by Structured Settlement Watchdog
By far the most notorious structured settlement fraud involved convicted felon James R. Gibson
- Gibson’s criminal indictment stemmed from his activities as owner and president of SBU, Inc. and several affiliated companies.
- The companies were operated by Gibson in the St. Louis, Chicago, and West Palm Beach areas.
- SBU offered tax-advantaged structured settlements to personal-injury plaintiffs.
James R. Gibson marketed SBU by representing to injury victims that he would use their settlement money to purchase United States Treasury Bonds and hold these bonds in trust for the victims
Gibson promised to make periodic payments to the victims from the proceeds of the investments. Some of the settlement funds were placed with legitimate trust companies and funded with bonds.
The Warning Flag
James Gibson transferred all of the SBU trust accounts to Flag Finance Corporation, another corporation wholly owned and operated by Gibson. After a period of legitimate operation Gibson stopped purchasing Treasury obligations for most of the trusts and instead used new settlement proceeds and bond proceeds in his own unauthorized business transactions, high-risk investments (including the operation of a chain of grocery stores that eventually sought bankruptcy protection), and the purchase of real estate and personal luxury items. The total loss to the personal injury victims in the case was $156,256,316.92. Source: United States v Gibson 356 F.3d 761
Scott Rothstein on the other hand has allegedly defrauded investors not personal injury victims
The terms “structured settlement” and “fabricated structured settlement” have been, in the opinion of this author, irresponsibly bandied about in the complaint against him as well as in press reports in the Sun Sentinel and Miami Herald as well as bloggers and other news organizations who have picked up the story and cited non personal injury lawyers. As far as this author can tell the Rothstein alleged fraud involves what it known as pre-settlement funding. Unlike structured settlements involving annuities such activity requires no insurance license and indeed Scott Rothstein has no life insurance license (allows person to sell annuities) in Florida as of November 3, 2009.
The Miami Herald shamelessly quoted Florida personal injury attorney Ira Leesfield, in an effort to let readers know what structured settlements really are, but fails to explain that what Rothstein was peddling were not structured settlements
From most accounts the press appears to have exposed, but chosen not to emphasize, that Scott Rothstein appeared to be engaging in pre-settlement funding transactions with his own clients. At this point we seem to be way beyond ethical considerations. But it opens up another discussion.
It is common knowledge that lawyers invest in pre-settlement funding due to the fabulous potential rate of return. This author understands that some firms charge 2.5-4% per month for non recourse financing. Survey the major players and you may even find lawyers among the owners, however at least one that I am aware of refers out such transactions involving his firm’s own clients. Why didn’t Rothstein?
James R. Gibson is the undisputed Structured Settlement Fraudster of all time
- James R. Gibson is serving a 40 year sentence and release date is July 7, 2025 ears in prison USCOURTS-ilsd-3_01-cr-30005-8.pdf
- Defrauded $67 million from 140 people injury victims’ structured settlements,
- Gibson threatened to kill a judge
- Denied compassionate release. See James R. Gibson, Structured Settlement Crook Who Threatened to Kill Judge, Denied Compassionate Release – Structured Settlements 4Real®Blog July 31, 2025
In terms of scale, Rothstein’s $1B Ponzi scheme blew Gibson away
- Let’s get it out of the way, Rothstein had a Gold toilet seat
- Defendant Rothstein used his law firm RRA to fraudulently induce investors to: (1) loan money to non-existent borrowers based upon promissory notes and requests for short-term bridge loans for business financing; and (2) invest funds based upon anticipated pay-outs from purported confidential settlements.
- Rothsetin was sentenced to 50 years for his role in his Ponzi Scheme.
- Rothstein testified that they specifically avoided calling the investments structured settlement because of the Court scrutiny it would bring (under the state Structured Settlement Protection Act) See Scott Rothstein Structured Settlements Misconceptions Debunked – Structured Settlements 4Real®Blog February 1, 2012 Last updated November 13, 2025
Wrap Up
- So when it comes to scale Scott Rothstein wins on amount ripped off, length of sentence for his crimes.
- However, James Gibson’s notoriety had to do with actual structured settelments.
- Rothstein’s purported association with structured settlements was sparked by mischaracterization made by Kendall Coffey and fanned by ignorant reporters from South Florida press.
- Both Gibson and Rothstein remain caged.
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