Virginia's Rich Structured Settlement Burn Injury Claimant Who Has Sold Millions and Is Now Broke
The Washington Post has published a shocking (or not so shocking) story on Dec. 27 about a Virginia resident who was preyed on by structured settlement factoring companies to sell large parts of his future payment installments of compensation money for a burn injury in exchange for pennies on the dollar.One lawyer, Mr. Heretick, who is now a legislator in Virginia's House of Delegates, and who was also involved in the payment purchase cases of the burn victim - has filed thousands of structured settlement transfer cases over the course of 15 years.
The lawsuit settlement agreement to compensate for his injury and consequences grants him monthly payments of $10,000 and an aggregate sum of $31.5 million during his lifetime.
Over the course of two years, the person sold future payments owed to him up to 2044. Now the very rich man has gone broke and is homeless.
This is an outraging story of course. The payment purchases by the factoring companies were approved by courts in Virginia.
According to the reports, the man is physically and psychologically limited.
Here are some key points of the Washington Post report:
Most of the cases were approved at the same courthouse, the Portsmouth Circuit Courthouse.
The burn victim has sold $11 million's worth of payments with a present value of about $8.5 for just $1.4 million (!). Yeah, that means the companies who bought the payment from him are getting the difference - MILLIONS OF DOLLARS all in all.
In 2013, Stephen Heretick petitioned the judge in the Portsmouth courthouse "at least 594 times".
The judge would rule on dozens in hearings that lasted an hour.
The same judge approved 95 percent of the deals.
Another judge of the same courthouse approved deals at a rate of 85 percent.
In one deal, the burn victim settlement recipient sold payments in the future value of about $9.5m and present value of about $4,100,000 for $12,536! (well, it's life-contingent payments that have a much smaller value.)
The payee spent out his lump sum cash from the settlement purchasing companies on entertainment, luxury items, gambling... He squandered his windfall. Only in 2044 he's expected to start receiving not-yet-sold payments once again. If he will not be persuaded to sell more payments, that's it.
Critics say the companies are predators, had no right to exploit and unfortunate man with disabilities, certainly now with unfair deals, and courts were not supposed to rubber-stamp such deals.
Others argue that if that victim was unable to handle his own finances because of incompetence and deficiencies, courts would not have to approve the structured settlement agreement in the first case unless a trusted guardian is appointed for him.
In a democratic country a person is allowed to act foolish and insane and do dumb things. Such as throwing away millions of dollars. A person has a right to be crazy.
It is a different thing when a person with limitations is manipulated into doing things that are crazy but made to believe it is actually wise and beneficial. It is hard to understand someone thought that deals such as the ones mentioned above are fair, or that selling payments for low amounts of upfront cash is in the best interest when the person receives $10,000 next month and another $10,000 the month thereafter.
Virginia is favored by structured payment buyers because sellers there don't have to appear in court and are not obliged to seek outside counsel and actually wave their rights to do so in most cases.
When judges easily approve lots of petitions in a short time, life doesn't get easier than that.
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