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.
