Largest Administrator of Pooled SNTs Chapter 11 | Center for Special Needs Trust Administration

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Purported $100M in loans were made to the Boston Finance Group, a company controlledby Center’s founder Leo J. Govoni

According to allegations in the Chaper 11 Bankruptcy Filing for Centers for Special Needs Trust Administration, Inc.,dated February 9, 2024,

“The Center’s leadership recently discovered that between 2009 and 2020 approximately $100 million of funds under The Center’s control was paid out as a loan under a purported line of credit agreement. The funds utilized to make the fund this purported loan were taken from over 1,000 of The Center’s beneficiaries and The Center itself. The Center’s demands for the immediate repayment of these funds and for documents addressing the use of the funds have gone unanswered.

Upon learning of the existence of this alleged loan transaction, The Center embarked on an internal investigation to ascertain all facts and circumstances surrounding the transfer of approximately $100 million from The Center. Through its investigation, The Center determined
that the purported $100 million loan was made to the Boston Finance Group (“BFG”), a company
controlled by The Center’s founder, Leo Govoni (“Govoni)

The Center determined it was necessary to file a petition for relief under Chapter 11 of the Bankruptcy Code for three primary reasons.

1.The bankruptcy filing provides The Center a means to provide all
beneficiaries with notice of the transfer of $100 million to BFG, while simultaneously allowing
The Center to pursue the recovery of these funds for the benefit of beneficiaries.

2.Second, the Chapter 11 filing will facilitate The Center’s ongoing investigation into the transfer and misuse of its funds, and the funds of the SNTs it administers.

3. Third and finally, The Center aims through this Chapter 11 proceeding to preserve the going-concern value of its assets and to restructure its obligations for the benefit of beneficiaries adversely impacted by the transfers.

Cite of the Center for SNT Administration, Inc. Bankruptcy Filing:

UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
http://www.flmb.uscourts.gov
In re: Chapter 11
THE CENTER FOR SPECIAL NEEDS
TRUST ADMINISTRATION, INC., Case No. 8:24-bk-676-RCT
Debtor.

Read a complete copy of the Centers for Special Needs Adminstration, Inc.’s Chapter 11 Bankruptcy Filing Now

Download The Centers – Case Management Summary – Bankruptcy Filing

Communication that went out to Trust Beneficiaries

According to a communication from within The Centers on the original publication date of this blog and provided to this author among others:

“The Board of Directors felt that this (the Chapter 11 filing) was the best route to come to a resolution for those affected cases. I can assure you that all cases were not compromised, and we are doing everything we can possibly do to not cause an interruption in service. Each Beneficiary will be receiving a letter (mailed on 2/12/24) fully outlining the process and what steps they can follow to assist with the resolution.

Also, included in the letter there is an 800 number for the Beneficiary to call to answer any questions they may have. (I have requested a copy of the Draft Letters that were sent) I do not have access to every case and the balance available currently because they are being overseen by the Bankruptcy Court. I will say that if there is an active Structure involved the affect is very minimal if at all. I will forward your email to my legal contact and get back to you in the coming days with a more clear and direct answer. But I have been given the below disclaimer on the situation:

The Center for Special Needs Trust Administration Disclosure 2/13/24: The Center for Special Needs Trust Administration has recently filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code, which is pending in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division. Some of the trusts The Center manages were compromised when their funds were loaned to an entity called Boston Financial Group and the loan was not repaid.

There are several new accounts which have not been compromised, and the Bankruptcy Court has approved procedures to allow the distributions from these trust accounts to be unaffected by the bankruptcy filing. For any new trust account established after the bankruptcy filing, beneficiaries’ entitlement to distributions from such new trust accounts will similarly be unaffected. Rest assured that funds for any new trust accounts established will be invested with institutional financial advisory firms and will not have any exposure to the loan issues that led The Center to file its chapter 11 bankruptcy case”.

Thank you for your …”

Who is Leo J. Govoni?

According to Fox News 13, Leo Govoni wrote that he “disputed the allegations and characterizations and he looks forward to resolving the issue though the bankruptcy process or otherwise” – reported February 19, 2024 by Aaron Messmer (see link to full article “Parents look for answers”below).

All links retrieved from public published sources on or after February 15, 2024

Read my follow up post concerning Class Action Law Suit filed February 19, 2024 in the United States District Court, Middle District of Florida which includes a copy of the 57 page Complaint.

Class Action Lawsuit Filed in Response to $100M FL Pooled SNT Administration Scandal – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer R eviews

See Fox News 13 video reporting by Aaron Mesmer dated February 28, 2024

Last updated March 1, 2024

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