by Structured Settlement Watchdog
Notice to New York Judges Presiding over Structured Settlement Transfer Petitions BAMBOOZLE ALERT
Judges are Being Deceived
Buyers of structured settlement payment rights are:
1. using rates deemed acceptable in legal cases 12-17 years old; and
2. use rates of inferior rated carriers, in an attempt to justify low ball offer seem “reasonable” to judges;
New York judges presiding over transfer hearings should continue to be mindful of efforts to bamboozle them at the expense of the buyers’ prey.
In recent years it is common to see discount rates in the 5-6% range and in some cases in the 4-5% range if a seller shops around.
All of these cases were pending in New York Courts at time of posting
1. In re: The Matter of and (sic) Application for Court Approval of the Sale and Transfer of Certain Structured Settlement Payment Rights of Dominque Sims , pursuant to and in accordance with Gen. Oblig law Section 5-1701 et seq. (NY Sup Ct., Suffolk County Index 604200/2020) 21 year old minority in 4th attempted sale (1 denied 2 approved, CBC Settlement Funding repeat business in 2018, 2019 and now 2020)
The annuities used for comparison were from A.M. Best B+ rated companies, nowhere near the A+ rating held by The Prudential Insurance Company of America
Prudential has been in business since the 19th Century
The rate (and the attempted justify them) are so high in today’s context, it should be preceded by the Richard Straus opus’ Also sprach Zarathustra, Op.30 (a/k/a as the theme to 2001: A Space Odyssey). They’re from the moon!
“The annual discount rate, compounded monthly, used to determine the gross advance amount is 19.59% (Exhibit “C”), which rate, under New York law, cannot be deemed as high, and unfair and unreasonable. In re Novation Capital LLC (Jamel Knight), 8/12/2008 N.Y.L.J. 27 (col. 3) (determining that a proposed transfer, with a 11.17% discount rate, to be fair and reasonable); In re Cherlee Medina, 12/26/2008 N.Y.L.J. 27 (col. 1) (Sup. Ct., Bronx Co.) (holding that a 13.92% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “C”); In re Kimberly Whispell (unpublished decision) (Sup. Ct., Ulster Co., Index No. 08-4095) (determining that a 15.66% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “C”); In re Settlement Funding of New York, LLC (Cunningham), 761 N.Y.S.2d 816 (Sup. Ct., Renssellaer Co., 2003) (determining that a discount rate of 15.46% is fair and reasonable); and In re Settlement Funding of New York, LLC (John E. Platt), 774 N.Y.S.2d 635 (Sup. Ct., Lewis Co. 2003) (approving transfer with 19.99% discount rate)”. You would have to go back to the George W. Bush era for all of these cases.
2. A. Jenkins Case Dutchess County Index 2020-51372 Pending at time of posting. 18 year old homeless man living in friend’s apartment to use the proceeds to rent an apartment and buy furniture 11.6% discount rate $26,500 for $40,000 in future payments.
In Jenkins, CBC Settlement Funding uses boilerplate case law to justify a high discount rate
“The annual discount rate, compounded monthly, used to determine the gross advance amount is 11.6% (Exhibit “C”), which rate, under New York law, cannot be deemed as high, and unfair and unreasonable. In re Novation Capital LLC (Jamel Knight), 8/12/2008 N.Y.L.J. 27 (col. 3) (determining that a proposed transfer, with a 11.17% discount rate, to be fair and reasonable); In re Cherlee Medina, 12/26/2008 N.Y.L.J. 27 (col. 1) (Sup. Ct., Bronx Co.) (holding that a 13.92% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “C”); In re Kimberly Whispell (unpublished decision) (Sup. Ct., Ulster Co., Index No. 08-4095) (determining that a 15.66% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “C”); In re Settlement Funding of New York, LLC (Cunningham), 761 N.Y.S.2d 816 (Sup. Ct., Rensselaer Co., 2003) (determining that a discount rate of 15.46% is fair and reasonable); and In re Settlement Funding of New York, LLC (John E. Platt), 774 N.Y.S.2d 635 (Sup. Ct., Lewis Co. 2003) (approving transfer with 19.99% discount rate)”.
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PRO TIP
It is worth noting that in a more recent decision, a Dutchess County New York judge concluded it was not fair and reasonable for a structured settlement payee to sell more than $470,000 in future settlement payments for an immediate sum of $10,000. See In Matter of J.G. Wentworth Originations, LLC (Kwant), Index No. 52903/2018, 2018 N.Y. Misc. LEXIS 5584 (N.Y. Sup. Ct. Dec. 4, 2018).
The reviewing court rejected the request for judicial approval of the transaction – a prerequisite for the transaction to become legally effective under the New York Structured Settlement Protection Act. Said the judge: “This Court concludes that the proposed sale of the payee’s structured settlement payments to petitioner is not fair and reasonable and does not serve the best interest of the payee . . . .” The Dutchess County, New York, judge also noted that, “[a]dditionally, the structured settlement payee’s willingness to transfer the settlement proceeds has no bearing on this Court’s determination of whether the transfer is fair and reasonable.”
