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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Revised Tennessee Structured Settlement Protection Act

Earlier this year Tennessee joined the many states revising their Structured Settlement Protection Acts to provide more robust protections to those people seeking to sell some of their periodic payments to factoring companies.  Under the Tennessee Structured Settlement Protection Act, the seller is called the “payee” and the factoring company is known as a “transferee”.  The revised Tennessee statute requires that the transfer petitions be brought in the county in which the payee resides.  It also requires that the payee personally appear at the hearing, unless excused for good cause.  The payee must also submit a sworn statement detailing any prior “requested, proposed, or approved transfers”.   Tennessee Senate Bill No. 760 was signed into law by Tennessee Governor Bill Haslam on April 14, 2016.

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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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Revised Florida Structured Settlement Protection Act

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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.

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Illinois Structured Settlement Protection Act – revised

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Revisions to the Illinois Structured Settlement Protection Act, 5 ILCS 153/1 went into effect last month in the wake of Settlement Funding, LLC v. Brenston, 998 N.E. 2d 111 (Ill. App. Ct. 2013) where the Illinois Appellate Court held that the trial court erred in permitting a transfer where the settlement agreement contained an anti-assignment clause and the factoring company failed to disclose this to the court. Among the changes to the Illinois Structured Settlement Protection Act are provisions permitting an “interested party” to waive these assignment prohibitions. The revisions to the Illinois Structured Settlement Protection Act also include provisions designed to address “forum shopping” inside the state by requiring that transfer petitions be filed in the county where the payee lives.

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Judicial Reforms for Structured Settlements in Maryland

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The Washington Post reported that “Prince George County Circuit Court has implemented significant reforms” in its handling of structured settlement payment petitions filed pursuant to the Maryland Structured Settlement Protection Act. All sellers and their independent advisors must now appear at the hearings, and all petitions must be filed using the seller’s full name, rather than initials. Judge Herman C. Dawson who previously presided over the transfer petition hearings will no longer do so. Unfortunately, as this latest article on the structured settlement industry by Terrence McCoy points out, loopholes in the Maryland Structured Settlement Protection Act “benefit the companies” purchasing these structured settlement payments. More judicial reforms such as those being implemented in Prince George County would go a long way in protecting the recipients of structured settlements.

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Bill Introduced in District of Columbia on Structured Settlements

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Council members Mary M. Cheh (D-Ward 3), Charles Allen (D-Ward 6), Anita Bonds (D-At Large), David Grosso (I-At Large) and Brandon T. Todd (D-Ward 4) introduced a structured settlement protection act to protect District of Columbia residents seeking to sell their structured settlement payment streams. While we agree with the op-ed in The Washington Post on September 11, 2015 by legal aid attorneys Heather Latino and Thomas Papson that the proposed legislation is a “huge step toward ensuring that District residents with structured settlements from personal injury cases are not victimized a second time by a company seeking to purchase their settlement payments” structured settlement protection acts need to ensure that they work to protect the recipients of structured settlements, not the companies purchasing the structured settlement payment streams.  This proposed legislation does not do enough.

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