Structured Settlement Industry Seeking Distance From Rothstein; Crackdown Coming for "Cash Now" Outfits?
|Whatever Rothstein was selling, it wasn't structured settlements.|
"These things were not structured settlements," says John Darer, who is a structured settlement broker based in Connecticut and writes a blog about the industry. "The kind of rates of return (investors) were promised is not what you'd get from a structured settlement. These were clearly pre-settlement funding deals."
Rothstein was purporting to engage in "legal funding," whereby plaintiffs sell their future reward in a lawsuit to an investor. In traditional structured settlements, investors have no role.
Another important difference, says Darer,
is that in a traditional brokered settlement, "There has to be a release of liability" on behalf of the plaintiff in a civil suit. "But they were not doing that in Rothstein's case," says Darer. "He was having somebody buy the client's interest out of the case." Last month, in an effort to distinguish Rothstein's scam from the structured settlement industry, Darer taped a video with another professional in the field, Mark Wahlstrom. Here it is:
During my conversation with Darer last week, he sent me a flow chart that he shows to clients as a way of simplifying the definition of structured settlements.
|Image courtesy: 4structures.com|
Despite Darer's frustration with Coffey and press accounts that linked Rothstein with structured settlements, he's hopeful that the publicity surrounding Rothstein's case will lead to increased regulation of what he calls the "Cash-now pushers." That is, companies that purchase structured settlement payment rights from plaintiffs who have won a lucrative legal victory but are willing to sell their entire reward just so they can get a fraction of it quickly.
"In advertising, they use the expression, 'Cash now!'" says Darer. "But there's a big difference between these peoples' needs and what these companies can deliver. " It's fraud in Darer's opinion. But for the moment, it's legal.