by Structured Settlement Watchdog
Structured Settlement Buyer and Grammy Nominated Hip Hop Producers Named in Lawsuit
Liberty Settlement Solutions and its principals are Defendants in a new lawsuit arising from the alleged exploitation of a young disabled adult with a structured settlement.
Shortly after Liberty bought her structured settlement payments and referred by an officer of Liberty, to an “agent” for hip hop producers, her money was gone in an alleged hip hop investment sham. Instead of being used to finance production of a hip hop music album from which she was to receive royalties, her money was used to build a swimming pool.
The lawsuit was filed August 2, 2019 in the Circuit Court of the 17th Juridical District in and for Broward County Florida [Case Number CACE-19-015927] styled Tierra Douglas v Liberty Settlement Solutions, LLC, PF 22 LLC, Marc Hermes, James McCabe, Record Room Productions Inc., Ted Kay, Andre Lyon and Marcello Valenzano Download Tierra Douglas v Liberty Settlement Solutions et al. Complaint.
Liberty Settlement Funding is another trade name that has been used by Liberty Defendants
The Complaint contains Three Counts
- Civil Theft and Exploitation of a Vulnerable Adult (Liberty, PF22, McCabe and Hermes)
- Civil Theft and Exploitation of a Vulnerable Adult (Record Room, Kay, Valenzano and Lyon)
- Fraud/Fraudulent Inducement (Record Room, Kay, Valenzano & Lyon)
Plaintiff’s lawyers contend that Defendants’ conduct constitutes exploitation of a disabled person and civil theft (as defined under Fla. Stat. Sect. 722.11) which entitles Tierra Douglas treble damages
Target was Young Minority Woman with Schizophrenia and Multiple Hospitalizations
Tierra Douglas is a young Missouri woman, who was diagnosed with schizophrenia and schizoaffective disorder in 2011, who has been hospitalized for mental health treatment six times since June 2014. On November 8, 2007, Ms. Douglas’ was 14 when her father Lemonte Christian was killed in an trucking accident. She was the only child according to his published obituary. As part of the resolution of a lawsuit arising from the accident, Ms. Douglas was to receive a structured settlement. The structured settlement was paying Ms. Douglas tax free income. At age 24, Tierra Douglas entered into a business relationship with Liberty Settlement Solutions and PF22 [ an alter-ego of Liberty] to sell of periodic payments (approximately $2,233,145.61 for $500,000.00.
No Legal Representation and “Sequestered” to Prevent Poaching by Liberty Defendants’ Competitors
The Complaint alleges that Tierra Douglas was not represented by counsel at anytime during her negations with Liberty and PF22, nor in connection with the Transfer Petition that was filed in St Louis Circuit Court [17SL-CC01020 – IN RE: P.F. 22, LLC Download In re PF22 v Douglas Docket Entries] or at an April 27, 2017 hearing. The Complaint alleges that after convincing Tierra Douglas into selling her periodic payments, Liberty offered Douglas a “free trip” to Florida. Liberty paid for Douglas to fly to Florida on April 8, 2017 , where she stayed until April 26, 2017, the day before the transfer petition was approved in St. Louis. Douglas’ hotels were paid for by the Liberty Defendants. A representative of Liberty accompanied her back to St.Louis. Liberty Defendants wanted to keep her away from being poached. Liberty and PF 22 competitors and coached her at the April 27, 2017 hearing.
