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.
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.
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.
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 firstname.lastname@example.org.
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.
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.
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.”
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.
In March, 2016 the Florida legislature passed a bill revising the Florida Structured Settlement Protection Act § 626.99296 et seq., adding new requirements designed to protect individuals selling their structured settlement payments in the secondary market. The revised Act requires that (1) transfer petitions be filed in the county where the payee resides; (2) all payees attend the hearing on the transfer petition (unless the court determines that good cause exists to excuse the payee from attending); (3) the transfer petition include a summary of all transfers by the payee to the transferee (or an affiliate of the transferee ) filed within the four years preceding the date of the transfer agreement; (4) the transfer petition include a summary of all transfers by the payee to any person or entity other than the current transferee within the three years preceding the date of the transfer agreement, if actually known to the transferee or disclosed by the payee; (5) the transfer petition include a summary of any proposed transfers by the payee to the transferee that were denied within the two years preceding the date of the transfer agreement; and (6) the transfer petition include a summary of any other proposed transfers that were denied, if known by the transferee or disclosed by the payee. These revisions are definitely steps in the right direction and go a long way towards supplying a Florida Circuit Court with information necessary to make a determination that a transfer is in the payee’s “best interest.”
However, the revised statute allows the court to hear an application for a transfer even if the settlement agreement prohibits the transfer of payment rights. This means that no matter how hard a personal injury lawyer may work to protect his/her client from the secondary market, the carefully crafted structured settlement designed to protect an injury victim for an entire lifetime can be undone with the stroke of a pen. Without a doubt, this leaves vulnerable settlement victims at the mercy of unscrupulous factoring companies and their high pressure sales tactics.
These revisions to the Florida Structured Settlement Protection Act § 626.99296 et seq., are effective as of July 1, 2016.
The Maryland Attorney General, Brian Frosh, has asked two attorneys involved in the structured settlement factoring industry, Anuj Sud and Charles Smith, to divulge records relating to their participation with Access Funding’s acquisition of over $28,000,000 of future payments from “overwhelmingly poor” Baltimore residents who were “cognitively impaired as a result of lead poisoning. Unlike many other structured settlement protection acts, Maryland’s Structured Settlement Protection Act requires sellers to obtain professional advice in connection with a sale of their periodic payments. Terrence McCoy of The Washington Post reported that Smith acted as the “independent professional adviser” in each of Access Funding’s transfer petitions filed between June 2013 and June 2015.