county in which the payee lives.  In September, Maryland Attorney General Brian Frosh announced that his office was accepting registrations under the new law.  If a factoring company is not registered with the OAG (Office of Attorney General) the factoring company may not file a transfer petition in Maryland.  This new legislation came on the heels of investigative journalist Terrence McCoy’s article in The Washington Post (“How companies make millions off lead-poisoned, poor blacks”) on the predatory business practices of many structured settlement factoring companies. Attorney General Frosh’s suit against Access Funding, LLC and other structured settlement factoring companies filed on May 10, 2016 is pending in the Circuit Court for Baltimore City. Maryland’s new Structured Settlement Protection Act is among the most comprehensive of the 49 state structured settlement protection acts.

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