Alleged Hip Hop Investment Scam
According to the Complaint, while Tierra Douglas was in Florida in April 2017, one of the owners of Liberty introduced her to an individual by the name of Ted Kay. McCabe allegedly told Douglas that Ted Kay was a “broker” in the music industry and could help her “invest” the $500,000 she received from Liberty.
in May 2017, Douglas returned to Florida and was picked up at Fort Lauderdale airport by Ted Kay. Kay took Douglas to meet with Defendants Marcello Valenzano and Andre Lyon (” Cool and Dre”), who represented themselves as successful, Grammy nominated hip hop producers. The Cool & Dre Wikipedia entry states that they have had a role in producing music by Little Wayne, The Game, featuring 50 Cent and others
Kay convinced Douglas that she could ” invest” the money she received from the Liberty Defendants with the Cool and Dre Defendants. According to the Complaint, Kay and the Cool and Dre Defendants told Plaintiff she would receive 10% of the “Co-Writers Share” in music produced by Valenzano and Lyon for a period of 2 years (” Controlled Composition Agreement”). Ted Kay was to receive 10% of the ” net value of services bought by Douglas” related to the Controlled Composition Agreement, according to the ” Broker/Agent Agreement” ( Exhibit 3 to the Complaint)
The Complaint alleges that Kay took Douglas to Regions bank where she obtained a bank check in the amount of $250,000 payable to Record Room Productions. Kay later told her that Cool and Dre used the disabled woman’s money to build as swimming pool at their North MIami condo.
Was Ted Kay Really a Broker or Intermediary?
From the plain language of the “Broker/ Agent Agreement, Kay held himself out as an intermediary, Broker and Agent for Douglas. Per Merriam Webster, inter- means “between, among”, an intermediary is someone who moves back and forth in the middle area between two sides—a “go-between”. Mediator (which shares the medi- root) is often a synonym, and so is facilitator; broker and agent are often others (emphasis added)
According to his LinkedIn profile Ted Kay is General Manager of Epidemic Records – Cool and Dre January 2015 – Present 4 years 8 months Miami/Fort Lauderdale Area. On his LinkedIn profile it says his home base is the Bahamas. The description says “How do I describe what I do? Its very simple…We dream big at Cool and Dre and I help make those dreams a reality! Grammy’s, Platinum records and in insane amount of records sold. But enough about us, lets work!” Whether or not it was disclosed by the officer of Liberty or by Ted Kay that Kay was actually the General Manager of Epidemic Record, Operating Partner Beardsace Mens apparel company designed By Cool and Dre. January 2016 – Present 3 years 8 months Miami/Fort Lauderdale Area, is not clear from the Complaint. What is clear is that Ted Kay holds no investment license, according to FINRA Broker Check, or the IAPD, and that Tierra Douglas is not an Accredited Investor.
In his “Broker/ Agent Agreement all Ted Kay certified was that “no certification or licensure is required by the Music Industry” What steps did Ted Kay take to determine that the investment solicitation to Tierra Douglas was suitable and in her best interest? No doubt we’ll see what pops in discovery.
The Purpose Presented to the St. Louis Circuit Court in the Petition for Transfer
Was Inconsistent with a Hip Hop Investment
The structured settlement transfer petition submitted to the St. Louis Circuit Court had a purpose represented to the Court which was inconsistent with a hip hop investment. Questions are raised given that the introduction to Kay occurred in April 2017, while Tierra Douglas was in Florida at the hospitality of the Liberty Defendants. The Controlled Composition Agreement was signed May 15, 2017, less than 3 weeks after approval by the St. Louis Circuit Court on April 27, 2017.
Never Take Financial or Investment Advice from Unlicensed People
Royalties are, like other types of business contracts, more complicated than they might seem. If you are considering a licensing agreement or royalties agreement, find an attorney who specializes in intellectual property law to help you through the process.
Some structured settlement buyers will try to induce structured settlement annuitants to sell using outrageous investment projections. Suitability is not even given a fleeting thought.
Always seek Independent Professional Advice whether it’s required in your state or not
Independent Professional Advice (IPA) for Structured Settlement Sellers
Postscript
FIVE Years after the 2017 incident, an Order Approving PARTIAL Settlement was filed in Broward County on December 21, 2022 and Recorded December 27, 2022 according to public records. I
It should be noted that the remaining claims are stayed with no end in sight, due to the 777 Partners Bankruptcy.
This is a sad and outrageous case, a large part if which remains unresolved YEARS LATER, that might have been prevented or mitigated with Independent Professional Advice.