2012 Queens County Case
In the Matter of the Application Of Settlement Funding of New York, L.L.C., Petitioner, For Approval of a Transfer of a Structured Settlement Payment Right of Christlyne B. Point Du Jour a/k/a C.B. Point Du Jour Pursuant to Article 5, Title 17 of the New York General Obligations Law [2012 NY Slip Op 52359(U) Decided on December 21, 2012 NY Sup. Ct., Queens County In his denial of the Petition to Transfer Judge Markey wrote: “Furthermore, the petitioner has not demonstrated that the 14.99% discount rate applied against the funds sought to be transferred is fair and reasonable within the meaning of the SSPA (see, Settlement Funding of NY, LLC v Hartford-Comprehensive Empl. Ben. Serv. Co., 2009 WL 3630802, 2009 NY Slip Op 52201[U], slip op. at 3, supra [14.99% discount rate not accepted as fair and reasonable]; Matter of Settlement Capital Corp. [Ballos], 1 Misc 3d 446 [Sup Ct Queens County 2003] [15.591% discount rate not accepted as fair and reasonable] [Satterfield,J.]; In re Settlement Funding of NY, LLC, 195 Misc 2d 721 [Sup Ct Rensselaer County 2003] [15.46% ok’d]
Said another way, many of those targeted by structured settlement factoring companies are young. Case law is plentiful. Why not a Blend of “Youth and Experience” ? Do the math, in dog years, to underscore the point.
2 years = 14 years in dog years
8 years – 56 years in dog years
12 years= 84 in dog years
17 years = 119 in dog years
The boilerplate these petitions have been using to justify bloated discount rates is of diminishing, if any, relevance. Pay attention New York judges, clerks, and counsel.
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C. T. A.Case Ontario County Index 127302-2020 120 life contingent payments 12.42% Discount Rate $35,000 offered for $1,348,934.88 in future payments
Boilerplate used yet again!
“The annual discount rate, compounded monthly, used to determine the gross advance amount is 12.42% (Exhibit “D”), which rate, under New York law, cannot be deemed as high, and unfair and unreasonable. In re Cherlee Medina, 12/26/2008 N.Y.L.J. 27 (col. 1) (Sup. Ct., Bronx Co.) (holding that a 13.92% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “D”); In re Kimberly Whispell (unpublished decision) (Sup. Ct., Ulster Co., Index No. 08-4095) (determining that a 15.66% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “D”); In re Settlement Funding of New York, LLC (Cunningham), 761 N.Y.S.2d 816 (Sup. Ct., Rensselaer Co., 2003) (determining that a discount rate of 15.46% is fair and reasonable); and In re Settlement Funding of New York, LLC (John E. Platt), 774 N.Y.S.2d 635 (Sup. Ct., Lewis Co. 2003) (approving transfer with 19.99% discount rate). Concurrently, nor can a gross advance amount of $35,000.00 payable to the Payee be considered unfair and unreasonable”.
D. In Re The Matter of and Application For Court Approval of the Sale and Transfer of Certain Structured Settlement Payment Rights of S Laux pursuant to and In Accordance with Gen Oblig Law 5 1701 et seq vs. None Onondaga County Index 003928/2020 10.04% Discount Rate $33.000 offered for $121,500 in future payments
Boilerplate used yet again!
“The annual discount rate, compounded monthly, used to determine the gross advance amount is 10.04% (Exhibit “D”), which rate, under New York law, cannot be deemed as high, and unfair and unreasonable. In re Cherlee Medina, 12/26/2008 N.Y.L.J. 27 (col. 1) (Sup. Ct., Bronx Co.) (holding that a 13.92% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “D”); In re Kimberly Whispell (unpublished decision) (Sup. Ct., Ulster Co., Index No. 08-4095) (determining that a 15.66% discount rate is fair and reasonable) (see Decision/Order, at Exhibit “D”); In re Settlement Funding of New York, LLC (Cunningham), 761 N.Y.S.2d 816 (Sup. Ct., Rensselaer Co., 2003) (determining that a discount rate of 15.46% is fair and reasonable); and In re Settlement Funding of New York, LLC (John E. Platt), 774 N.Y.S.2d 635 (Sup. Ct., Lewis Co. 2003) (approving transfer with 19.99% discount rate). Concurrently, nor can a gross advance amount of $33,000.00 payable to the Payee be considered unfair and unreasonable”
Note: The same Queens New York law firm represented the structured settlement factoring company (plaintiff) in each of these submissions to the respective New York Supreme Courts. In all the cited petitions from 2020, boilerplate language is used and there is not a single cite in each of these cases that is less than 12 years old, completely ignoring the 2018 Kwant case. Perhaps it’s time to reset the time bar.
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PRO TIP 2
When a structured settlement transfer petition is filed, the factoring company is often listed as the Plaintiff and the Seller and Annuity Issuer/Qualified Assignment Company as Defendant
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