More on Pension Factoring - Pension Assignments

We just did our third case in support of pensioners who got involved in pension assignment contracts.  In my opinion, these contracts are illegal not just from the point of view of the seller, but also from the point of view of the buyer as well.  From the seller's point of view, they are disguised loans without required disclosure. From the buyers' point of view, they are illegal securities.  The basic rule of securities law is that, unless an exemption applies, the security must be registered and the seller must be licensed to sell the security.  In most of these cases, the security is not registered and the seller is not licensed to sell the security.

Many times these pension securities are sold to unsuspecting buyers by their trusted life insurance agents.  These life insurance agents may have a bond and professional liability insurance. This is important because the companies putting these securities together may be practically insolvent or their assets may be out of reach of a reasonable-cost lawsuit.  The sellers' only recourse may be to bring a claim against the life insurance agent or other person who sold them the security.

Note this applies not just to pension securities but other investments that might be sold by brokers and agents.  I have seen cases involving illegal church bonds, for example.

If you bought a pension investment that is not performing, or were sold some other type of worthless security from a life insurance agent, including church bonds or unregistered corporate bonds, please call my office at 317-662-4529.

Of course, we still represent consumers who have sold part of their pensions. Here are some of the companies that are involved in the industry

Voyager Financial Group, LLC (also doing business as Pension4Case, Cash out my Pension, Buy Your Pension)
Veterans Benefit League
Cash Flow Investment Partners
LumpSum Pension Advance
Pension Funding, LLC
Pensions Annuities & Settlements LLC
Pension Income LLC
DFR Pension Funding
Veterans Benefit Leverage
First American Finance Corporation
Investing Forward (Termbrokers LLC)

More on Pension Harvesting Schemes

I am continuing to work on issues involving pension harvesting schemes.  Retirees are the prey for these companies. They identify senior citizens in need of cash and tell them they can get them money secured by their pensions.  Here's where it gets weird.  We think of arrangements where you get money now and pay back money in installments as loans. These companies sell contracts that do just that, give you money up front that you pay back, but the companies claim they aren't loans. They claim they are turning your pension into annuities and selling the annuities to outside investors.  As far as the retiree is concerned, though there is no functional difference between these annuity contracts and loans, EXCEPT the retirees don't get the disclosure and legal protections that consumers are supposed to get in loans.  I think most of these contracts are illegal loans as to the retiree, and I think most of them are illegal securities as to the investors.  Here are some companies that have been identified in this industry.  If you have a problem with one of these, please contact me.  I will be happy to link you up with a NACA-member consumer lawyer in your area.

LumpSum Pension Advance, Pension Funding LLC

Pensions Annuities & Settlements LLC

Pension Income LLC

Cash Flow Investment Partners

DFR Pension Funding

Veterans Benefit Leverage

Voyager Financial Group LLC (Pension4Case/Cash Out My Pension/Buy Your Pension)

First American Finance Corp. and Investing Forward (Termbrokers LLC).

Check out the  SEC alert, entitled “Pension or Settlement Income Streams: What You Should Know before Buying or Selling Them” is available at www.sec.gov/investor/alerts/ib_income_streams.pdf

Beware of Pension Factoring Ripoffs

I've been a lawyer for 27 years, more than half my live.  I've handled over 100,000 intakes in that time. Recently I was approached regarding a a type of transaction that I had never seen before. It involved pension factoring and a company called Voyager Financial Group, LLC.  Voyager approaches people who need money and have an income stream from a pension fund or something similar, and they offer their services as brokers to get the person cash up front for his or her pension scheme. the pensioner pledges the income from the pension as security for the advance. It seems obvious to me that this is a loan by any other name but so far Voyager and like companies have dodged scrutiny as lenders.  Voyager has run afoul of securities commissioners in several states because Voyager does not put up its own money, it recruits investors to buy the income streams. Because this is passive income for the investor, it is a security and should be registered.

The best mainstream journalistic article that I've seen on the subject is this one from the New York Times.

In the business world, factoring is common. The most common factoring is accounts receivable. Another type of factoring involves payment in advance for structured settlement payments.  The intermediaries in these transactions can potentially rip off both the investors and the person obtaining the lump sum, a/k/a the borrowers.  The implied interest rates in these deals are quite high. From what I've seen the rates exceed the 21% maximum legal rate for mainstream lenders in most states.  It's not such a great deal for the investor, either. The pensioner can actually cut off the stream of income. I think it's arguable whether these contracts are ever legal due to lack of disclosure on the consumer side and lack of registration of the various lenders and intermediaries.

If you have a problem with a pension factoring company, or of you sold pension payments, especially if you are getting collection letters relating to the pension assignment, I am interested in hearing from you. Call me at 317-662-4529. If you are not in my area (Indiana), I will try to link you up with a NACA attorney.