by Structured Settlement Watchdog
Stephen Otto, A Sewickley, PA bankruptcy lawyer has written the 11/11/2007 commentary "Trading Your Structured Settlement For "Cash Now", A Cousin to Predatory Lending?" about his perception of the similarities between structured settlement factoring transactions and predatory lending. He sources information from www.cockeyed.com, which I also cited in a prior post. What makes this post interesting is that this is a lawyer's impression of the factoring business.
What Mr. Otto does not touch upon is what, upon information and belief, is the dirty BIG secret that a fair number of insurance agents, structured settlement brokers, settlement planners, financial planners, and even lawyers, purportedly receive financial incentives from such factoring companies for completed structured settlement factoring transactions, Such financial incentives may not be disclosed by those receiving them. The financial reality is that the recipients of these undisclosed (or disclosed) financial incentives are taking money out of the pockets of those who must resort to factoring their structured settlement payment rights to raise money, a good number of whom may be in desperate shape and behind in their bills. The most egregious behavior is exhibited by some structured settlement brokers, settlement planners, financial planners, and even lawyers who make the specious explanation to their "victims" that their fees come out of the factoring company's profit. Hiding the likelihood that the profit margin is malleable and must be built up to accommodate "the vig" paid to, and received by, some structured settlement brokers, settlement planners, financial planners, and even lawyers, is just plain wrong.
The outrageous payment of undisclosed (or disclosed) financial incentives to, and receipt by, some structured settlement brokers, settlement planners, financial planners, insurance agents, stock brokers, and even lawyers for referrals to factoring companies such as JG Wentworth, Strategic Capital and others deserves to be exposed. Bankruptcy lawyers should be educated about "the vig" and know that their clients might be able to pay off more (or receive more) if "the vig" were not paid to structured settlement brokers, settlement planners, financial planners, insurance agents, stock brokers, and even lawyers by the factoring companies.
State and national trial lawyer associations who have worked hard to dispel the "perceived" negative connotation from the "Trial Lawyers, Inc." moniker, need to be aware of the potentially negative mainstream media exposure they or any of their members may face if they, or any of their lawyer members, donors, "friends" or "partners for justice", were found to be on "the cash now vig", and the directors of these associations turned a blind eye, because of the donations made by such individuals or firms to the association kitty.
The National Association of Trial Lawyer Executives (NATLE) recently endorsed Strategic Capital. As part of their "very thorough investigation" did they check to see if Strategic Capital pays financial incentives to structured settlement brokers, settlement planners, financial planners, insurance agents, stock brokers, and even lawyers for referrals? Once again those referral fees take money out of the victim's pockets. What about a structured settlement brokers, settlement planners, financial planners, insurance agents, stock brokers, and even lawyer who refers to Strategic Capital, citing NATLE's imprimatur, and takes a fee? It's all seems rather unhealthy for the tort victim doesn't it?
***Patrick Hindert, an author, attorney and insurance agent, one of the biggest promoters of factoring, who continues to be permitted to sit on the influential legal committee of the National Structured Settlement Trade Association, is the same guy who in April 2007 implied that James Gibson, a convicted felon who ripped off millions of dollars of structured settlement funds from tort victims who held treasury bond trusts wasn't worse than this author's well placed criticism of the factoring industry business practices as they relate to structured settlements. The decision of the Illinois Attorney Registration Disciplinary Commission on September 2, 2004 in that matter of In Re: Thomas Ducey, Jr. Comm. 01SH 118 gives a good synopsis of the dark Gibson/SBU scandal.
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