Cummings Expands Investigation of Predatory Buy-Outs of Structured Settlements
Washington, D.C. (Nov. 2, 2015)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent letters to Bulbrook/Drislane Brokerage and Somerset Wealth Strategies requesting information about their sales of structured settlement payment streams to third parties. Structured settlements are often awarded to individuals, such as victims of lead paint exposure, who need consistent income for years or even for a lifetime.
“Structured settlements are awarded to ensure that individuals who have suffered grievous injuries – like children in Baltimore who have been exposed to lead paint – are taken care of well into the future,” said Cummings. “I want to understand how private companies make profits buying and selling settlements that are meant to ensure victims have reliable incomes, and how we can best protect vulnerable individuals from predatory and abusive practices.”
Cummings began his investigation of the structured settlements industry following a front-page Washington Post article that detailed transactions between a Maryland-based factoring company and Baltimore City residents who received settlements from lead-paint litigation in the form of future payment streams. The article also described several individuals whose structured settlement payments were bought by a factoring company for pennies on the dollar.
On August 27, 2015, Cummings sent a letter to a Maryland company requesting information about how it purchases structured settlements in exchange for lump-sum payments, as well as the adequacy of existing legal protections for settlement recipients. His August letter focused on companies that locate and directly contact structured settlement recipients.
Today’s letters are addressed to two companies, Bulbrook/Drislane and Somerset, that appear to offer structured settlement payment streams for sale to investors. Both advertise structured settlement payment streams for sale to investors. Bulbrook/Drislane advertises that its “secondary market annuities” are “a product with guaranteed rates of 4-7 percent to the purchaser.” Somerset advertises that its annuities are “safe and dependable,” and that they can assist in “easing your tax burden.” Somerset promised that its annuities would “allow money to double or triple over time, guaranteed.”
In his letters today, Cummings asked both companies to respond to a series of questions, including whether “secondary market annuities” are regulated annuities under Maryland State law; what disclosures are made to purchasers of these “annuities;” the profits made by selling or mediating the sale of these “annuities.” Rep. Cummings also requested a list of structured settlement payment streams originally owned by Maryland residents that have been offered for sale by each company.
Click here to read the letter to Bulbrook/Drislane Brokerage.
Click here to read the letter to Somerset Wealth Strategies.